(1)(a) Any person who is paid, collects, or receives funds under a preneed contract for funeral services or merchandise or burial services or merchandise shall deposit an amount at least equal to the sum of 70 percent of the purchase price collected for all services sold and facilities rented; 100 percent of the purchase price collected for all cash advance items sold; and 30 percent of the purchase price collected or 110 percent of the wholesale cost, whichever is greater, for each item of merchandise sold. The board may, by rule, specify criteria for the classification of items sold in a preneed contract as services, cash advances, or merchandise.
Terms Used In Florida Statutes 497.458
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Beneficiary: means a natural person expressly identified in a preneed contract as the person for whom funeral merchandise or services are intended. See Florida Statutes 497.005
- Board: means the Board of Funeral, Cemetery, and Consumer Services. See Florida Statutes 497.005
- Contract: A legal written agreement that becomes binding when signed.
- Control: means the possession, directly or indirectly, through the ownership of voting shares, by contract, arrangement, understanding, relationship, or otherwise, of the power to direct or cause the direction of the management and policies of a person or entity. See Florida Statutes 497.005
- Department: means the Department of Financial Services. See Florida Statutes 497.005
- Director: means the director of the Division of Funeral, Cemetery, and Consumer Services. See Florida Statutes 497.005
- Fair market value: means the fair market value of assets held by a trust as of a specific date, assuming all assets of the trust are sold on that specific date. See Florida Statutes 497.005
- Income: means earnings on trust assets, including interest, dividends, and other income earned on the principal. See Florida Statutes 497.005
- individual: includes both natural persons and legal entities. See Florida Statutes 497.005
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- License: includes all authorizations required or issued under this chapter, except where expressly indicated otherwise, and shall be understood to include authorizations previously referred to as registrations or certificates of authority in chapters 470 and 497 as those chapters appeared in the 2004 edition of the Florida Statutes. See Florida Statutes 497.005
- Licensee: means the person or entity holding any license or other authorization issued under this chapter, except where expressly indicated otherwise. See Florida Statutes 497.005
- merchandise: means any personal property offered or sold by any person for use in connection with the final disposition, memorialization, interment, entombment, or inurnment of human remains or cremated remains, including, but not limited to, caskets, outer burial containers, alternative containers, cremation containers, cremation interment containers, urns, monuments, private mausoleums, flowers, benches, vases, acknowledgment cards, register books, memory folders, prayer cards, and clothing. See Florida Statutes 497.005
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Person: when used without qualification such as "natural" or "individual" includes both natural persons and legal entities. See Florida Statutes 497.005
- Preneed contract: means any arrangement or method, of which the provider of funeral merchandise or services has actual knowledge, whereby any person agrees to furnish funeral merchandise or service in the future. See Florida Statutes 497.005
- Principal: means and includes the sole proprietor of a sole proprietorship; all partners of a partnership; all members of a limited liability company; regarding a corporation, all directors and officers, and all stockholders controlling more than 10 percent of the voting stock; and all other persons who can exercise control over the person or entity. See Florida Statutes 497.005
- Purchaser: means a person who executes a preneed or an at-need contract with a licensee for merchandise or services. See Florida Statutes 497.005
- Revocable trust: A trust agreement that can be canceled, rescinded, revoked, or repealed by the grantor (person who establishes the trust).
- Rules: refers to rules adopted under this chapter unless expressly indicated to the contrary. See Florida Statutes 497.005
- Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Source: OCC
- Trustee: A person or institution holding and administering property in trust.
(b) The method of determining wholesale cost shall be established by rule of the licensing authority and shall be based upon the preneed licensee‘s stated wholesale cost for the 12-month period beginning July 1 during which the initial deposit to the preneed trust fund for the preneed contract is made.
(c) Such deposits shall be made within 30 days after the end of the calendar month in which payment is received, under the terms of a revocable trust instrument entered into with a trust company, with a national or state bank holding trust powers, or with a federal or state savings and loan association holding trust powers.
(d) The trustee shall take title to the property conveyed to the trust for the purpose of investing, protecting, and conserving it for the preneed licensee; collecting income; and distributing the fair market value as prescribed in this chapter. The preneed licensee is prohibited from sharing in the discharge of these responsibilities, except that the preneed licensee may request the trustee to invest in tax-free investments and may appoint an adviser to the trustee. The licensing authority may adopt rules limiting or otherwise specifying the degree to which the trustee may rely on the investment advice of an investment adviser appointed by the preneed licensee. The licensing authority may adopt rules limiting or prohibiting payment of fees by the trust to investment advisors that are employees or principals of the licensee to whom the trust fund relates.
(e) The trust agreement shall be submitted to the licensing authority for approval and filing prior to use. The licensing authority may adopt rules specifying procedures and establishing criteria and requirements not inconsistent with this chapter for approval of trusts submitted under this paragraph.
(f) The deposited funds shall be held in trust, both as to principal and any change in fair market value thereon, and shall remain intact, except that the cost of the operation of the trust or trust account authorized by this section may be deducted from the income earned thereon.
(g) The preneed contract purchaser shall have no interest whatsoever in, or power whatsoever over, funds deposited in trust pursuant to this section.
(h) In no event may trust funds be loaned, directly or indirectly, to any of the following persons: the preneed licensee; any entity under any degree of common control with the preneed licensee; any employee, director, full or partial owner, or principal of the preneed licensee; or any person related by blood or marriage to any of those persons. In no event may trust funds, directly or indirectly, be invested in or with, or loaned to, any business or business venture in which any of the following persons have an interest: the preneed licensee; any entity under any degree of common control with the preneed licensee; any employee, director, full or partial owner, or principal of the preneed licensee; or any person related by blood or marriage to any of those persons.
(i) The preneed licensee’s interest in said trust shall not be pledged as collateral for any loans, debts, or liabilities of the preneed licensee and shall not be transferred to any person without the prior written approval from the department and the trustee which shall not be unreasonably withheld.
(j) Even though the preneed licensee shall be deemed and treated as the settlor and beneficiary of said trust for all purposes, all of said trust funds are exempt from all claims of creditors of the preneed licensee except as to the claims of the preneed contract purchaser, her or his representative, the board, or the department.
(k) Beginning April 1, 2018, and on or before each April 1 thereafter, the trustee shall furnish the department with an annual report regarding each preneed licensee trust account held by the trustee at any time during the previous calendar year. The report shall state the name and address of the trustee; the name, address, and license number of the licensee to whom the report relates; the trust account number; the beginning and ending trust balance; and, as may be specified by department rule, a list of receipts showing the date and amount of any disbursement. The report must be signed by the trustee’s account manager for the trust account. The trustee shall submit the report in a format and pursuant to procedures specified by department rule.
(2) Except as provided in s. 497.283, the delivery of funeral merchandise before the death of the person for whom it is purchased does not constitute performance or fulfillment, either wholly or in part, of any preneed contract entered into after July 1, 1977.
(3)(a) The trustee shall make regular valuations of assets it holds in trust and provide a fair market value report of such valuations to the preneed licensee at least quarterly.
(b) Any person who withdraws appreciation in the value of trust, other than the pro rata portion of such appreciation which may be withdrawn upon the death of a contract beneficiary or upon cancellation of a preneed contract, shall be required to make additional deposits from her or his own funds to restore the aggregate value of assets to the value of funds deposited in trust, but excluding from the funds deposited those funds paid out upon preneed contracts which such person has fully performed or which have been otherwise withdrawn, as provided for in this chapter.
(c) The preneed licensee shall be liable to third parties to the extent that income from the trust is not sufficient to pay the expenses of the trust.
(4) The licensing authority may adopt rules exempting from the prohibition of paragraph (1)(h), pursuant to criteria established in such rule, the investment of trust funds in investments, such as widely and publicly traded stocks and bonds, notwithstanding that the licensee, its principals, or persons related by blood or marriage to the licensee or its principals have an interest by investment in the same entity, where neither the licensee, its principals, or persons related by blood or marriage to the licensee or its principals have the ability to control the entity invested in, and it would be in the interest of the preneed contract holders whose contracts are secured by the trust funds to allow the investment.
(5) The trustee of the trust established pursuant to this section shall only have the power to:
(a) Invest in investments as prescribed in s. 518.11 and exercise the powers set forth in part VIII of chapter 736. However, the trustee may not invest in, or count as assets, life insurance policies or annuity contracts; real estate may not compose more than 25 percent of the trust’s assets; and the licensing authority may by order require the trustee to liquidate or dispose of any investment within 30 days after such order, or within such other times as the order may direct. The licensing authority may issue such order if it determines that the investment violates any provision of this chapter or is not in the best interests of the preneed contract holders whose contracts are secured by the trust funds.
(b) Borrow money up to an aggregate amount of 10 percent of trust assets, at interest rates then prevailing from any individual, bank, insurance company, or other source, irrespective of whether any such person is then acting as trustee, and to create security interests in no more than 10 percent of trust assets by mortgage, pledge, or otherwise, upon the terms and conditions and for such purposes as the trustee may deem advisable.
(c) Commingle the property of the trust with the property of any other trust established pursuant to this chapter and make corresponding allocations and divisions of assets, liabilities, income, expenses, and capital gains and losses.
(6) The amounts required to be placed in a trust by this section for contracts previously entered into shall be as follows:
(a) For contracts entered into before October 1, 1993, the trust amounts as amended by s. 6, chapter 83-316, Laws of Florida, shall apply.
(b) For contracts entered into on or after October 1, 1993, the trust amounts as amended by s. 98, chapter 93-399, Laws of Florida, shall apply.