(a) Every pre-need seller engaged in the business of selling pre-need funeral contracts funded by a trust shall establish a pre-need funeral trust fund. The trust fund shall be established by executing a written trust agreement with a trustee; provided, that a pre-need seller may change the trustee of its trust fund by providing written notice to the commissioner no later than thirty (30) days prior to the change, along with evidence sufficient to the commissioner that the trustee will be able to comply with the requirements of this part. If the commissioner determines that the evidence submitted is insufficient to ensure that the trustee will be able to comply with the requirements of this part, the commissioner may refuse to allow the pre-need seller to change the trustee. If the commissioner does not object to the change of trustee within sixty (60) calendar days of receiving a request, the current trustee shall have not less than ninety (90) calendar days from the date it receives notice of the proposed change to transfer all trust assets related to the pre-need funeral contracts issued by the pre-need seller held by the trustee to the successor trustee. As used in this section, “trustee” means a savings and loan association, bank, savings bank, credit union, or trust company organized under the laws of any state or organized under the laws of the United States.
Terms Used In Tennessee Code 62-5-407
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
Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
Person: includes a corporation, firm, company or association. See Tennessee Code 1-3-105
Pre-need funeral contract: means any agreement, contract or plan requiring the payment of money in advance, whether in a lump sum or installments and whether funded by a pre-need funeral trust or prearrangement insurance policy or combination of a pre-need funeral trust and a prearrangement insurance policy, that is made or entered into with any person, association, partnership, firm or corporation for the final disposition of a dead human body, for funeral or burial services or for the furnishing of personal property or funeral or burial merchandise, wherein the use of the personal property or the funeral or burial merchandise or the furnishing of professional services by a funeral director or embalmer is not immediately required. See Tennessee Code 62-5-403
Pre-need funeral contract beneficiary: means the person upon whose death the pre-need funeral contract will be performed. See Tennessee Code 62-5-403
Pre-need funeral trust: means funds set aside in a trust account held by a trustee to provide for a pre-need funeral contract. See Tennessee Code 62-5-403
Pre-need seller: means a funeral establishment or other individual, firm, partnership, company, corporation, or association that has applied for and has been granted, or that engages in conduct requiring, registration to sell pre-need funeral contracts pursuant to this part. See Tennessee Code 62-5-403
Prearrangement insurance policy: means a life insurance policy, annuity contract, or other insurance contract, or any series of contracts or agreements in any form or manner, issued by an insurance company, that, whether by assignment or otherwise, funds a pre-need funeral contract, the insured or annuitant being the person for whose funeral service the funds were paid. See Tennessee Code 62-5-403
Savings and loan association: includes a building and loan association, a federal or state savings and loan association, a federal savings bank, and any other financial institution, the accounts of which are insured by the [former] federal savings and loan insurance corporation (FSLIC) or any successor [repealed] of such corporation. See Tennessee Code 1-3-105
State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
Trustee: means a state or national bank, federally chartered savings and loan association, state chartered trust company, or, in the reasonable discretion of the commissioner upon the terms and conditions that the commissioner may require, a securities brokerage firm licensed and in good standing with appropriate state and federal regulatory authorities. See Tennessee Code 62-5-403
Trustee: A person or institution holding and administering property in trust.
United States: includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(b)(1) If the pre-need funeral contract purchaser chooses to fund the pre-need funeral contract by a trust deposit or deposits, the pre-need seller shall deposit all funds with the trustee, to be held in trust, within fifteen (15) calendar days of receipt. The pre-need seller, at the time of making the deposit, shall furnish to the trustee the name of each pre-need funeral contract beneficiary and the amount of payment on each for which the deposit is being made.(2) The trustee may establish:
(A) A separate trust fund for each pre-need funeral contract;(B) A single trust fund for all pre-need funeral contracts issued by a pre-need seller; or(C) A single trust fund for all pre-need funeral contracts issued by multiple pre-need sellers.(3) For trusts established pursuant to subdivisions (b)(2)(A) and (b)(2)(B), the trust accounts must be carried in the name of the pre-need seller and the pre-need seller must be based in this state.(4) A trustee managing a trust established pursuant to this section shall manage the trust in accordance with the Tennessee Uniform Prudent Investor Act of 2002, compiled in title 35, chapter 14. However, § 35-14-103(b) does not apply to trusts, or trustees managing a trust, established pursuant to this section.(5) Accounting records for trusts established pursuant to this section must be established and maintained for each individual pre-need funeral contract beneficiary showing the amounts deposited and invested, and interest, dividends, increases, and accretions earned.(6) A trustee managing a trust established pursuant to this section shall:
(A) Provide a semiannual financial report concerning the trust to the department in a manner determined appropriate by the department by rule; and(B) Make accounting records for the trust available to the comptroller of the treasury and the department, upon request, for review and audit.(7) If the trustee uses a board for the management of the trust established pursuant to this section, then the trustee shall maintain insurance on behalf of each board member against liability asserted against or incurred by the board member in that capacity.(c) Funds deposited in trust under a pre-need funeral contract may, with the written permission of the pre-need funeral contract purchaser and written approval of the commissioner, be withdrawn by the trustee and used to purchase a prearrangement insurance policy. The trustee shall disclose, in writing, the terms of the prearrangement insurance policy to the pre-need funeral contract purchaser. Except as provided in this subsection (c), no funds deposited in trust with a trustee pursuant to this section shall be withdrawn by the trustee to purchase a prearrangement insurance policy.(d) No pre-need seller, affiliate of a pre-need seller, or any person directly or indirectly engaged in the burial, funeral home, or cemetery business may act as trustee for any pre-need funeral trust. No pre-need seller, affiliate of a pre-need seller, or any person directly or indirectly engaged in the burial, funeral home, or cemetery business may share in the responsibilities of or direct the actions of the trustee of a pre-need funeral trust fund.(e) It is unlawful to loan pre-need funeral trust funds to a pre-need seller, an affiliate of a pre-need seller, or any person directly or indirectly engaged in the burial, funeral home, or cemetery business. Furthermore, the pre-need seller’s interest in the trust shall not be pledged as collateral for any loans, debts, or liabilities of the pre-need seller and shall not be transferred to any person without the prior written approval from the commissioner and the trustee.
