H. B. 4504
(By Delegate Butcher)
[Introduced February 20, 1998; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact sections one, two, four, five, seven,
eight, nine and ten, article five-b, chapter thirty-five of
the code of West Virginia, one thousand nine hundred
thirty-one, as amended; and to further amend said article by
adding thereto a new section, designated section nineteen,
all relating to including preneed crematory company
contracts to regulation pursuant to the provisions of
article five-b, chapter thirty-five, which currently solely
apply to preneed cemetery company contracts.
Be it enacted by the Legislature of West Virginia:
That sections one, two, four, five, seven, eight, nine and
ten, article five-b, chapter thirty-five of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
amended and reenacted; and that said article be further amended
by adding thereto a new section, designated section nineteen, all to read as follows:
ARTICLE 5B. PRENEED CEMETERY COMPANY OR PRENEED CREMATORY
COMPANY PROPERTY, GOODS AND SERVICES; RELATED
CONTRACTS.
§35-5B-1. Definitions.
The following words and phrases as used in this article,
unless a different meaning is clearly indicated by the context,
have the following meanings:
(1) "Burial vault" means a protective container for a casket
which is used to prevent a grave from sinking.
(2) "Cemetery" means and includes all land and appurtenances
including roadways, office buildings, outbuildings and other
structures used or intended to be used for or in connection with
the interment of human remains. The sprinkling of ashes or their
burial in a biodegradable container on church grounds or their
placement in a columbarium on church property does not constitute
the creation of a cemetery.
(3) "Cemetery company,"
crematory company or "seller" means
any person, partnership, firm or corporation engaged in the
business of operating a cemetery
or crematory or selling
property, goods or services used in connection with interring,
cremating or disposing of the remains or commemorating the memory
of a deceased human being, where delivery of the property or
goods or performance of the service may be delayed later than one hundred twenty days after receipt of the initial payment on
account of such sale. Such property, goods or services include,
but are not limited to, burial vaults, mausoleum crypts, lawn
crypts, memorials, marker bases,
alternative caskets, cremation
interment containers, urns and opening and closing and/or
interment services, but do not include graves or incidental
additions such as dates, scrolls or other supplementary matter
representing not more than ten percent of the total contract
price.
(4) "Alternative casket" means a receptacle, other than a
casket, in which human remains are transported to a crematory and
placed in a creation chamber for cremation.
(5) "Cremation" means the technical process, using heat and
flame, that reduces human remains to bone fragments, and shall
include the processing, and may include the pulverization, of
bone fragments.
(6) "Crematory" means the building or portion of a building
that houses the holding facility and the cremation room in which
the cremation chamber is located. A crematory must be owned and
operated by a West Virginia funeral establishment licensed by the
West Virginia board of funeral directors and embalmers; must have
been issued a permit to conduct cremations by the West Virginia
division of environmental protection; and must meet all
environmental requirements imposed upon cremation chambers and the process of cremation by all federal, state and local
regulatory agencies having jurisdiction over the construction,
installation and operation of the process of cremation of human
remains.
(7) "Cremation interment container" means a rigid outer
container composed of concrete, steel, fiberglass or similar
material in which an urn is placed prior to being entered into
the ground.
(4) (8) "Commissioner" or "tax commissioner" means the
secretary of the West Virginia department of tax and revenue.
(5) (9) "Compliance agent" means a natural person who owns
or is employed by a cemetery company
or crematory company to
assure the compliance of the cemetery company
or crematory
company with the provisions of this article.
(10) "Division" means the West Virginia division of
environmental protection.
(11) "Funeral director" means a person licensed by the state
of West Virginia to practice funeral directing or funeral
directing and embalming.
(12) "Funeral establishment" means a building or separate
portion of a building licensed by the state of West Virginia,
which is devoted to activities relating to the shelter, care,
custody and preparation of a deceased human body.
(13) "Urn" means a receptacle designed to encase cremated remains with the deceased's name, date of birth and date of death
permanently inscribed thereon.
(6) (14) "Cost requirement" means the total cost to the
seller of the property, goods or services subject to the deposit
requirements of section four of this article required by that
seller's total contracts.
(7) (15) "Delivery" means that the seller has transferred
physical possession of the identified goods, has attached or
installed such goods at the designated interment space or has
actually furnished preneed cemetery company contract services
or
preneed crematory company contract services. In the case of
preneed goods which are identified with the name of the buyer or
other contract beneficiary, "delivery" may also occur when: (A)
The seller pays for and stores the goods at the cemetery
or
crematory where they are intended to be used; or (B) the seller
has paid the supplier of such goods and the supplier has caused
such merchandise to be manufactured and stored, has caused title
to such merchandise to be transferred to the buyer or other
contract beneficiary and has agreed to ship such merchandise upon
his or her request.
(8) (16) "Grave" means a below-ground right of interment.
(9) (17) "Interment" means the disposition of human remains
by earth burial, entombment or inurnment.
(10) (18) "Lawn crypt" means a burial receptacle, usually constructed of reinforced concrete, installed underground in
quantity on gravel or tile underlay. Each crypt becomes an
integral part of the given garden area and is considered real
property.
(11) (19) "Marker base" means the visible part of the base
or foundation upon which the memorial, marker or monument rests
and is considered personal property.
(12) (20) "Mausoleum crypt" means a burial receptacle
usually constructed of reinforced concrete and usually
constructed or assembled above the ground and is considered real
property.
(13) (21)"Memorials, markers or monuments" means the object
used to identify the deceased including the base and is
considered personal property.
(14) (22) "Opening and closing or interment service" means
any service associated with the excavation and filling in of a
grave in a manner which will not disturb or invade adjacent grave
sites.
(15) (23) "Preneed" means at any time other than either at
the time of death or while death is imminent.
(16) (24) "Preneed cemetery company contract"
or "preneed
crematory contract" means a contract for the sale of real and
personal property, goods or services used in connection with
interring,
cremating or disposing of the remains or commemorating the memory of a deceased human being, where delivery of the
property or performance of the service may be delayed for more
than one hundred twenty days after the receipt of initial payment
on account of such sale. Such property, goods or services
include, but are not limited to, burial vaults, mausoleum crypts,
lawn crypts, memorials, marker bases,
alternative caskets,
cremation interment containers, urns and opening and closing
and/or interment services, but do not include graves or
incidental additions such as dates, scrolls or other
supplementary matter representing not more than ten percent of
the total contract price.
(17) (25) "Seller's trust account" means the total specific
funds deposited from all of a specific seller's contracts, plus
income on such funds allotted to that seller.
(18) (26) "Specific trust funds" means funds identified with
a certain preneed cemetery company contract
or preneed crematory
contract for personal property, goods or services.
(19) (27) "Trustee" means any natural person, partnership or
corporation, including any bank, trust company, broker-dealer,
foreign state charter trust, savings and loan association or
credit union which receives money in trust pursuant to any
agreement or contract made pursuant to the provisions of this
article.
§35-5B-2. Information filing; fees, compliance agent.
On or after the first day of July, one thousand nine hundred
ninety-
three eight, no person, partnership, firm or corporation
may engage in the business of operating a cemetery company
or a
crematory company in this state without having first paid an
annual registration fee established by the tax commissioner in an
amount not to exceed four hundred dollars, and filing with the
tax commissioner certain information which shall include the name
and addresses of all officers, owners and directors of the
cemetery company
or crematory company and the name of the
designated compliance agent. The cemetery company
or crematory
company shall notify the tax commissioner of any changes in the
information required to be filed within ninety days of the date
on which the change occurs. A new filing shall also be required
if there is a change in the ownership of the cemetery company
or
crematory company or if there is a change in the name of the
compliance agent designated by the cemetery company
or crematory
company. The cemetery company
or crematory company shall pay an
additional fee as established by the commissioner in connection
with the reporting of such changes, not to exceed one hundred
dollars. There is hereby created in the state treasury a special
account to be known as the "cemetery
and crematory company
account" into which all fees collected under this article shall
be deposited:
Provided, That amounts collected which are found
from time to time to exceed funds needed for the purposes set forth in this article may be transferred to other accounts or
funds and redesignated for other purposes by appropriation of the
Legislature. Funds in this account shall be expended upon
appropriation of the Legislature by the secretary of tax and
revenue in connection with the administration of this article.
§35-5B-4. Deposit in preneed trust required; who may serve as
trustee.
(a) Each cemetery
or crematory company shall deposit into an
interest bearing trust fund forty percent of the receipts from
the sale of property, goods or services purchased pursuant to a
preneed cemetery company
or preneed crematory contract including
sales of opening and closing or interment services, when the
delivery thereof will be delayed more than one hundred twenty
days from the initial payment on said contract. However, should
the proceeds from the sale be financed through a lending
institution, it shall be considered a cash sale. Deposits are
required to be made by the cemetery
or crematory company within
thirty days after the close of the month in which said receipts
are paid to it.
(b) If payment is made on an installment or deferred payment
basis, the seller shall have the option of depositing into the
trust fund forty percent of the amount of the principal
initially, or alternatively, depositing forty percent of the
principal of each payment within thirty days after the close of the month in which said receipts are paid to it.
(c) (1) The trustee of the trust fund shall be appointed by
the person owning, operating, or developing a cemetery
or
crematory company. If the trustee is other than a bank, savings
and loan or other federally insured investment banking
institution, the trustee shall be approved by the tax
commissioner. A trustee that is not a bank, savings and loan or
other federally insured investment banking institution shall
apply to the tax commissioner for approval, and the tax
commissioner shall approve the trustee when satisfied that:
(A) The applicant employs and is directed by persons who are
qualified by character, experience, and financial responsibility
to care for and invest the funds of others; and
(B) The applicant will perform its duties in a proper and
legal manner and the trust funds and interest of the public
generally will not be jeopardized.
(2) If the trustee is other than a bank, savings and loan or
other federally insured investment banking institution, the
trustee shall furnish a fidelity bond with corporate surety
thereon, payable to the trust established, in a sum equal to but
not less than one hundred percent of the value of the principal
of the trust estate at the beginning of each calendar year, which
bond shall be deposited with the tax commissioner.
(3) If the trustee is other than a bank, savings and loan or other federally insured investment banking institution, and if it
appears that an officer, director or employee of the trustee is
dishonest, incompetent or reckless in the management of a trust
fund required by the provisions of this article, the tax
commissioner may bring an action in the circuit courts of this
state to remove the trustee and to impound the property and
business of the trustee as may be reasonably necessary to protect
the trust funds.
§35-5B-5. Requirements for preneed cemetery or crematory company
contracts.
A preneed cemetery company
or preneed crematory company
contract shall:
(1) Be written in clear understandable language and printed
in easy-to-read type, size and style;
(2) Identify the seller, the contract buyer and the person
for whom the contract is bought if other than the contract buyer;
(3) Contain a complete description of the property, goods or
services bought;
(4) Clearly disclose whether the price of the property,
goods or services bought is guaranteed;
(5) Provide that if the particular property, goods and
services specified in the contract are unavailable at the time of
delivery, the seller shall be required to furnish property, goods
and services similar in size and style and at least equal in quality of material and workmanship and that the representative
of the deceased has the right to reasonably choose the property,
goods or services to be substituted; and
(6) Be executed in duplicate and a signed copy given to the
buyer.
§35-5B-7. Corpus of trust account and income to remain in
preneed trust account; exception.
The corpus of the trust account shall remain intact until
the property or goods are delivered or services performed as
specified in the contract:
Provided, That the net income from
the preneed trust account may be used to pay any appropriate
trustee and auditor fees, commissions and costs. The net income
from the preneed trust account, after payment of any appropriate
trustee and auditor fees, commissions and costs, shall remain in
the account and be reinvested and compounded. Any trustee fees,
commissions and costs in excess of income shall be paid by the
cemetery company and not from the trust. However, the trustee
shall, as of the close of the cemetery company's
or crematory
company's fiscal year, upon the written assurance to the trustee
by a certified public accountant employed by the seller, return
to the seller any income in the seller's account which, when
added to the corpus of the trust account is in excess of the
current cost requirements for all undelivered property, goods or
services included in the seller's preneed cemetery company
or preneed crematory contracts including all outstanding preneed
cemetery company
or preneed crematory company contracts entered
into prior to the first day of July, one thousand nine hundred
ninety-
three eight. The seller's cost requirements shall be
based upon wholesale cost and certified in its records by a sworn
affidavit by the compliance agent and shall be determined by the
seller as of the close of the cemetery
or crematory company's
fiscal year.
§35-5B-8. Disbursement of trust funds upon performance of
contract; mausoleum construction required.
(a) Upon performance of the preneed cemetery company
or
preneed crematory company contract, the seller shall certify to
the trustee by affidavit the amount of specific funds in the
trust, identified with the contract performed, which the trustee
shall pay to the seller. The seller may in its records itemize
the property, goods or services and the consideration paid or to
be paid therefor, to which the deposit requirements of this
article apply. In such case the seller may, upon certification
to the trustee of performance or delivery of such property, goods
or services and of the amount of specific trust funds identified
in its records with such items, request disbursement of that
portion of the specific funds deposited pursuant to the contract,
which the trustee shall pay to the seller.
(b) If the preneed contract provides for two or more persons, the seller may, at its option, designate in its records
the consideration paid for each individual in the preneed
cemetery company
or preneed crematory contract. In such case,
upon performance of that portion of the contract identified with
a particular individual, the seller may request, by certification
in the manner described above, the disbursement of trust funds
applicable to that portion of the contract, which the trustee
shall pay to the seller.
(c) Any cemetery
or crematory company that sells space in an
unconstructed mausoleum must commence construction within seven
years from the date of the first sale or when eighty percent of
the spaces in the original mausoleum plan are sold, whichever
occurs first.
§35-5B-9. Seller required to keep records.
Each seller of a preneed cemetery company
or preneed
crematory contract shall record and keep detailed accounts of all
contracts and transactions regarding preneed cemetery company
or
preneed crematory contracts and the records shall be subject to
examination by the tax commissioner.
§35-5B-10. Financial report and written assurance required.
(a) The cemetery
or crematory company shall report the
following information to the tax commissioner within four months
following the close of the cemetery
or crematory company's fiscal
year:
(1) The total amount of principal in the preneed trust
account;
(2) The securities in which the preneed trust account is
invested;
(3) The income received from the trust and the source of
that income during the preceding fiscal year;
(4) An affidavit executed by the compliance agent that all
provisions of this article applicable to the seller relating to
preneed trust accounts have been complied with;
(5) The total receipts required to be deposited in the
preneed trust account;
(6) All expenditures from the preneed trust account; and
(7) If the trustee is other than a bank, savings and loan or
other federally insured investment banking institution, proof, in
a manner determined by the tax commissioner, that the fidelity
bond required by the provisions of section four of this article
has been secured and that it is in effect.
(b) The cemetery
or crematory company shall employ an
independent certified public accountant who is to audit the
account and provide assurance, which assurance shall be forwarded
with the report required by subsection (a) of this section, that
forty percent of the cash receipts from the sale of preneed
property, goods or services which will not be delivered or
performed within one hundred twenty days after receipt of the initial payment on account has been deposited in the account
within thirty days after the close of the month in which the
payment was received.
§35-5B-19. Issuance of crematory permits.
On or after the first day of July, one thousand nine hundred
ninety-eight, no person, partnership, firm or corporation may
construct, install or operate a crematory or engage in the
process or business of cremation without first obtaining a permit
for that purpose from the division of environmental protection,
which shall be issued only to a funeral establishment employing
a funeral director on a full and continuous basis:
Provided,
That any funeral establishment which on the first day of January,
one thousand nine hundred ninety-eight, held a valid crematory
permit issued by the division, shall not be required to obtain
another such permit from the division. The director may issue
such permits in accordance with regulations based upon
appropriate air quality requirements. The director may restrict
the number of such permits issued by the division based upon
population or other relevant factors which may affect the air
quality of the area to be served by the applicant for a
crematory:
Provided, however, That no more than one permit for
a crematory may be issued in any county without substantial
evidence of the need for additional permits in a county.
NOTE: The purpose of this bill is to include preneed
crematory company contracts to regulation pursuant to the
provisions of article five-b, chapter thirty-five, which
currently solely apply to preneed cemetery company contracts.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.
§35-5B-19 is new; therefore, strike-throughs and
underscoring have been omitted.