Sec. 12.1. (a) This section applies to contracts for prepaid services or merchandise, or both, entered into under this chapter after December 31, 1995, and before July 1, 1999.

     (b) A purchaser may enter into more than one (1) contract under this chapter for prepaid services or merchandise, or both. Each contract may be funded with cash, either in a lump sum or installment payments, or an insurance policy, or both. The purchaser may revoke the contract if the purchaser sends the seller written notice of the revocation within thirty (30) days after the contract is signed by the purchaser and seller. If a purchaser revokes a contract, the seller shall refund to the purchaser, without interest, all property used to fund the contract. If the seller receives payment of at least five hundred dollars ($500) in cash that must ultimately be placed in trust or escrow under this section, the seller shall, not more than five (5) days after receiving the payment, deposit the payment in escrow pending irrevocable deposit to trust or escrow authorized by either subsection (h) or (i). Thirty (30) days after the contract is signed all property paid or delivered to the seller to fund each contract shall be irrevocably deposited by the seller to trust or escrow authorized by either subsection (h) or (i). Except for installment contracts funded with cash and contracts funded with a newly issued insurance policy that has a limited or qualified death benefit period, all sellers shall guarantee the provision of all services and merchandise sold under a contract authorized by this chapter. At delivery, a seller may not impose additional charges to recover a difference between the original contract retail prices or current retail prices for services and merchandise that are sold under the contract, whichever is greater, and the amount on deposit in trust or escrow.

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Terms Used In Indiana Code 30-2-13-12.1

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • contract: means a written agreement between a purchaser and a seller that:

    Indiana Code 30-2-13-4

  • Contract: A legal written agreement that becomes binding when signed.
  • delivery: means the time when:

    Indiana Code 30-2-13-5

  • Escrow: Money given to a third party to be held for payment until certain conditions are met.
  • Finance charge: The total cost of credit a customer must pay on a consumer loan, including interest. The Truth in Lending Act requires disclosure of the finance charge. Source: OCC
  • fund: refers to the preneed consumer protection fund established by section 28 of this chapter. See Indiana Code 30-2-13-6
  • insurance policy: means a policy providing one (1) or more of the types of insurance described in IC 27-1-5-1, Class 1(a) and Class 1(c). See Indiana Code 30-2-13-7
  • Irrevocable trust: A trust arrangement that cannot be revoked, rescinded, or repealed by the grantor.
  • Property: includes personal and real property. See Indiana Code 1-1-4-5
  • purchaser: means a person or firm contracting with a seller for services or merchandise to be provided or delivered for a named individual. See Indiana Code 30-2-13-9
  • Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
  • seller: means a person doing business as a sole proprietor, a firm, a limited liability company, a corporation, an association, or a partnership contracting to provide services or merchandise, or both, to a named individual. See Indiana Code 30-2-13-10
  • services or merchandise: includes personal property or services:

    Indiana Code 30-2-13-8

  • 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.
     (c) If a contract under this chapter is funded with an insurance policy, the ownership of the insurance policy must be irrevocably assigned to a trustee. The seller may not borrow against, pledge, withdraw, or impair the cash value of the policy.

     (d) A finance charge may be assessed on a contract sold on an installment basis, and the seller shall disclose to the purchaser all the applicable requirements under federal and state law.

     (e) A seller or successor seller who has accepted cash or an insurance policy, or both as full payment of a contract under subsection (b) is responsible for providing all contracted prepaid services and merchandise if the insurance company or trust company used to fund the contract is insolvent.

     (f) A purchaser who purchases a contract with cash or through an insurance contract shall make the payment for the contract payable only to the seller or insurer, respectively.

     (g) A seller may not accept or deposit to trust or escrow cash, an insurance policy, or any other property as consideration for services or merchandise to be provided in the future except in connection with a contract authorized by this chapter.

     (h) A trust account authorized and established under this chapter must:

(1) be irrevocable and require the seller to deposit to trust all sums or property received from the purchaser;

(2) designate the seller as settlor and the seller as beneficiary;

(3) designate a trustee qualified under this chapter and authorize the trustee to charge a reasonable fee for services;

(4) require that a separate account be maintained in the name of each purchaser;

(5) require that interest earned on the account be added to the principal and reinvested;

(6) permit assets of the separate accounts of several purchasers to be commingled for investment; and

(7) require that on delivery of services or merchandise the trustee shall remit to the seller the amount on deposit in the purchaser’s trust.

Upon full delivery of all services and merchandise under the contract, if the amount on deposit in the trust is greater than the seller’s total current retail price of all services and merchandise under the contract, the remaining amount may but need not be returned to the individual, if any, designated by the purchaser to receive the remainder, or to the purchaser’s estate.

     (i) An escrow account authorized and established under this chapter must:

(1) be irrevocable and require the seller to deposit to escrow all sums or property received from the purchaser;

(2) designate the seller as settlor and beneficiary;

(3) designate a trustee qualified under this chapter and authorize the trustee to charge a reasonable fee for services;

(4) require that the escrow account be maintained in the name of the seller and serve as a depository for all cash or other property received by the seller to fund contracts sold by the seller;

(5) permit the commingling of cash for investment;

(6) permit the seller to withdraw from the escrow account the current retail value of prepaid services or merchandise delivered under this chapter; and

(7) permit any interest earned or appreciation in value of money or other property deposited in escrow to be paid to the seller not more frequently than monthly, to the extent that the total value of the escrow account after a payment under this subdivision is not less than the current retail value of all services and merchandise under the contracts that remain undelivered.

     (j) A trust account or an escrow account established under this chapter:

(1) must include the provisions set forth in either subsection (h) or (i);

(2) may be included as an integral part of a seller’s contract through the execution of an adoption agreement that references the trust account or escrow account; and

(3) is not required to be represented by a separate trust or escrow document for each contract.

     (k) The entire value of an irrevocable trust or an escrow established under this chapter may not be considered as a resource in determining a person’s eligibility for Medicaid under IC 12-15-2-17.

     (l) A contract for prepaid services or merchandise, or both, entered into after June 30, 1997, must contain a statement that:

(1) the purchaser may revoke the contract under subsection (b) within thirty (30) days after the contract is signed; and

(2) after thirty (30) days, the contract is irrevocable.

     (m) This chapter does not prohibit a purchaser from immediately making the trust or escrow required under this chapter irrevocable and assigning ownership of an insurance policy used to fund a contract to obtain favorable consideration for Medicaid, Supplemental Security Income, or another public assistance program under federal or state law.

As added by P.L.241-1995, SEC.7. Amended by P.L.113-1996, SEC.2; P.L.195-1997, SEC.1; P.L.114-1999, SEC.8.

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