S*414 Session 108 (1989-1990)
S*0414(Rat #0143, Act #0089 of 1989) General Bill, By J.V. Smith, Bryan,
Courson, Drummond, Giese, J.C. Hayes, R.L. Helmly, D.L. Hinds, C.T. Hinson,
Holland, Leatherman, Leventis, J.M. Long, I.E. Lourie, A.S. Macaulay,
S.S. Martschink, McGill, Moore, M.F. Mullinax, O'Dell, T.H. Pope, M.T. Rose,
Saleeby, Setzler, H.C. Smith, N.W. Smith, H.S. Stilwell and Wilson
A Bill to amend Chapter 7 of Title 32, Code of Laws of South Carolina, 1976,
relating to preneed burial contracts, so as to change the name of the
contracts authorized under the Chapter to preneed funeral contracts, to define
the terms "seller", "provider", "purchaser", and "beneficiary", to require
that when any vault is sold preneed by a seller in accordance with this
Chapter, one hundred percent of actual cost to the seller at the time of
payment must be held as trust funds and deposited in a financial institution,
to require that all taxes on the trust account must be paid in accordance with
the Internal Revenue Code and applicable rules and regulations, to provide for
a funeral contract when the full contract price amount is paid to the
provider, to require that the funds held by a financial institution in trust
for a beneficiary must not be paid until a death certificate is furnished by
the provider, to provide for the refund of amounts deposited with the provider
when they do not constitute payment in full, to provide that all contracts
contain the name and funeral service license number of the provider and
seller, to provide for a procedure for establishing a trust for the purchaser
of a contract and establish requirements with regard to the establishment and
maintenance of a trust account, to provide that the contract is voidable if
the purchaser fails to make payments as provided in the contract, to provide
that if the merchandise selected is not available at the time of need that the
provider must make available to the purchaser merchandise of equal or greater
value which must be approved by the purchaser or his representative, to
provide under what conditions contracts may be made irrevocable, to provide
for a procedure for the refund of monies paid for a contract, to provide a
procedure for the transfer to another provider of a contract, to delete
provisions with regard to the manner in which trust funds must be established
and maintained, to provide for the occurrence of a provider going out of
business, to authorize the Board of Financial Institutions to establish an
amount rather than a two dollar service charge to be collected from each
purchaser to be used in administering the provisions of this Chapter, to
delete provisions making it unlawful for any person other than a funeral
director or home to furnish or perform funeral services to accept or hold
payments on a preneed burial contract except financial institutions, to delete
provisions relating to commissions allowed persons on trust funds which arise
out of a preneed burial contract, to delete provisions which make it unlawful
for a licensee who sells preneed burial contracts to solicit or publicly
advertise the availability of them and to establish a procedure for the
solicitation and advertising of preneed funeral contracts, and to provide for
the prohibition on the solicitation of these contracts, and to amend Section
39-55-35, relating to definitions used in the South Carolina Cemetery Act of
1984, so as to redefine "merchandise."-amended title
02/22/89 Senate Introduced and read first time SJ-4
02/22/89 Senate Referred to Committee on Judiciary SJ-4
03/29/89 Senate Committee report: Favorable with amendment
Judiciary SJ-14
03/30/89 Senate Amended SJ-20
03/30/89 Senate Read second time SJ-22
03/30/89 Senate Ordered to third reading with notice of
amendments SJ-22
04/04/89 Senate Read third time and sent to House SJ-32
04/05/89 House Introduced and read first time HJ-8
04/05/89 House Referred to Committee on Medical, Military,
Public and Municipal Affairs HJ-10
04/25/89 House Committee report: Favorable with amendment
Medical, Military, Public and Municipal Affairs HJ-201
05/09/89 House Amended HJ-29
05/09/89 House Read second time HJ-31
05/10/89 House Read third time and returned to Senate with
amendments HJ-23
05/11/89 Senate Concurred in House amendment and enrolled SJ-14
05/16/89 Ratified R 143
05/22/89 Signed By Governor
05/22/89 Effective date 07/21/89
05/22/89 Act No. 89
05/22/89 See act for exception to or explanation of
effective date
05/26/89 Copies available
(A89, R143, S414)
AN ACT TO AMEND CHAPTER 7 OF TITLE 32, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO PRENEED BURIAL CONTRACTS, SO AS TO CHANGE THE NAME OF THE CONTRACTS
AUTHORIZED UNDER THE CHAPTER TO PRENEED FUNERAL CONTRACTS, TO DEFINE THE TERMS
"SELLER", "PROVIDER", "PURCHASER", AND
"BENEFICIARY", TO REQUIRE THAT WHEN ANY VAULT IS SOLD PRENEED BY A
SELLER IN ACCORDANCE WITH THIS CHAPTER, ONE HUNDRED PERCENT OF ACTUAL COST TO THE
SELLER AT THE TIME OF PAYMENT MUST BE HELD AS TRUST FUNDS AND DEPOSITED IN A
FINANCIAL INSTITUTION, TO REQUIRE THAT ALL TAXES ON THE TRUST ACCOUNT MUST BE
PAID IN ACCORDANCE WITH THE INTERNAL REVENUE CODE AND APPLICABLE RULES AND
REGULATIONS, TO PROVIDE FOR A FUNERAL CONTRACT WHEN THE FULL CONTRACT PRICE
AMOUNT IS PAID TO THE PROVIDER, TO REQUIRE THAT THE FUNDS HELD BY A FINANCIAL
INSTITUTION IN TRUST FOR A BENEFICIARY MUST NOT BE PAID UNTIL A DEATH CERTIFICATE
IS FURNISHED BY THE PROVIDER, TO PROVIDE FOR THE REFUND OF AMOUNTS DEPOSITED WITH
THE PROVIDER WHEN THEY DO NOT CONSTITUTE PAYMENT IN FULL, TO PROVIDE THAT ALL
CONTRACTS CONTAIN THE NAME AND FUNERAL SERVICE LICENSE NUMBER OF THE PROVIDER AND
SELLER, TO PROVIDE FOR A PROCEDURE FOR ESTABLISHING A TRUST FOR THE PURCHASER OF
A CONTRACT AND ESTABLISH REQUIREMENTS WITH REGARD TO THE ESTABLISHMENT AND
MAINTENANCE OF A TRUST ACCOUNT, TO PROVIDE THAT THE CONTRACT IS VOIDABLE IF THE
PURCHASER FAILS TO MAKE PAYMENTS AS PROVIDED IN THE CONTRACT, TO PROVIDE THAT IF
THE MERCHANDISE SELECTED IS NOT AVAILABLE AT THE TIME OF NEED THAT THE PROVIDER
MUST MAKE AVAILABLE TO THE PURCHASER MERCHANDISE OF EQUAL OR GREATER VALUE WHICH
MUST BE APPROVED BY THE PURCHASER OR HIS REPRESENTATIVE, TO PROVIDE UNDER WHAT
CONDITIONS CONTRACTS MAY BE MADE IRREVOCABLE, TO PROVIDE FOR A PROCEDURE FOR THE
REFUND OF MONIES PAID FOR A CONTRACT, TO PROVIDE A PROCEDURE FOR THE TRANSFER TO
ANOTHER PROVIDER OF A CONTRACT, TO DELETE PROVISIONS WITH REGARD TO THE MANNER
IN WHICH TRUST FUNDS MUST BE ESTABLISHED AND MAINTAINED, TO PROVIDE FOR THE
OCCURRENCE OF A PROVIDER GOING OUT OF BUSINESS, TO AUTHORIZE THE BOARD OF
FINANCIAL INSTITUTIONS TO ESTABLISH AN AMOUNT RATHER THAN A TWO DOLLAR SERVICE
CHARGE TO BE COLLECTED FROM EACH PURCHASER TO BE USED IN ADMINISTERING THE
PROVISIONS OF THIS CHAPTER, TO DELETE PROVISIONS MAKING IT UNLAWFUL FOR ANY
PERSON OTHER THAN A FUNERAL DIRECTOR OR HOME TO FURNISH OR PERFORM FUNERAL
SERVICES TO ACCEPT OR HOLD PAYMENTS ON A PRENEED BURIAL CONTRACT EXCEPT FINANCIAL
INSTITUTIONS, TO DELETE PROVISIONS RELATING TO COMMISSIONS ALLOWED PERSONS ON
TRUST FUNDS WHICH ARISE OUT OF A PRENEED BURIAL CONTRACT, TO DELETE PROVISIONS
WHICH MAKE IT UNLAWFUL FOR A LICENSEE WHO SELLS PRENEED BURIAL CONTRACTS TO
SOLICIT OR PUBLICLY ADVERTISE THE AVAILABILITY OF THEM AND TO ESTABLISH A
PROCEDURE FOR THE SOLICITATION AND ADVERTISING OF PRENEED FUNERAL CONTRACTS, AND
TO PROVIDE FOR THE PROHIBITION ON THE SOLICITATION OF THESE CONTRACTS, AND TO
AMEND SECTION 39-55-35, RELATING TO DEFINITIONS USED IN THE SOUTH CAROLINA
CEMETERY ACT OF 1984, SO AS TO REDEFINE "MERCHANDISE."
Be it enacted by the General Assembly of the State of South Carolina:
Preneed funeral contracts
SECTION 1. Chapter 7, Title 32 of the 1976 Code is amended to read:
"CHAPTER 7
Preneed Funeral Contracts
Section 32-7-10. As used in this chapter, unless the context requires
otherwise:
(1) 'Board' means the State Board of Financial Institutions;
(2) 'Financial institution' means a bank, trust company, or savings and loan
association authorized by law to do business in this State;
(3) 'Preneed funeral contract' means a contract, which has for its purpose the
furnishing or performance of funeral services, or the furnishing or delivery of
personal property, merchandise, services of any nature in connection with the
final disposition of a dead human body, to be furnished or delivered at a time
determinable by the death of the person whose body is to be disposed of, but does
not mean the furnishing of a cemetery lot, crypt, niche, mausoleum, grave marker
or monument;
(4) 'Seller' means a licensed funeral director in this State who is directly
employed by the provider;
(5) 'Provider' means a funeral home licensed in this State which is the entity
providing services and merchandise pursuant to item (3) and is designated trustee
of all funds;
(6) 'Purchaser' means the person who is obligated to make payments under a
preneed contract;
(7) 'Beneficiary' means the person who is to be the subject of the
disposition, services, facilities, or merchandise described in a Preneed Contract
subject to item (3).
Section 32-7-20. (A) (1) All payments of money made to any person upon any
agreement or contract or any series or combination of agreements or contracts,
but not including the furnishing of cemetery lots, crypts, niches, mausoleums,
grave markers or monuments, which has for a purpose the furnishing or performance
of funeral services, or the furnishing or delivery of personal property,
merchandise, or services of any nature in connection with the final disposition
of a dead human body, to be furnished or delivered at a time determinable by the
death of the person whose body is to be disposed of, are held to be trust
funds.(2) When any vault is sold preneed by a seller in accordance with this
chapter, one hundred percent of actual cost to the seller at the time of payment
must be held as trust funds and deposited in a financial institution. (3) The
provider receiving the payments is declared to be a trustee of it, and shall
deposit all payments in a financial institution. All of the interest, dividends,
increases, or accretions of whatever nature earned by the funds deposited in a
trust account must remain with the principal of the account and become a part of
it, subject to all of the regulations concerning the principal of the fund
contained in this section. After the death of the beneficiary, the principal and
all accrued earnings must be applied to the cost in effect at the time of death
of the services and merchandise specified in the contract. Any shortfall in the
funds must be paid by the next of kin or the estate of the beneficiary and any
excess must be refunded to the estate of the beneficiary. All taxes on the fund
must be paid in accordance with the Internal Revenue Code and applicable rules
and regulations.
(B) The provider may enter into a contract and guarantee to provide services
and merchandise as provided for in Section 32-7-10(3) in the future at no
additional cost to the purchaser when the full contract price amount is paid to
the provider. After the death of the beneficiary of a guaranteed-price contract,
the principal and all accrued earnings must be paid to the provider to cover the
costs in effect at the time of death of the services and merchandise specified
in the contract.
(C) All payments made under the agreement, contract, or plan are and remain
trust funds with the financial institution until the death of the beneficiary and
until the delivery of all merchandise and full performance of all services called
for by the agreement, contract, or plan, except where payment is made pursuant
to Section 32-7-30.
(D) The funds may not be paid by the financial institution until a certified
death certificate and a certified statement is furnished by the provider to the
financial institution setting forth that all of the terms and conditions of the
agreement have been fully performed. The provider has no obligation to deliver
any merchandise or perform any services for which payment in full has not been
deposited in the financial institution. Any amounts deposited which do not
constitute payment in full may be credited against the cost of merchandise or
services contracted for by representatives of the deceased. Any balance
remaining in the fund after the payment for the merchandise and services as set
forth in the agreement, contract, or plan must be paid to the estate of the
beneficiary of the agreement, contract, or plan pursuant to Section 32-7-20(A)
or paid to the provider of a contract pursuant to Section 32-7-20(B).
(E) Subsections (A) and (B) do not apply to contracts for funeral service or
merchandise funded by insurance policies which are otherwise regulated by law.
(F) The board shall approve forms for preneed funeral contracts. All
contracts must be in writing, and no contract form may be used without prior
approval of the board. Any use or attempted use of an oral preneed funeral
contract or any written preneed funeral contract in a form not approved by the
board is considered to be a violation of this chapter by the person selling
services or merchandise under its provisions; provided, however, that minor
modifications to a contract form furnished or approved by the board shall not
invalidate the contract.
(G) All contracts must contain the name and Funeral Service License Number of
the provider and seller.
(H) All funds received by the provider pursuant to the provisions of a
contract governed by this chapter must be placed in trust in a federally insured
account. The trustee may establish an individual trust for each contract or a
common trust fund may be established with a financial institution which would
maintain accounting for each individual deposit and furnish a quarterly report
to the provider. The trust accounts must be carried in the name of the provider
but accounting records must be maintained showing the amounts deposited and
invested, and interest, dividends, increases, and accretions earned on it, with
respect to each purchaser's contract. The trustee has the authority to transfer
trust funds from one financial institution to another; provided, that the trustee
must notify the purchaser within thirty days thereafter, or the beneficiary, if
the purchaser dies.
(I) All earnings accrue in the trust except that the provider may withdraw ten
percent of the annual earnings of the trust to cover trust administration.
(J) No preneed trust funds or earnings may be used as collateral, pledged, or
in any way encumbered or placed at risk.
(K) If the purchaser fails to make payments as provided in the contract, the
contract is voidable at the option of the provider and he may retain ten percent
of the amount paid on the contract as a fee and return the remaining funds to the
purchaser.
(L) If the merchandise selected is not available at the time of need, the
provider shall make available to the purchaser or his representative merchandise
of equal or greater value. The purchaser or his representative is entitled to
approve any substitutions.
Section 32-7-25. The contracts governed by the provisions of this chapter may
be made irrevocable at the option of the purchaser. If the purchaser selects an
irrevocable contract he must be allowed thirty days to examine the contract.
Within that period, the purchaser may revoke his decision to enter this contract
and all monies paid by the purchaser must be refunded.
Section 32-7-30. (A) Within thirty days of receipt of a written demand for
refund by any purchaser who has paid funds for a preneed funeral contract
pursuant to Section 32-7-20(A) or (B) the trustee shall refund to the purchaser
the entire amount paid together with all interest, dividends, increases, or
accretions earned on the fund except that the provider will retain ten percent
of the earnings in the portion of the final year before termination.
(B) After making refund to the trustee pursuant to the provisions of
subsection (A) or (B), the financial institution is relieved from further
liability to any party.
(C) This section does not apply if the contract is irrevocable.
Section 32-7-35. A preneed funeral contract may be transferred to another
provider only at the prior written request of the purchaser or the beneficiary
if the purchaser dies before the beneficiary, or pursuant to Section 32-7-45.
The selling provider must be paid a fee equal to ten percent of the contract face
amount. The selling provider also must be paid ten percent of the earnings in
that portion of the final year before transfer.
Section 32-7-40. All trust funds mentioned in this chapter must be deposited
in the name of the trustee, as trustee, within thirty days after receipt.
Section 32-7-45. If the provider goes out of business, it shall negotiate with
the purchaser to transfer the trust fund to a provider of the purchaser's choice.
The selling provider forfeits its right to any monies it otherwise would be
entitled to.
Section 32-7-50. (A) No person may, without first securing from the board a
license, accept or hold payments made on a preneed funeral contract, except
financial institutions. Application for a license must be in writing, signed by
the applicant and duly verified on forms furnished by the board. Each
application must contain at least the following: the full name and address (both
residence and place of business) of the applicant, and every member, officer, and
director of it if the applicant is a firm, partnership, association, or
corporation. Any license issued pursuant to the application must be valid only
at the address stated in the application for the applicant or at a new address
approved by the board.
(B) Upon receipt of the application, a one-time payment of a license fee, and
the deposit in an amount to be determined by the board of such security or proof
of financial responsibility as the board may determine, the board shall issue
a license unless it determines that the applicant has made false statements or
representations in the application, or is insolvent, or has conducted his
business in a fraudulent manner, or is not duly authorized to transact business
in this State, or if in the judgment of the board, the applicant should be denied
a license for some other good and sufficient reason.
(C) A person selling a preneed funeral contract shall collect from each
purchaser a service charge in an amount to be established by the board, and all
fees collected must be remitted by the person collecting them to the board at
least once each month, and these funds must be used by the board in administering
the provisions of this chapter.
Section 32-7-60. (VACANT)
Section 32-7-70. The provider shall keep accurate accounts, books, and records
in this State of all transactions, copies of all agreements, dates, and amounts
of payments made and accepted on them, the names and addresses of the contracting
parties, the persons for whose benefit funds are accepted, and the names of the
depositories of the funds. The provider shall make all books and records
pertaining to the trust funds available to the board for examination. The board
may at any reasonable time investigate the books, records, and accounts of the
provider with respect to its trust funds and for that purpose may require the
attendance of and examine under oath all persons whose testimony it may require.
Section 32-7-80. (VACANT)
Section 32-7-90. (A) Any contract seller, provider, agent, employee, or
person acting in behalf of one of these persons may not:
(1) directly or indirectly call upon individuals or persons in hospitals,
rest homes, nursing homes, or similar institutions for the purpose of soliciting
preneed funeral contracts or making funeral or final disposition arrangements
without first having been specifically requested by the person to do so;
(2) directly or indirectly employ any agent, assistant, employee,
independent contracting person, or any other person to call upon individuals or
persons in hospitals, rest homes, nursing homes, or similar institutions for the
purpose of soliciting preneed funeral contracts or making funeral or final
disposition arrangements without first having been specifically requested by the
person to do so;
(3) solicit relatives of persons whose death is apparently pending or whose
death has recently occurred for the purpose of providing funeral services, final
disposition, burial, or funeral goods for the person;
(4) solicit or accept or pay any consideration for recommending or causing
a dead human body to be provided funeral services and funeral and burial goods
by specific persons, or the services of a specific crematory, mausoleum, or
cemetery except where the arrangement is the subject of a preneed funeral
contract;
(5) solicit by telephone call or by visit to a personal residence, unless
the solicitation has been previously requested by the person solicited or by a
family member residing at the residence.
(B) Nothing in this chapter may be construed to restrict the right of a person
to lawfully advertise, to use direct mail or otherwise communicate in a manner
not within the above prohibition of solicitation or to solicit the business of
anyone responding to the communication or otherwise initiating discussion of the
goods or services being offered.
(C) Nothing in this chapter may be construed to prohibit general advertising.
(D) Anyone making a personal or written solicitation for a preneed funeral
contract shall, as soon as possible, divulge the real reason for the contract or
solicitation.
(E) The board may adopt regulations regulating the solicitation of preneed
contracts by sellers and providers and their agents and employees to protect the
public from solicitation practices which utilize undue influence or which take
undue advantage of a person's ignorance or emotional vulnerability.
Section 32-7-100. Any person wilfully violating the provisions of this chapter
is guilty of a misdemeanor and, upon conviction, must be fined not less than five
hundred dollars nor more than one thousand dollars, or be imprisoned for not less
than ten days nor more than six months, or both. In addition, this person may
be prohibited from entering into any further preneed funeral contracts if the
board, in its discretion, finds that the offense is sufficiently grievous. The
revocation of a license under this section may be appealed to the circuit court
in the licensee's county of residence.
Section 32-7-110. The board shall enforce the provisions of this chapter and
has the power to make investigations, subpoena witnesses, require audits and
reports, and conduct hearings as to violations of any provisions, and to
promulgate such regulations as are necessary to carry out the provisions of this
chapter.
Section 32-7-120. Nothing in this chapter of Title 32 modifies, abridges, or
repeals any provision of Chapter 55 of Title 39. This chapter shall apply only
to preneed funeral contracts sold by funeral homes licensed in this State and
their licensed directors.
Section 32-7-130. Nothing in this chapter or in Chapter 55 of Title 39
precludes the sale at need of granite, memorials, or vaults by a licensed funeral
director. However, a licensed funeral director may sell only vaults preneed in
accordance with this chapter."
Definition
SECTION 2. Item 12 of Section 39-55-35 of the 1976 Code is amended to read:
"12. 'Merchandise' means items used in connection with grave space,
niches, mausoleum crypts, granite, memorials, or vaults; provided, however,
merchandise shall expressly exclude burial caskets, clothing, cremation urns,
professional services, facilities used for preparation, viewing or services, and
automotive equipment and transportation. Items expressly excluded under the
definition of merchandise in this provision shall be governed by Chapter 7 of
Title 32."
Time effective
SECTION 3. This act takes effect sixty days after approval by the Governor. |