523A.201 Establishment of trust funds.
Unless proceeding under section 523A.401, 523A.402, or 523A.403, a seller must establish a trust fund prior to advertising, selling, promoting, or offering cemetery merchandise, funeral merchandise, funeral services, or a combination thereof in this state as follows:
1. The trust fund must be established at a financial institution.
2. If a seller agrees to furnish cemetery merchandise, funeral merchandise, funeral services, or a combination thereof and performance or delivery may be more than one hundred twenty days following the initial payment on the account, a minimum of eighty percent of all payments made under a guaranteed purchase agreement or a minimum of one hundred percent of all payments made under a nonguaranteed purchase agreement shall be placed and remain in trust until the person for whose benefit the funds were paid dies.
3. If a purchase agreement for cemetery merchandise, funeral merchandise, funeral services, or a combination thereof provides that payments are to be made in installments, the seller shall deposit eighty percent of each payment made under a guaranteed purchase agreement and one hundred percent of each payment made under a nonguaranteed purchase agreement in the trust fund until the full amount required to be placed in trust has been deposited. If the purchase agreement is financed with or sold to a financial institution, the purchase agreement shall be considered paid in full and the trust requirements shall be satisfied within fifteen days after the seller receives funds from the financial institution.
4. A seller shall not invade the trust principal for any purpose.
5. Unless a seller deposits all of each payment in a trust fund that meets the requirements of this section and section 523A.202, the seller shall have a fidelity bond or similar insurance in an amount of not less than fifty thousand dollars to protect against the loss of purchaser payments not placed in trust within the time period required by this section and section 523A.202. The commissioner may require a greater amount as the commissioner determines is necessary. If the seller changes ownership, the fidelity bond or similar insurance shall continue in force for at least one year after the transfer of ownership.
6. Payments otherwise subject to this section are not exempt merely because they are held in certificates of deposit.
7. Commingling of trust funds with other funds of the seller is prohibited.
8. Interest or income earned on amounts deposited in trust shall remain in trust under the same terms and conditions as payments made under the purchase agreement, except that a seller may withdraw so much of the interest or income as represents the difference between the amount needed to adjust the trust funds for inflation as set by the commissioner based on the consumer price index and the interest or income earned during the preceding year not to exceed fifty percent of the total interest or income on a calendar-year basis. The early withdrawal of interest or income under this provision does not affect the purchaser’s right to a credit of such interest or income in the event of a nonguaranteed price agreement, cancellation, or nonperformance by such a seller.
9. The commissioner may require amendments to a trust agreement not in accord with the provisions of this chapter.
10. If a seller voluntarily or involuntarily ceases doing business and the seller’s obligation to provide merchandise or services has not been assumed by another seller holding a current preneed seller’s license, all trust funds, including accrued interest or income, shall be repaid to the purchaser within thirty days following the seller’s cessation of business. A seller may petition the commissioner, upon a showing of good cause, for a longer period of time for repayment. A seller shall notify the commissioner at least thirty days prior to ceasing business.
2001 Acts, ch 118, §19; 2007 Acts, ch 175, §6 – 8; 2011 Acts, ch 62, §1, 2
Referred to in §523A.202, 523A.203, 523A.503, 523A.807, 523A.811, 523A.901
Structure Iowa Code
Chapter 523A - CEMETERY AND FUNERAL MERCHANDISE AND FUNERAL SERVICES
Section 523A.101 - Short title.
Section 523A.102 - Definitions.
Section 523A.201 - Establishment of trust funds.
Section 523A.202 - Trust fund deposit requirements.
Section 523A.203 - Financial institution trustees — qualification and investment requirements.
Section 523A.204 - Preneed seller annual reporting requirements.
Section 523A.205 - Financial institution annual reporting requirements.
Section 523A.206 - Examinations — authority and scope.
Section 523A.207 - Report by certified public accountants — penalties — waiver — confidentiality.
Section 523A.301 - Definition.
Section 523A.302 - Identification of merchandise and service provider.
Section 523A.303 - Disbursement of remaining funds.
Section 523A.401 - Purchase agreements funded by insurance proceeds.
Section 523A.402 - Purchase agreements funded by annuity proceeds.
Section 523A.403 - Purchase agreements funded by certificates of deposit.
Section 523A.404 - Merchandise delivered to the purchaser or warehoused.
Section 523A.405 - Bond in lieu of trust fund.
Section 523A.501 - Preneed sellers — licenses.
Section 523A.502 - Sales agents — licenses.
Section 523A.502A - Sales agent annual reporting requirements.
Section 523A.503 - Denial, suspension, revocation, and surrender of licenses.
Section 523A.504 - Appointment of sales agents — fee.
Section 523A.601 - Disclosures.
Section 523A.603 - Security and notice requirements.
Section 523A.604 - Purchase agreements — numbering.
Section 523A.701 - Misleading filings.
Section 523A.702 - Misrepresentations of government approval.
Section 523A.703 - Fraudulent practices.
Section 523A.704 - Violations.
Section 523A.801 - Administration.
Section 523A.802A - Service of process made on the commissioner as the agent for service of process.
Section 523A.803 - Investigations and subpoenas.
Section 523A.805 - Cease and desist orders — injunctions.
Section 523A.806 - Court action for failure to cooperate.
Section 523A.807 - Prosecution for violations of law.
Section 523A.808 - Cooperation with other agencies.
Section 523A.809 - Rules, forms, and orders.
Section 523A.810 - Date of filing — interpretive opinions.
Section 523A.810A - Electronic filing.
Section 523A.811 - Receiverships.
Section 523A.812 - Insurance division regulatory fund.
Section 523A.813 - License revocation — recommendation by commissioner to board of mortuary science.