Florida Statutes 497.464 – Alternative preneed contracts
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(1) Nothing in this chapter shall prevent the purchaser and the preneed licensee from executing a preneed contract upon the terms stated in this section. Such contracts shall be subject to this chapter except:
(a) Section 497.454(2).
Terms Used In Florida Statutes 497.464
- 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
- 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
- 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
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- 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.
- Grantor: The person who establishes a trust and places property into it.
- Income: means earnings on trust assets, including interest, dividends, and other income earned on the principal. 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
- Net income: means , in relation to a trust, ordinary income minus any income distributions for items such as trust expenses. See Florida Statutes 497.005
- Person: when used without qualification such as "natural" or "individual" includes both natural persons and legal entities. See Florida Statutes 497.005
- Preneed: 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
- Preneed contract: means any arrangement or method for which the provider of funeral merchandise or services receives any payment in advance for funeral or burial merchandise and services after the death of the contract beneficiary. 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
- Rules: refers to rules adopted under this chapter unless expressly indicated to the contrary. See Florida Statutes 497.005
- service: means any service offered or provided in connection with the final disposition, memorialization, interment, entombment, or inurnment of human remains or cremated remains. See Florida Statutes 497.005
- Servicing agent: means any person acting as an independent contractor whose fiduciary responsibility is to assist both the trustee and licensee in administrating their responsibilities pursuant to this chapter. See Florida Statutes 497.005
- Trustee: A person or institution holding and administering property in trust.
- writing: includes handwriting, printing, typewriting, and all other methods and means of forming letters and characters upon paper, stone, wood, or other materials. See Florida Statutes 1.01
(b) Section 497.457.
(c) Section 497.459(1), (2), and (4).
(d) Section 497.460.
(e) Section 497.462.
(2) The contract must require that a trust be established by the preneed licensee on behalf of, and for the use, benefit, and protection of, the purchaser and that the trustee must be a trust company, a national or state bank holding trust powers, or a federal or state savings and loan association holding trust powers.
(3) The contract must require that the purchaser make all payments required by the contract directly to the trustee or its qualified servicing agent, subject to the terms of a trust instrument approved by the licensing authority. The licensing authority may adopt rules establishing procedures and forms for the submission of trust instruments for approval by the licensing authority, establishing criteria for the approval of such trust instruments, and specifying information required to be provided by the applicant in connection with submission of a trust instrument for approval. A copy of the trust instrument shall be made available to the purchaser, at any reasonable time, upon request.
(4) The contract or trust instrument shall expressly state that the preneed licensee does not have any dominion or control over the trust or its assets, except to the extent that subsection (6) applies, until such time as the preneed contract is entirely completed or performed.
(5) The trust instrument shall prohibit the trustee from distributing any appreciation on the trust to any person and shall require that the trustee accumulate the entire net income of the trust, or its pro rata share thereof. The accumulated net income shall be distributed to the preneed licensee upon cancellation or performance of the contract.
(6) The contract and trust instrument may provide that the preneed licensee may receive a current distribution of not more than 10 percent of all funds paid or collected by the trustee and may further provide for liquidated damages during the first 3 years after the execution of the contract of not more than 10 percent of all the funds paid on the preneed contract, except that no liquidated damages shall apply for cancellation within 30 days of the date of execution of the contract.
(7) The trustee shall disburse funds discharging a preneed contract to the person issuing or writing the contract upon the trustee’s receipt of a certified copy of the contract beneficiary‘s death certificate or satisfactory evidence, as the licensing authority shall define by rule, that the preneed contract has been performed in whole or in part. However, if the contract is only partially performed, the disbursement shall cover only that portion of the contract performed. In the event of any contract default by the contract purchaser, or in the event that the funeral merchandise or service contracted for is not provided or is not desired by the purchaser or the heirs or personal representative of the contract beneficiary, the trustee shall return, within 30 days after its receipt of a written request therefor, funds paid on the contract to the contract purchaser or to her or his assigns, heirs, or personal representative, subject to the lawful liquidation damage provision in the contract.
(8) The contract shall provide, in conspicuous type, that the purchaser may receive a federal income tax informational statement, pursuant to the grantor trust rules of ss. 671 et seq. of the Internal Revenue Code of 1986, as amended, from the trustee reflecting all of the income earned by the trust; and, accordingly, the purchaser should seek the advice of an independent tax professional for the tax impact upon the purchaser as a result of executing the preneed contract.
(9) The contract may provide that the preneed licensee may cancel the contract, but only in the event that the purchaser is more than 90 days in default of the terms of the contract; and, unless subject to the provisions of s. 497.459(5), must provide that the purchaser, or her or his representative, has the right, at any time prior to the performance of the contract, to cancel the preneed contract and revest title to all the funds paid on the preneed contract, except for applicable liquidated damages, and the preneed licensee’s rights in the net income of the trust.
(10) The contract or trust agreement may require the trustee to invest in solely tax-free investments.
(11) In the event the parties execute a contract pursuant to this section, the purchaser shall be deemed, and treated for all purposes, as the settlor of the trust established thereunder.