32-1391.05. Prearranged funeral agreements funded by trusts; definition

(L19, Ch. 252, sec. 39. Eff. 7/1/20)

A. All monies paid under a prearranged funeral agreement funded by trust, except as provided in subsection B of this section, shall be deposited, within five business days after the receipt of the monies, in a prearranged funeral trust account with a financial institution doing business in this state. The monies shall be invested either in federally insured accounts, in which case the amounts so deposited shall not exceed the amount of the deposit insurance, or in direct obligations of the United States government. Federally insured accounts are defined as accounts insured by the federal deposit insurance corporation or the national credit union administration board. If invested in direct obligations of the United States government, the maturity dates of such obligations shall not exceed three years, unless rules adopted by the department of insurance and financial institutions permit a longer period and not less than five percent of the amounts so deposited shall at all times be deposited in federally insured accounts.

B. All monies paid under a fixed price prearranged funeral agreement funded by trust shall be deposited, within twenty-one calendar days or fifteen business days, whichever is shorter after the receipt of the monies, in a prearranged funeral trust account with a financial institution doing business in this state. In investing these monies the trustee shall exercise the judgment and care of a prudent investor under the prevailing circumstances.

C. Except as provided in this article:

1. All monies deposited in a prearranged funeral trust account and all accrued interest shall be held in the trust account for and remain the property of the beneficiary during the beneficiary's life and of the beneficiary's estate after the beneficiary's death.

2. A funeral establishment or another person shall not withdraw, transfer, remove, commingle, encumber or use as collateral any monies paid to the establishment under a prearranged funeral agreement funded by trust.

3. All monies deposited and accrued interest in a prearranged funeral trust account shall be exempt from attachment, garnishment, execution and claims of creditors, receivers and trustees of the funeral establishment other than the claims of the beneficiary or the beneficiary's estate.

4. All monies deposited and accrued interest in a prearranged funeral trust account up to a total of $5, 000 shall be exempt from attachment, garnishment, execution and claims of creditors, receivers and trustees of the beneficiary other than the claims of the funeral establishment.

D. A funeral establishment may direct the financial institution in which the trust monies are deposited to transfer the trust account to another financial institution after providing each participant in the trust with the name and location of the institution and the new trust account number.

E. For the purposes of this section, " prudent investor" means a person who exercises the same care and expertise as a person of ordinary prudence, diligence, discretion and judgment would exercise in the management of the property of others, not in regard to speculation, but in regard to the permanent disposition of the funds considering the probable income as well as the probable safety of the capital to be invested.