§ 453. Moneys paid in connection with agreements for funeral merchandise or services in advance of need to be kept on deposit pending use or repayment. 1. (a) Any and all moneys paid to a funeral firm, funeral director, undertaker, cemetery, or any other person, firm or corporation, under or in connection with an agreement, or any option to enter into an agreement, for the sale of merchandise to be used in connection with a funeral or burial, or for the furnishing of personal services of a funeral director or undertaker, wherein the merchandise is not to be actually physically delivered or the personal services are not to be rendered until the occurrence of the death of the person for whose funeral or burial such merchandise or services are to be furnished shall continue to be the money of the person making such payment and shall be held in trust for such person by the funeral firm, funeral director, undertaker, cemetery or any other person, firm or corporation to whom such payment is made and shall, within ten business days of receipt, be deposited in an interest bearing account in a bank, national bank, federal savings bank, federal savings and loan association, savings bank, savings and loan association, credit union, or federal credit union within the state and duly authorized to receive deposits in the state of New York and which shall earn interest at a rate which shall be at not less than the prevailing rate of interest earned by other such deposits in such banks, savings banks, savings and loan associations, or credit unions under this section, or shall be placed in a trust company in an investment backed by the government of the United States and shall not be commingled with other moneys of the funeral firm, funeral director, undertaker, cemetery, or other person, firm or corporation or become the funds of the funeral firm, funeral director, undertaker, cemetery, or other person, firm or corporation, and shall be so held on deposit, together with any interest thereon with interest earned being accrued daily and credited monthly, until said merchandise has been actually physically delivered and said personal services have been rendered, unless sooner repaid, in whole or in part. No funeral firm, funeral director, undertaker, cemetery or any other person, firm or corporation, shall discharge the obligation established under this section to deposit or place money with a bank, national bank, federal savings bank, federal savings and loan association, savings bank, savings and loan association, credit union, federal credit union or trust company within the state through a surety bond or other financial instrument unless expressly provided under this section.

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(b) Such funeral firm, funeral director, undertaker, cemetery, or other person, firm or corporation which received such moneys shall, within thirty business days after the deposit or any change in the institution in which such funds are deposited, provide written notification to the person who made such payment of the institution of the deposit and, until such moneys have been repaid or the personal services and merchandise have been provided, shall annually provide the person who made such payment with a statement identifying the location and annual interest earned by the account.

(c) Upon request of the person who made such payment, or his or her representative, the funeral firm, funeral director, undertaker, cemetery or other person, firm or corporation which received such moneys shall provide a statement within thirty days of such request identifying the location of the account, amount of such account and interest earned on such account. Upon the provision of any merchandise or personal services in connection with any such agreement, the funeral firm, funeral director, undertaker, cemetery or other person, firm or corporation which received such moneys shall provide a statement itemizing the merchandise or personal services provided and the cost of such merchandise or personal services and describing the disposition of all moneys in the account. Copies of such statements and the records on which they are based shall be made available for inspection and shall be made available during ordinary business hours for copying upon written request by any state agency regulating the funeral firm, funeral director, undertaker, cemetery or other person, firm or corporation which received such money or enforcing the requirements of this section, provided a complaint, either oral or written, has been received, or an inspector has grounds to believe that serious or repeat violations of this section have occurred.

(d) Moneys paid for such an agreement for an applicant or recipient of supplemental security income benefits under § 209 of the social services law or of medical assistance under section three hundred sixty-six of such law, or moneys paid by such an applicant or recipient for such an agreement for his or her family member, shall be placed into a trust which shall be irrevocable but under which such applicant/recipient reserves the right to select any funeral firm, funeral director, undertaker, cemetery or any other person, firm or corporation to whom such payment is made and to change such selection any time to any type of funeral or any funeral firm, funeral director, cemetery or any other person, firm or corporation to whom such payment is made, located in the state of New York or any other state. Any such change must be carried out within ten business days following receipt of a request by the purchaser to the funeral firm, funeral director, cemetery or any other person, firm or corporation to whom such payment is made, with which such trust was established. This requirement is subject to any limits set forth in federal law or regulation pertaining to disregarded resources or income.

2. The amount of any and all moneys paid under or in connection with such an agreement, together with interest, if any, accrued thereon while on deposit as so required shall be repaid on demand at any time prior to the delivery of the merchandise and/or the rendering of the personal services. No administrative, consultation or other fee may be assessed against the person making such payment in connection with or planning for such agreement. Provided, however, neither the applicant, recipient or other purchaser of preneed funeral goods or services through an irrevocable trust, their legal representative nor the heirs of such person, shall be entitled to any repayment of the moneys which created such trust.

3. Any such agreement must be in writing and must:

(a) Identify all moneys paid or to be paid; and

(b) Identify any fees paid to the person administering such trust fund by a third party, provided, however, any such fees shall not exceed seventy-five hundredths of one percent of the amount of such trust fund; and

(c) Except for an irrevocable trust established pursuant to § 209 of the social services law or paragraph (d) of subdivision one of this section, notify the person making such payment of his or her right to be repaid moneys paid, together with accrued interest, as described in this section and of his or her right to receive an annual statement; and

(d) Identify the provider of each service or item of merchandise to the extent agreed upon, and fully describe the service or merchandise to the extent agreed upon; and

(e) Describe the obligations of each party:

(i) in the event the service or merchandise described in the agreement cannot, for reasons beyond the control of the parties, be provided when needed;

(ii) in the event the cost of such services or merchandise, when such services or merchandise is to be provided, exceeds the amount of the moneys paid and accrued interest; and

(iii) in the event the amount of the moneys paid and accrued interest exceeds the cost of such services or merchandise when they are to be provided. If the agreement does not provide to the contrary, the services or merchandise described in the agreement must be provided for no more than the price stated therein. Except for an irrevocable trust established pursuant to § 209 of the social services law or paragraph (d) of subdivision one of this section, any moneys in excess of the amount set forth in the agreement must be repaid to the person who made the payment or to the estate of such person. The agreement must also specify the name and address of a person not living at the address of the person who made payments under or in connection with the agreement, to whom required notices may be sent if the person who made payments under or in connection with the agreement cannot be contacted. The person making such payments may decline in writing to specify the name and address of a person not living at the address of the person making such payments to whom such notice may be sent; and

(f) With respect to an agreement for an irrevocable trust fund pursuant to § 209 of the social services law or paragraph (d) of subdivision one of this section, include the following statement in the agreement in conspicuous print of at least twelve point type:

DISCLOSURE

NEW YORK LAW REQUIRES THIS AGREEMENT TO BE IRREVOCABLE FOR APPLICANTS FOR AND RECIPIENTS OF SUPPLEMENTAL SECURITY BENEFITS UNDER SECTION TWO HUNDRED NINE OF THE SOCIAL SERVICES LAW OR OF MEDICAL ASSISTANCE UNDER SECTION THREE HUNDRED SIXTY-SIX OF THE SOCIAL SERVICES LAW, AND FOR THE MONEYS PUT INTO A TRUST UNDER THIS AGREEMENT TO BE USED ONLY FOR FUNERAL AND BURIAL EXPENSES. WHETHER THE AGREEMENT IS FOR YOUR FUNERAL AND BURIAL EXPENSES OR FOR THOSE OF A FAMILY MEMBER, IF ANY MONEY IS LEFT OVER AFTER YOUR FUNERAL AND BURIAL EXPENSES HAVE BEEN PAID, IT WILL GO TO THE COUNTY. YOU MAY CHANGE YOUR CHOICE OF FUNERAL HOME AT ANY TIME. IF THIS AGREEMENT IS FOR THE FUNERAL AND BURIAL EXPENSES OF A FAMILY MEMBER, AFTER YOUR DEATH SUCH FAMILY MEMBER MAY CHANGE THE CHOICE OF FUNERAL HOME AT ANY TIME.

(g) Any promotional literature prepared after January first, nineteen hundred ninety-seven by a funeral firm, funeral director, undertaker, cemetery, or any other person, firm or corporation for prearranged funeral and burial services must contain language disclosing the irrevocable nature of burial trusts established by or for an applicant or recipient of supplemental security income benefits or medical assistance.

4. Any provision of any such agreement whereby a person who pays money under or in connection therewith waives any provision of this section shall be void.

5. (a) Upon the sale or transfer of any business, firm, corporation or other entity having received moneys in connection with such agreements or the transfer of control over such money, both the new owner and former owner or the estate of the former owner, or both the persons currently and formerly having control over such money, shall, within thirty days of such sale or transfer, notify, in writing, each such person who has paid moneys of the sale or transfer, including the name and address of the new and former owner. Copies of such notification shall be made available for inspection and shall be made available during ordinary business hours for copying upon written request by any official or agency having jurisdiction.

(b) Upon the sale or other transfer of any business, firm, corporation or other entity having received moneys in connection with such agreements or upon any transfer of control over such moneys, the transferee shall be liable for compliance with all provisions of this section including the repayment of any moneys and provision of funeral merchandise and services, and for compliance with all other requirements of this section if the transferor or a transferor's predecessor in interest was liable for such compliance with the requirements of this section. Such liability shall attach whether or not the successor in interest has, upon conveyance of such business, firm, corporation or other entity, received such moneys or has knowledge of the existence of the agreement as herein described. Such liability shall attach where there is proof of a valid agreement for providing funeral merchandise and services, and the funeral director, undertaker, cemetery or other person, firm or corporation has not refunded the moneys received from the customer.

(c) Upon the sale or other transfer of any business, firm, corporation or other entity having received such moneys, or upon a transfer of control of such moneys, the transferor shall disclose a complete accounting of all moneys transferred pursuant to such agreement to the transferee, including the names and addresses of all persons who deposited moneys with such business, firm, corporation or other entity, the amount and location of such moneys, the names and addresses of persons who have received refunds and the amount of such refund.

(d) Upon the termination, cessation of operation or discontinuance of any business, firm, corporation or other entity which has received moneys in connection with such agreements or is otherwise liable for compliance with the requirements of this section, such business, firm, corporation or other entity shall repay all such monies and accrued interest as if a demand had been made therefor within thirty days of such termination or discontinuation. Copies of records relating to the repayment of such moneys shall be available for inspection and shall be made available during ordinary business hours for copying upon written request by the appropriate official or agency having jurisdiction.

6. Any person, firm or corporation who or which, having received any moneys under or in connection with such an agreement, shall knowingly and willfully fail to deposit or keep such moneys on deposit shall be guilty of a misdemeanor or, shall knowingly and willfully fail to provide the notification required pursuant to subdivision five of this section shall be guilty of a violation. Any person, firm or corporation who or which, having received any moneys under or in connection with such an agreement, or who or which is deemed responsible for such moneys pursuant to subdivision five of this section shall, without lawful reason, knowingly and willfully fail to repay, upon demand, any and all such moneys as provided in this section, or shall knowingly and willfully misappropriate such money for a use not authorized in this section, shall, in addition to any other penalties provided by law, be guilty of a misdemeanor.

7. Whenever there shall be a violation of this section an application may be made by the attorney general in the name of the people of the state of New York to a court or justice having jurisdiction by a special proceeding to issue an injunction, and upon notice to the defendant of not less than five days, to enjoin and restrain the continuance of such violation; and if it shall appear to the satisfaction of the court or justice that the defendant has, in fact, violated this section, an injunction may be issued by the court or justice, enjoining and restraining any further violations, without requiring proof that any person has, in fact, been injured or damaged thereby. In any such proceeding, the court may make allowances to the attorney general as provided in paragraph six of subdivision (a) of § 8303 of the civil practice law and rules, and direct restitution. Whenever the court shall determine that a violation of this section has occurred, the court may impose a civil penalty of not more than one thousand dollars for each violation; provided, however, the court shall not impose a civil penalty in any case where the department of health has imposed such a penalty for an identical violation of the provisions of the public health law. In connection with any such proposed application the attorney general is authorized to take proof and make a determination of the relevant facts and to issue subpoenas in accordance with the civil practice law and rules, and direct restitution.

8. Records required by this section to be maintained and true copies of agreements shall be retained for four years following the provisions of funeral merchandise and services or, if a preneed administrator, for four years after final payment is disbursed pursuant to the agreement. In the event the funds are returned to the person who deposited the money or their representative, such records, including the record of return of funds shall be retained for a period of four years after the sale, transfer, termination, cessation of operation or discontinuance of the funeral. For purposes of this section, records shall include, but not be limited to, a copy of the agreement, a death certificate and a copy of the check or other payment made pursuant to the agreement. Copies of such records shall be made available for inspection and shall be made available during ordinary business hours for copying upon written request by any state agency regulating the funeral firm, funeral director, undertaker, cemetery or other person, firm or corporation which received such money or enforcing the requirements of this section, provided a complaint, either oral or written, has been received, or an inspector has grounds to believe that serious or repeat violations of this section have occurred.

9. This section shall not apply to the sale of lots or graves by a cemetery.

10. For the purposes of this section, "preneed administrator" means any person, partnership, firm, limited liability company or corporation, which is either domiciled in or doing business in the state of New York, and which has received money under or in connection with an agreement executed pursuant to this section; and "county" shall refer only to a county located within the state of New York. For the purposes of subdivision five of this section, "preneed administrator" shall also include any successor, assignee or transferee of funds held pursuant to this section.

11. Notwithstanding any other provision of law to the contrary, the following provisions shall be applicable to each preneed administrator of written preneed accounts, both revocable and irrevocable:

(a) The assets of such an account shall be deemed abandoned as of the later of (i) three years after the date of death of the person for whose funeral or burial such assets were to be used; or (ii) one year after the preneed administrator has determined that the person for whose funeral or burial such assets were to be used has died if such death occurred less than two years prior to such determination. The preneed administrator shall make reasonable attempts to determine if the person for whose funeral or burial such assets were to be used has died, using available information from federal and state sources. Upon the death of a person for whose funeral or burial such merchandise or services are to be furnished, the preneed administrator shall determine the name and address of the funeral director who performed the funeral services. If the preneed administrator determines that the funeral director has been paid in full for the funeral services, and if the account is irrevocable, the preneed administrator shall, on or before the tenth day of March in each year, transfer the assets of such account to the indigent care burial fund for the county in which the person for whose funeral or burial such assets were to be used resided at the date of his or her death. If the preneed administrator determines that the funeral director has been paid in full for the funeral services, and if the account is revocable, the preneed administrator shall, on or before the tenth day of March in each year, pay or deliver to the state comptroller pursuant to § 1315 of the abandoned property law, the assets of such account which was deemed to have been abandoned as of the thirty-first day of December of such calendar year.

(1) Upon the death of a person for whose funeral or burial such merchandise or services are to be furnished, if the preneed administrator determines that the funeral director has not been paid in full for the funeral services, the preneed administrator shall pay the funeral director for the funeral services upon receipt of the required documentation for paying claims for funeral services. If the balance due is more than the cost of the funeral services, the preneed administrator shall transfer the remaining balance, if an irrevocable account, to the indigent care burial fund as provided in this paragraph, or, if a revocable account, to the state comptroller as provided in this paragraph.

(2) Upon the death of a person for whose funeral or burial such merchandise or services are to be furnished, and with reasonable efforts, the preneed administrator cannot determine the name and address of the funeral director who provided the funeral services, the preneed administrator, if the account was irrevocable, shall transfer the assets of such account to the indigent care burial fund for the county in which the person for whose funeral or burial such merchandise or services are to be furnished resided at the time the irrevocable account was established, such transfer to be made as described in this paragraph. The preneed administrator, if the account was revocable, shall pay or deliver the assets of such account to the state comptroller, such transfer to be made as described in this paragraph.

(b) If the preneed administrator is not able to determine a current proper address of an account for the person for whose funeral or burial such merchandise or services are to be furnished such that the annual statements mailed regarding the account are returned to the preneed administrator as undeliverable, and such administrator cannot, after making reasonable efforts, determine a current and proper address for the person for whose funeral or burial such merchandise or services are to be furnished, the account shall be deemed dormant if (i) the preneed administrator has not been able to determine a correct address for the person for whose funeral or burial such merchandise or services are to be furnished for a period of fifteen consecutive years, and (ii) based upon the information contained in the written agreement the preneed administrator can determine that, if the person for whose funeral or burial such merchandise or services are to be furnished were then living, the person for whose funeral or burial such merchandise or services are to be furnished would have reached the age of one hundred fifteen years.

(1) If the account is deemed dormant as defined in this paragraph, the preneed administrator shall transfer the assets of such account, if it is an irrevocable account, to the indigent care burial fund for the county in which the person for whose funeral or burial such merchandise or services are to be furnished resided at the time the irrevocable account was established. The administrator shall transfer the assets of such account, if it is a revocable account, to the state comptroller as provided in paragraph (a) of this subdivision.

(2) Nothing contained in this subdivision shall prevent a person for whose funeral or burial such merchandise or services are to be furnished, if an irrevocable account, or a funeral home which provided funeral services to the person for whose funeral or burial such merchandise or services are to be furnished, or a person who has paid for funeral services for which an irrevocable account was established, from requesting and receiving the lesser of (i) the actual cost or amount paid for the funeral, or (ii) the amount transferred to the indigent burial fund, in the event that the person for whose funeral or burial such merchandise or services are to be furnished is living, or that the funeral services for the person for whose funeral or burial such merchandise or services are to be furnished were not paid in full, or that a person has paid for funeral services for which an irrevocable account was established. Nothing contained in this subdivision shall prevent a person otherwise authorized by law to seek reimbursement of the funds from a revocable account pursuant to the applicable provisions of the abandoned property law.

12. A preneed administrator operating under this section shall conduct an audit of all of its accounts relating to preneed agreements as of the thirty-first of December of each calendar year. The audit shall:

(a) Be performed by a certified public accountant licensed to practice in New York state;

(b) Be completed and delivered to the preneed administrator within one hundred twenty days of the end of such calendar year;

(c) Verify, by way of a representative sample, that the preneed administrator has a signed copy of the agreement for each account;

(d) Verify, by way of a representative sample, that appropriate income tax reports have been sent by the preneed administrator to the owner of each account;

(e) Verify that the investment of all funds for the agreements is in compliance with this section;

(f) Verify, by an appropriate sampling method, that the earnings on the investments are being properly applied to each account and that the earnings are credited to each account at least monthly;

(g) Express an opinion that the financial statements of the preneed administrator fairly represent the financial condition of the funds received in all material respects, and that all financial information distributed by the preneed administrator to consumers, funeral homes or other parties is accurate; and

(h) Verify that the stated yield credited to the account for that fiscal year, as announced by the preneed administrator, is accurate.

13. (a) In no event shall the administrative fees charged under a preneed agreement in any calendar year exceed the net income credited to an account for such calendar year; that is, the account balance shall never be reduced in any calendar year because of administrative fees charged against the account.

(b) Any administrative fees otherwise payable in relation to preneed agreements which are not paid in any calendar year because of the limitations in paragraph (a) of this subdivision shall not be collected in any subsequent calendar year.

14. A preneed administrator operating under this section shall, at the end of each calendar year, have all assets valued and presented in accordance with generally accepted accounting principles.