4.01: Definitions
For
purposes of 239 CMR 4.00 et seq., the following terms shall have the
following meanings unless the context in which they are used clearly
indicates otherwise:
Beneficiary
– means the individual for whom funeral goods and services are to be
provided under the terms of a pre-need funeral contract.
Board
- means the Board of Registration in Embalming and Funeral Directing.
Buyer
- means the person entering into a pre-need funeral contract with a
licensed funeral establishment.
Cost-Protected
Pre-Need Funeral Contract - means a pre-need funeral contract
in which:
- a licensedfuneral
establishment agrees to provide a specifically-identified set of
funeral goods and/or services for a named beneficiary upon his or her
death;
- the beneficiary has
established a funeral trust account, or purchased a pre-need insurance
policy, which is to be used to pay for those funeral goods and services;
- the beneficiary has
fully funded the funeral trust account, or fully paid for the pre-need
insurance policy, within a specified period of time after the pre-need
funeral contract is made; and
- the licensed
funeral establishment has agreed to accept the funds available in the
beneficiary’s funeral trust account or pre-need insurance policy at the
time of the beneficiary’s death as payment in full for all funeral
goods and services provided by the funeral establishment, and, to the
extent specifically provided in the contract, for non-funeral
establishment charges or "cash-advance item" charges as well, so that
there will be no additional cost to the beneficiary or his or her
estate for those goods, services and charges at the time of the
beneficiary’s death.
Funeral
Goods and/or Services - means those goods and services which
are customarily provided in the business of embalming and funeral
directing, as commonly practiced, including but not limited to usage of
facilities and those goods and services identified in 239 CMR 3.01.
Funeral
Trust Account - an account established in any federal or
state-chartered banking institution having trust powers, or any trust
company, located in the Commonwealth of Massachusetts, in which funds
are deposited or invested pursuant to the terms of a pre-need funeral
contract for the purpose of paying for funeral goods and/or services at
a future time.
Itemized
Statement of Funeral Goods and Services or Itemized Statement
– means a written itemized statement showing to the extent then known
the price of funeral goods and/or services selected by a person, the
price of each supplemental item of goods and/or services to be
provided, the estimated amount for each item for which the funeral
establishment will advance monies as an accommodation to the person or
persons making the funeral arrangements, and all other information
required by M.G.L. c. 112, § 84B, 239 CMR 3.14, and 16
15 CFR 453.2.
Licensed
Funeral Establishment - means a fixed place or establishment
owned or maintained by a person, partnership, corporation, association
or other organization which has been duly registered by the Board
pursuant to M.G.L. c. 112, § 84 and which is located,
constructed, equipped and operated for the purpose of providing
sanitary handling, preparation, disposition and care of dead human
bodies.
Non-Funeral
Establishment Charges or "Cash Advance Item" Charges – means
the costs of goods or services which are provided for a beneficiary in
connection with his or her funeral by a supplier or vendor other than a
funeral establishment licensed in Massachusetts, but which are
partially or fully paid for by a Massachusetts licensed funeral
establishment with funds in a funeral trust account or pre-need
insurance policy or annuity on behalf of, and as an accommodation to,
that beneficiary.
Pre-Need
Funeral Contract – means any written agreement between a buyer
and a licensed funeral establishment in which:
- the licensed
funeral establishment agrees, prior to the death of a named
beneficiary, to furnish funeral goods and/or services for that named
beneficiary upon his or her death, and
- the buyer, pursuant
to that agreement, transfers or tenders funds to the licensed funeral
establishment for the purpose of paying all or part of the cost of
those funeral goods and/or services at the time they are actually
provided.
Pre-Need
Insurance Policy or Annuity - means any policy, certificate,
agreement or contract of insurance issued by an insurance company, the
proceeds of which are to be utilized to pay for funeral goods and/or
services furnished to a named beneficiary.
Trustee
- means a federal or state-chartered banking institution within the
Commonwealth of Massachusetts having trust powers, or a trust company
within the Commonwealth of Massachusetts, to which funds have been
transferred in trust for the purpose of paying for funeral goods and/or
services for a named beneficiary, and which is charged with the
fiduciary duty of managing and administering those funds for the
benefit for that named beneficiary.
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4.02:
- Creation and Content of Pre-Need Funeral Contracts
- Parties to
Pre-Need Funeral Contracts - All pre-need funeral contracts
shall be between a buyer and a licensed funeral establishment.
- Who May
Prepare Pre-Need Funeral Contracts - No person shall prepare,
negotiate or execute a pre-need funeral contract with a buyer or
potential buyer; or receive, control or manage any funds tendered as
payment for the funeral goods and/or services identified in such a
pre-need funeral contract; unless he or she is duly registered with the
Board as a registered licensed funeral director or registered certified
funeral director.
-
Location
of Offices in Which Pre-Need Funeral Contracts May Be Prepared
- All pre-need centers or offices which engage in the preparation,
negotiation or execution of pre-need funeral contracts or arrangements
shall be located within a duly licensed funeral establishment.
-
Provision
of Buyer’s Guide Required - A copy of a Buyer's Guide to
Pre-Need Funeral Contracts, approved by the Board, shall be furnished
to every person or identifiable group of persons who enter into
negotiations or discussions with a registered licensed funeral director
or registered certified funeral director regarding a pre-need funeral
contract prior to the signing of any such contract by the parties. A
Buyer's Guide to Pre-Need Funeral Contracts shall, at a minimum, inform
the consumer that:
- A consumer can
pre-plan his or her funeral arrangements without paying for such
arrangements in advance;
- The cost of the
funeral goods and services purchased through a pre-need funeral
contract may be higher or lower at the time of the beneficiary’s death
than the amounts set forth in the contract, and the beneficiary’s
rights and obligations with respect to such changes in price are
determined by the contract;
- There are various
methods of financing pre-need funeral contracts, including but not
limited to trusts, pre-need insurance policies, funeral insurance,
traditional life insurance policies, annuities, and separately-created
Medicaid-compliant burial accounts;
- Each such financing
method has certain briefly-described tax, Medicare and Medicaid
eligibility, and cancellation consequences;
- The consumer has a
legal right to cancel such a pre-need funeral contract within ten days
of its execution without penalty;
- Cancellation or
revocation of a pre-need funeral contract after the expiration of the
ten-day "cooling-off" period may have adverse consequences in terms of
eligibility for Medicaid or other government benefits programs; and
- The funeral
establishment will report any changes in the pre-need funeral contract,
or withdrawals of funds which were originally received in connection
with that contract, to the applicable governmental authority
responsible for the administration of Medicaid or other governmental
benefits programs to the extent that such reporting is required by law.
-
Required
Form and Contents of Pre-Need Funeral Contracts.
- All pre-need
funeral contracts shall be in writing and shall be prepared and
executed on one of the Pre-Need Funeral Contract forms prescribed by
the Board.
- Each pre-need
funeral contract shall be complete and shall contain all information
specified on the form used, including but not limited to:
- The signature of
the buyer, and
- The signature of
the registered licensed funeral director or registered certified
funeral director who is acting as the authorized representative of the
contracting funeral establishment.
- Each pre-need
funeral contract shall:
- State
conspicuously on the first page of the contract, in a manner reasonably
calculated to attract the attention of a reasonable person, whether or
not the buyer has selected specific funeral goods and/or services; and
- Be accompanied by
an itemized statement of funeral goods and services which meets the
requirements of the Federal Trade Commission Funeral Rule (15 CFR Part
453), M.G.L. c. 112, s. 84B and 239 CMR 3.14, which shall be attached
to that pre-need funeral contract and incorporated by reference into
that contract.
- If the buyer
has selected specific funeral goods and/or services, the itemized
statement of funeral goods and services shall specify the prices for
each identified funeral good or service selected by the buyer to the
extent known at the time the pre-need funeral contract is prepared.
- If the buyer
has not selected any specific funeral goods and/or services, the
itemized statement of funeral goods and services shall have the words
"No Goods or Services Selected" clearly and conspicuously marked
thereon.
- Each pre-need
funeral contract shall indicate, in the spaces designated for such
information on the Board-prescribed pre-need funeral contract form:
- The percentage of
the total cost of the funeral which is attributable to the goods and
services which are being provided directly by the licensed funeral
establishment itself, which shall be calculated by dividing the total
cost of the goods and services being provided by the funeral
establishment itself, as set forth in the itemized statement of funeral
goods and services required by 239 CMR 4.02(5)(c), by the total cost of
the funeral as set forth in that itemized statement; and
- The percentage of
the total cost of the funeral which is attributable to goods and
services provided by suppliers or vendors other than the licensed
funeral establishment (the non-funeral establishment charges or "cash
advance item" charges), which shall be calculated by dividing the total
cost of the goods and services being provided by suppliers or vendors
other than the licensed funeral establishment (the non-funeral
establishment charges or "cash advance item" charges), as set forth in
the "cash advance items" section of the itemized statement of funeral
goods and services required by 239 CMR 4.02(5)(c), by the total cost of
the funeral as set forth in that itemized statement.
The
percentages so calculated shall be rounded off to the nearest whole
number (e.g., 75.28% = 75%, 75.67%= 76%) and the sum of such
percentages shall in all cases equal one hundred (100) percent.**
- Each pre-need
funeral contract shall recite:
- The amount of
money which the buyer has paid or transferred to the funeral
establishment in connection with that contract at the time the contract
was made;
- The amount(s) of
any future payment(s) which are to be made by the buyer in order to
fully fund that contract and the date(s) on which such payments are due;
- Whether the money
paid or transferred to the funeral establishment in connection with
that contract was placed in a funeral trust account or used to pay for
a pre-need insurance policy; and
- The identity of
the banking institution which serves as trustee of the funeral trust
account established pursuant to 239 CMR 4.09, or the insurance company
which issued the pre-need insurance policy pursuant to 239 CMR 4.10,
whichever applies.
- Each pre-need
funeral contract shall recite conspicuously on its face whether it is
revocable or irrevocable, and that an attempt to revoke or cancel an
irrevocable pre-need funeral contract after the expiration of the
ten-day "cooling-off" period described in 239 CMR 4.07(1) may have
adverse consequences in terms of eligibility for Medicaid or other
government benefit programs.
- If the buyer has
not paid or transferred any funds to the funeral establishment in
connection with a proposed pre-need funeral contract, any document
which sets forth the terms and provisions of a proposed pre-need
funeral contract shall be treated as a non-binding pre-need funeral
contract estimate pursuant to 239 CMR 4.02(6) below.
- A proposed or
attempted pre-need funeral contract shall be deemed null and void and
unenforceable by either party if:
- The parties fail
to prepare and execute the pre-need funeral contract on one of the
Pre-Need Funeral Contract forms prescribed by the Board;
- The parties fail
to fully and properly complete any portion of the prescribed Pre-Need
Funeral Contract Form used; or
- The parties fail
to comply with any other applicable provision of 239 CMR 4.02(5) with
respect to the preparation or execution of the proposed or attempted
pre-need funeral contract.
In
such event, any and all monies paid or transferred to the funeral
establishment by the buyer in connection with the proposed pre-need
funeral contract shall be returned to the buyer immediately, without
penalty or deduction of any kind.
- Notwithstanding the
provisions of 239 CMR 4.02(5)(h) above, a proposed or attempted
pre-need funeral contract which has not been signed by one or both
parties shall be treated as a non-binding pre-need funeral estimate
pursuant to 239 CMR 4.02(6) below.
- The licensed
funeral establishment shall furnish a complete, fully-executed copy of
the pre-need funeral contract to the buyer at the time the pre-need
contract is made. In the event that the beneficiary of the pre-need
contract is someone other than the buyer, the funeral establishment
shall furnish an additional fully-executed copy of the pre-need funeral
contract to the beneficiary not later than five (5) business days after
the pre-need contract is made.
-
Non-Binding
Pre-Need Funeral Estimates - A licensed funeral establishment
may issue a non-binding estimate or proposal for a pre-need funeral
contract to a buyer or potential buyer, as long as:
- The estimate or
proposal is prepared and issued on the Pre-Need Funeral Contract Form
prescribed by the Board;
- The estimate or
proposal specifies the funeral goods or services which the issuing
funeral establishment proposes to provide; and
- The estimate or
proposal contains, or is accompanied by, an itemized statement of
funeral goods and services which meets the requirements of 239 CMR
4.02(5) above and which specifies the prices for each identified
funeral good or service which the funeral establishment proposes to
provide to the extent known at the time the estimate is prepared.
Any
such estimate or proposal expires and becomes null and void after a
specified period of time, not to exceed thirty (30) days from the date
of its issuance, unless the buyer or potential buyer, prior to that
expiration date, enters into a pre-need funeral contract which meets
the requirements of 239 CMR 4.02(5) and tenders full or partial payment
of the specified price for the identified funeral goods and services to
the funeral establishment which issued the estimate.
-
Sale
of Monuments or Interment Space Prohibited - Registered
licensed funeral directors and registered certified funeral directors
who prepare, negotiate and/or execute pre-need funeral contracts shall
arrange only for funeral goods and/or services, and shall not sell
interment space or monuments in such contracts. Nothing in this section
shall be construed to prohibit a licensed funeral establishment from
contracting with a vendor or supplier which is not a licensed funeral
establishment for the purchase of a monument or interment space on
behalf of the beneficiary pursuant to the terms of a pre-need funeral
contract which specifically identifies that monument or interment space
as one of the cash-advance items selected by the buyer.
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4.03: Notice of Changes Affecting Pre-Need
Contracts Required
- A licensed funeral
establishment shall send written notice of any proposed cessation of
the funeral establishment's operation to the buyer (and beneficiary, if
different) of each pre-need funeral contract, via certified mail,
return receipt requested, at least ten days prior to the effective date
of that proposed cessation of operations. Such notice shall inform the
buyer (and beneficiary, if different) of their right to:
- Transfer that
pre-need funeral contract and all funds connected with that contract to
another licensed funeral establishment of their choice, or
- Cancel that
pre-need funeral contract, if it is revocable, and receive a refund of
all funds connected with that contract pursuant to 239 CMR 4.07(3).
- A licensed funeral
establishment shall send written notice of any transfer of ownership of
that funeral establishment, or sale of any portion of its assets, to
the buyer (and beneficiary, if different) of every pre-need funeral
contract to which it is a party, via certified mail, return receipt
requested, not later than ten days after the effective date of said
transfer or sale. Such notice shall request that the buyer inform the
funeral establishment, in writing, whether the buyer wishes to:
- Transfer that
pre-need funeral contract, and assign all funds paid in connection with
that contract, to the new owner(s) of that funeral establishment;
- Transfer that
pre-need funeral contract, and assign all funds paid in connection with
that contract, to another licensed funeral establishment of their
choice, or
- Cancel that
pre-need funeral contract, if it is revocable, and receive a refund of
all funds paid in connection with that contract pursuant to 239 CMR
4.07(3).
In the
event that the buyer does not respond to this notice within thirty (30)
days after the date on which the notice was sent, there shall be a
rebuttable presumption that the pre-need funeral contract and all funds
connected with that contract have been transferred to the new owner(s)
of the transferee funeral establishment.
- In the event that a
licensed funeral establishment enters into an assignment for the
benefit of creditors or other debt reorganization plan, or institutes
bankruptcy or receivership proceedings under state or federal law, the
funeral establishment shall send to the buyer (and beneficiary, if
different) of each pre-need funeral contract to which it is a party,
via certified mail, return receipt requested, a written explanation of
how their rights and obligations under the pre-need funeral contract
will be affected by that event.
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4.04:
Amendment of Pre-Need Funeral Contracts
- Except as provided in
239 CMR 4.04(2), a pre-need funeral contract may be amended by the
licensed funeral establishment, the buyer, or the buyer’s legal
representative, at any time prior to the death of the beneficiary of
that contract. The party proposing the change shall give written notice
of the proposed change to the other party at least ten days prior to
the effective date of the proposed change. All such amendments shall be
in writing, and no such amendment shall be effective unless signed by
both parties to the contract.
- A pre-need funeral
contract shall not be amended or modified, except by order of a court
of competent jurisdiction, if:
- The amendment or
modification would convert a pre-need funeral contract which was
irrevocable at the time it was originally made into a revocable
contract, and such an amendment or modification would adversely affect
the eligibility of the contract beneficiary for Medicaid or any other
government benefits program; or
- The amendment or
modification would modify or eliminate any price-protection provision
which was included in a price-protected pre-need funeral contract at
the time it was originally made.
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4.05:
Substitution of Goods or Services
If any
funeral good or service which was selected by the buyer and identified
in a pre-need funeral contract at the time that contract was created is
unavailable at the time of the death of the beneficiary of that
contract, the licensed funeral establishment which is responsible for
performing that pre-need funeral contract shall provide the beneficiary
of the contract with a good or service selected by the buyer, or if the
buyer is unavailable, the beneficiary’s next–of-kin, whose fair market
value is equal to or greater than the value of the good or service
which is now unavailable. Where the pre-need funeral contract was a
cost-protected pre-need funeral contract, as defined in 239 CMR 4.01,
the substituted good or service shall be provided to the contract
beneficiary at no additional cost.
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4.06: Transfer of Pre-Need Funeral Contracts
- Upon receipt of
written authorization to do so from the buyer of a pre-need funeral
contract, or the buyer’s legal representative, a licensed funeral
establishment shall transfer or assign that pre-need funeral contract
to another licensed funeral establishment designated by that buyer or
legal representative, provided that the funeral establishment to whom
the contract is to be transferred or assigned has indicated in writing
that it will agree to honor that contract. The terms of the contract
shall not be modified at the time of the transfer, but may be amended
by means of a written agreement between the buyer and the transferee
funeral establishment after the transfer of the contract and all funds
connected with that contract has been completed. All such amendments
shall be subject to the limitations on amendments of pre-need funeral
contracts, as set forth in 239 CMR 4.04.
- In the event of any
transfer or assignment of a pre-need funeral contract pursuant to 239
CMR 4.06(1):
- if any funds
received by the transferor funeral establishment from the buyer in
connection with that pre-need funeral contract are being held in a
funeral trust account pursuant to 239 CMR 4.09, all such funds shall be
transferred to the transferee funeral establishment within ten (10)
business days, as provided in 239 CMR 4.09(5). The transferee funeral
establishment shall furnish written confirmation to the buyer, and the
beneficiary (if different), that these funds have been received by the
transferee funeral establishment and deposited in a funeral trust
account which meets the requirements of 239 CMR 4.09 not later than
thirty (30) days after the transfer or assignment of the pre-need
funeral contract occurs. The transferee funeral establishment shall
notify the buyer, in writing, of the identity and location of the
banking institution in which the funds were deposited and which will
serve as the trustee of the new funeral trust account.
- If any funds
received by the transferor funeral establishment from the buyer in
connection with that pre-need funeral contract were used to purchase a
pre-need insurance policy pursuant to 239 CMR 4.10, the transferor
funeral establishment shall send a copy of the buyer’s written
authorization for transfer of that pre-need funeral contract to the
insurance company which issued the pre-need insurance policy and
request that the insurance company take all necessary and appropriate
steps to modify the insurance policy so that the transferee funeral
establishment may receive payment for any funeral goods and services it
provides to the beneficiary of that policy. The transferor funeral
establishment shall furnish written confirmation to the buyer, and the
beneficiary (if different), that the request for transfer of the
pre-need funeral contract and appropriate modification of the insurance
policy have been sent to the insurance company which issued the
pre-need insurance policy not later than thirty (30) days after the
transfer or assignment of the pre-need funeral contract occurs.
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4.07: Cancellation of Pre-Need Funeral
Contracts
- Any buyer of a
pre-need funeral contract may cancel that contract and receive a full
refund of all monies paid connected with that contract , without
penalty, at any time within ten days after signing said contract. After
the expiration of this ten-day "cooling off period" a pre-need funeral
contract may be canceled in accordance with 239 CMR 4.07(3).
- Where an application
by the buyer or contract beneficiary of a pre-need funeral contract for
government benefits is pending, the buyer may waive his/her right to
cancel said contract within this ten-day "cooling off" period, but only
by signing a written waiver of that right. Said waiver shall not affect
the buyer's right to transfer that pre-need funeral contract pursuant
to 239 CMR 4.06.
- If a pre-need funeral
contract was revocable at the time it was originally created, the buyer
who signed that pre-need funeral contract, or his/her legal
representative, may cancel that pre-need funeral contract at any time
after the expiration of the ten-day "cooling off" period specified in
239 CMR 4.07(1) above by sending written notice of such cancellation,
via certified mail, return receipt requested, to the licensed funeral
establishment.
- If a funeral trust
account has been established to fund that pre-need funeral contract,
the funeral establishment shall forward a copy of said notice of
cancellation to the named trustee of said funeral trust account, and
take all steps necessary to ensure that all funds contained in that
funeral trust account are refunded to the buyer, without penalty,
within ten (10) days after the notice of cancellation is received by
the trustee of the funeral trust account.
- If a pre-need
insurance policy was purchased to fund that pre-need funeral contract,
the licensed funeral establishment shall forward a copy of the notice
of cancellation of that pre-need funeral contract to the insurance
company which issued the pre-need insurance policy.
- If a pre-need funeral
contract was irrevocable at the time it was originally created, such a
contract shall not be cancelled by either party except by order of a
court of competent jurisdiction. Such a contract may, however, be
transferred to another licensed funeral establishment in accordance
with 239 CMR 4.06.
- No licensed funeral
establishment, or agent or employee thereof, shall impose any
surcharge, fee or other penalty (monetary or otherwise) upon any person
who seeks to exercise his or her rights to cancel a pre-need funeral
contract under 239 CMR 4.07.
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4.08:
Restrictions on Use or Disposition of Funds Received in
Connection with Pre-Need Funeral Contracts
- Prohibition
Against Personal or Business Uses - No licensed funeral
establishment, nor any agent or employee thereof, shall use or pledge
any funds which are received in connection with any pre-need funeral
contract for any personal use, payment of the operating expenses of any
funeral establishment, issuance of a loan to any person, as collateral
for any loan, or for any purpose other than those expressly authorized
by that pre-need funeral contract and 239 CMR 4.00.
- Funeral Trust
Account or Pre-Need Insurance Policy Required - All funds
received from a buyer by a licensed funeral establishment, or by any
employee or agent thereof, in connection with any pre-need funeral
contract shall be:
- Deposited in a
funeral trust account which meets the requirements of 239 CMR 4.09 not
later than five (5) business days after the expiration of the
"cooling-off" period described in 239 CMR 4.07(1); or
- Paid to an
insurance company for the purchase of a pre-need insurance policy or
annuity pursuant to 239 CMR 4.10 not later than five (5) business days
after the expiration of the "cooling-off" period described in 239 CMR
4.07(1).
Each
time a licensed funeral establishment receives any funds in connection
with any pre-need funeral contract to which it is a party, that funeral
establishment shall furnish the buyer, and the beneficiary (if
different), with written confirmation that such funds have been
deposited in a funeral trust account or used to purchase a pre-need
insurance policy, as required by this section, not later than thirty
(30) days after such funds are received. Such written confirmation
shall bear the signature of a duly-authorized representative of the
banking institution in which the funeral trust account has been
established, or a duly-authorized representative of the insurance
company which issued the pre-need insurance policy, whichever applies.
- Reimbursement
for Newly Imposed Taxes or Governmental Fees Permitted -
Notwithstanding the provisions of 239 CMR 4.08(1), a licensed funeral
establishment may require a customer to reimburse said funeral
establishment for any local, state or federal taxes or fees imposed
after the execution of the pre-need funeral contract, including but not
limited to any value-added or sales taxes, for which the funeral
establishment is held responsible by the taxing authority or
governmental entity. In cases where the pre-need funeral contract is
funded in full or in part, said reimbursement shall be considered an
additional sum to be paid by the customer, and the funeral
establishment shall not be required to deduct it from any income which
accrues on the amount initially placed with the funeral establishment
for investment in a pre-need funeral trust account or pre-need
insurance policy or annuity.
- Access to
Pre-Need Contract Funds - Neither a licensed funeral
establishment, nor any agent or employee thereof, shall have access to
any of the funds received by that funeral establishment in connection
with any pre-need funeral contract for any purpose other than:
- Obtaining payment
for the actual costs of funeral goods and/or services provided to the
beneficiary, or for cash advance non-funeral establishment charges
connected with the funeral of that beneficiary, upon presentation of
the documentation required by 239 CMR 4.08(5);
- Transferring those
funds to another funeral trust account, or to a pre-need insurance
policy or annuity, upon written authorization to do so from the buyer,
the beneficiary of the pre-need funeral contract (if different from the
buyer), or the duly authorized legal representative of the buyer or
beneficiary;
- Transferring those
funds to another licensed funeral establishment in connection with a
transfer of the underlying pre-need funeral contract, pursuant to and
in accordance with the requirements of 239 CMR 4.06; or
- Refunding those
funds to the buyer or the beneficiary upon receipt of a written notice
of cancellation of the pre-need funeral contract from the buyer, the
beneficiary of the pre-need contract (if different from the buyer) or
the duly authorized legal representative of the buyer or beneficiary,
to the extent permitted by 239 CMR 4.07.
- Documentation
Required for Payment for Services Rendered – Before obtaining
or receiving payment for funeral goods and/or services rendered to the
beneficiary of any pre-need funeral contract pursuant to 239 CMR
4.08(4)(a), the licensed funeral establishment shall present both of
the following to the named trustee of the funeral trust account, or the
duly authorized representative of the insurer which issued the pre-need
insurance policy or annuity, which was used to fund that pre-need
funeral contract:
- A certified copy of
the death certificate for the beneficiary; and
- A written
statement, signed by a registered licensed funeral director, certifying
that the pre-need funeral contract has been performed in full.
- Allocation
and Disposition of Pre-Need Funeral Contract Funds – At the
time of the contract beneficiary’s death, the funds available in any
funeral trust account established in connection with that pre-need
funeral contract pursuant to 239 CMR 4.09, and/or in any pre-need
insurance policies purchased in connection with that pre-need funeral
contract pursuant to 239 CMR 4.10, shall be apportioned between the
cost of the goods and services provided directly by the licensed
funeral establishment and the cost of the goods and services provided
by vendors other than the licensed funeral establishment (the
non-funeral establishment charges or "cash advance item" charges) in
accordance with the percentages calculated pursuant to 239 CMR
4.02(5)(d).
- If the pre-need
funeral contract contained cost-protection provisions pertaining to the
costs of the goods and services provided directly by the licensed
funeral establishment, and the amount of funds to be applied to the
costs of those goods and services pursuant to this section exceeds the
actual cost of those goods and services at the time of the contract
beneficiary’s death, the licensed funeral establishment may retain the
resulting surplus funds.
- If the pre-need
funeral contract contained cost-protection provisions pertaining to the
costs of the goods and services provided directly by the licensed
funeral establishment, and the amount of funds to be applied to the
costs of those goods and services pursuant to 239 CMR 4.08 (6) is not
sufficient to cover the actual cost of those goods and services at the
time of the contract beneficiary’s death, the licensed funeral
establishment shall bear the resulting loss and shall not bill the
estate of the contract beneficiary, or any other person, for the
deficiency.
- If the pre-need
funeral contract contained cost-protection provisions pertaining to the
costs of the goods and services provided by vendors other than the
licensed funeral establishment, and the amount of funds to be applied
to the costs of those goods and services pursuant to 239 CMR 4.08 (6)
exceeds the actual cost of those goods and services at the time of the
contract beneficiary’s death, the licensed funeral establishment may
retain the resulting surplus funds.
- If the pre-need
funeral contract contained cost-protection provisions pertaining to the
costs of the goods and services provided by vendors other than the
licensed funeral establishment, and the amount of funds to be applied
to the costs of those goods and services pursuant to 239 CMR 4.08 (6)
is not sufficient to cover the actual cost of those goods and services
at the time of the contract beneficiary’s death, the licensed funeral
establishment shall bear the resulting loss and shall not bill the
estate of the contract beneficiary, or any other person, for the
deficiency.
- If the pre-need
funeral contract did not contain cost-protection provisions pertaining
to the costs of the goods and services provided directly by the
licensed funeral establishment, and the amount of funds to be applied
to the costs of those goods and services pursuant to 239 CMR 4.08(6)
exceeds the actual cost of those goods and services at the time of the
contract beneficiary’s death, the licensed funeral establishment shall
refund the resulting surplus to the estate of the contract beneficiary.
In such event, the amount refunded may be subject to claims of the
Commonwealth or the United States.
- If the pre-need
funeral contract did not contain cost-protection provisions pertaining
to the costs of the goods and services provided directly by the
licensed funeral establishment, and the amount of funds to be applied
to the costs of those goods and services pursuant to 239 CMR 4.08 (6)
is not sufficient to cover the actual cost of those goods and services
at the time of the contract beneficiary’s death, the licensed funeral
establishment may bill the estate of the contract beneficiary for the
deficiency.
- If the pre-need
funeral contract did not contain cost-protection provisions pertaining
to the costs of the goods and services provided by vendors other than
the licensed funeral establishment, and the amount of funds to be
applied to the costs of those goods and services pursuant to 239 CMR
4.08 (6) exceeds the actual cost of those goods and services at the
time of the contract beneficiary’s death, the licensed funeral
establishment shall refund the resulting surplus to the estate of the
contract beneficiary. In such event, the amount refunded may be subject
to claims of the Commonwealth or the United States.
- If the pre-need
funeral contract did not contain cost-protection provisions pertaining
to the costs of the goods and services provided by vendors other than
the licensed funeral establishment, and the amount of funds to be
applied to the costs of those goods and services pursuant to 239 CMR
4.08 (6) is not sufficient to cover the actual cost of those goods and
services at the time of the contract beneficiary’s death, the licensed
funeral establishment may bill the estate of the contract beneficiary
for the deficiency.
- Final
Statement of Allocation of Funds to be Furnished to Beneficiary’s
Estate in Certain Cases – If a pre-need funeral contract is
not a cost-protected contract with respect to all of the funeral goods
and services identified in that contract, the licensed funeral
establishment shall prepare, and furnish to the estate of the contract
beneficiary at the time of the contract beneficiary’s death, an
addendum to the written itemized statement of funeral goods and
services required by 15 CFR Part 453 and M.G.L. c. 112, s. 84B which
shows:
- The total amount of
funds in the pre-need funeral trust account(s) and/or pre-need
insurance policies for that beneficiary which were available at the
time of the contract beneficiary’s death;
- The amount of funds
available in the pre-need funeral trust account(s) and/or pre-need
insurance policies which was applied to the costs of the goods and
services which were provided directly by the licensed funeral
establishment itself; and
- The amount of funds
available in the pre-need funeral trust account(s) and/or pre-need
insurance policies which was applied to the costs of the goods and
services provided by vendors other than the licensed funeral
establishment (the non-funeral establishment charges or "cash advance
item" charges).
Failure
to provide such information accurately and completely in writing to the
estate of the contract beneficiary shall constitute a violation of 239
CMR 4.00.
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4.09: Funeral Trust Accounts
(1)
All funeral trust accounts shall be established and administered in
compliance with the requirements of 239 CMR 4.09.
(2) Creation
of Funeral Trust Accounts - Where a pre-need funeral contract
will be funded through a funeral trust account, the licensed funeral
establishment shall deposit all funds received in connection with that
pre-need funeral contract in a funeral trust account within five
business days after the expiration of the "cooling-off" period
described in 239 CMR 4.07(1). Every such funeral trust account
shall:
- Designate a federal
or state-chartered banking institution which has trust powers, or a
trust company, within the Commonwealth of Massachusetts as the trustee
of said funeral trust account;
- Designate the
person for whom the funeral goods and/or services are to be provided as
the beneficiary of said funeral trust account;
- Indicate that the
funds are to be used solely for the purpose of paying for funeral goods
and/or services and non-funeral establishment charges ("cash advance
item" charges) as indicated in the itemized statement required by 239
CMR 4.02(5); and
- Provide that the
entire account balance shall be payable to the licensed funeral
establishment which provides the specified funeral goods and/or
services to the beneficiary at time of death in accordance with 239 CMR
4.00.
(3) Investment
Requirements
The
funds placed in a funeral trust account may be invested in any form of
investment which may lawfully be established or maintained by the trust
department of the banking institution or trust company which is serving
as the trustee of that funeral trust account. All funds deposited in
that funeral trust account shall be invested and managed in accordance
with M.G.L. c. 203C.
(4) Common
or Commingled Trust Accounts
Funds
received in connection with more than one pre-need funeral contract may
be deposited in a single common or commingled funeral trust account
under the terms of a single trust instrument, provided that:
(a) The
common or commingled funeral trust account is established and
administered in accordance with all applicable requirements of
239 CMR 4.09; and
(b)
Separate records, which meet the requirements of 239 CMR 4.12(1)
(e) , are maintained for each customer whose funds are deposited in the
common or commingled funeral trust account.
(5)
Obligations to Locate Trust Beneficiary.
(a) If
a licensed funeral establishment which is a party to a pre-need funeral
contract does not provide the funeral goods and/or services for the
beneficiary of that contract upon his/her death, then, upon receipt of
a certified copy of the death certificate of such beneficiary, the
trustee of any funeral trust account established to fund said pre-need
funeral contract shall pay the assets of said funeral trust account to
the estate or legal representative of the named beneficiary in
accordance with the applicable requirements of 239 CMR 4.09.
(b) If
a licensed funeral establishment has not received notice of the death
of the named beneficiary of a pre-need funeral contract for whom a
funeral trust account has been established under 239 CMR 4.09 within
110 years of the beneficiary's date of birth, said funeral
establishment shall take all reasonable steps to contact that
beneficiary or his/her legal representative to inform them of the
existence of said funeral trust account. A written notice of the
existence of said funeral trust account, sent via certified mail,
return receipt requested, to the last known address of the trust
beneficiary and his/her legal representative shall be sufficient to
satisfy the requirements of 239 CMR 4.09(5)(b).
(c) If,
after a reasonable search, a licensed funeral establishment is unable
to locate the beneficiary of said funeral trust account, the funeral
establishment shall notify the trustee of the account, and the trustee
shall turn over all funds in the funeral trust account to the Treasurer
of the Commonwealth, in accordance with the laws of the Commonwealth.
Any such transfer of funds to the Treasurer of the Commonwealth shall
constitute a complete release of all obligations of such licensed
funeral establishment pursuant to the pre-need funeral contract.
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4.10: Pre-Need Insurance Policies and
Annuities
(1) Any
agent or employee of any licensed funeral establishment who sells or
otherwise provides insurance policies or annuities as a method for
funding pre-need funeral contracts shall comply with all applicable
state and federal laws and regulations pertaining to the conduct of the
business of insurance, including but not limited to all licensing
requirements of the Massachusetts Division of Insurance.
(2)
Any agent or employee of any licensed funeral establishment who sells
or otherwise provides insurance policies or annuities as a method for
funding pre-need funeral contracts shall, prior to accepting any funds
as payment for the issuance of any such insurance policy or annuity,
make all of the disclosures required by the Massachusetts Division of
Insurance to the prospective purchaser of said insurance policy or
annuity. In addition to the disclosures required by the Massachusetts
Division of Insurance, the agent or employee of the funeral
establishment shall also disclose:
- That the amount to
be refunded to the buyer if the insurance policy is cancelled prior to
the death of the beneficiary will be determined by the cash surrender
value provisions of the insurance policy; and
- That the funeral
establishment, or its agent or employee, will be paid a commission on
the sale of the insurance policy.
(3) No
licensed funeral establishment, nor any agent or employee thereof,
shall require any buyer to purchase any insurance policy or annuity as
a condition for entering into any pre-need funeral contract.
(4) Any
person who purchases a pre-need insurance policy or annuity from any
agent or employee of any licensed funeral establishment who is duly
licensed as an insurance agent by the Massachusetts Division of
Insurance, may cancel said policy or annuity without penalty any time
within ten days after said policy or annuity contract is delivered to
him or her by surrendering the policy or annuity contract to either the
insurance company which issued said policy or annuity or the agent from
whom it was purchased. Upon surrender of such policy or annuity, the
purchaser shall be entitled to a full refund of all payments made in
connection with said policy or annuity. No licensed funeral
establishment, nor any agent or employee thereof, shall impose any
penalty or surcharge (monetary or otherwise) on any person exercising
said right of cancellation.
(5) The
requirements of 239 CMR 4.10 shall apply to any and all forms of
insurance which are sold or utilized for the purpose of providing
funding for a pre-need funeral contract, regardless of how named.
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4.11: Marketing Of Pre-Need Funeral
Products
(1) No
agent or employee of any licensed funeral establishment shall visit or
call upon any patient in a hospital, convalescent or nursing home, rest
home, charitable home for the aged, infirmary maintained in a town,
intermediate care facility for the mentally retarded, or other health
care facility, for the purpose of soliciting or inducing such patient
to enter into any pre-need funeral contract, or for the purpose of
soliciting or inducing such patient to establish a funeral trust
account or purchase a pre-need insurance policy or annuity, unless said
agent or employee has been authorized to do so by the patient or
his/her legal representative to do so prior to the visit.
(2) A
licensed funeral establishment, or any agent or employee thereof, may
utilize telephonic communications for the purpose of soliciting or
inducing any person to enter into a pre-need funeral contract,
establish a funeral trust account, or purchase any pre-need insurance
policy or annuity, provided that:
(a) The
prospective customer is informed at the beginning of the telephonic
communication that the telephonic communication is being made for the
purpose of inducing him or her to enter into a pre-need funeral
contract, establish a funeral trust account, or purchase a pre-need
insurance policy or annuity; and
(b) The
telephonic communication is terminated immediately upon any request to
do so from the prospective customer.
(3) No
agent or employee of any licensed funeral establishment shall solicit
or attempt to induce any person to enter into a pre-need funeral
contract, establish any funeral trust account, or purchase any pre-need
insurance policy or annuity by any method or means which is false,
deceptive, misleading, coercive, intimidating or threatening.
(4) No
licensed funeral establishment, nor any agent or employee thereof,
shall knowingly induce or attempt to induce any person to cancel or
revoke any pre-existing pre-need funeral contract, funeral trust
account, or pre-need insurance policy or annuity.
(5) Advertising
of Pre-need Funeral Products.
(a) Advertising
of pre-need funeral contracts, funeral trust accounts and/or pre-need
insurance policies or annuities by any licensed funeral establishment,
or agent or employee thereof, shall not be false, deceptive or
misleading.
(b) All
advertising of pre-need funeral contracts, funeral trust accounts
and/or pre-need insurance policies or annuities shall disclose all of
the following information:
1. The
type of product (e.g., funeral trust account, pre-need insurance
policy, annuity, etc.) which is to be, or may be, used to fund the
pre-need funeral contract; and
2. The
nature of the relationship between the agent who solicits the purchase
of the product, the funeral establishment which is to provide the
funeral goods and/or services, the buyer, and the individual or
institution which will receive and/or hold any funds paid by the buyer
in connection with the purchase of the product.
(c) All
advertising of pre-need funeral contracts, funeral trust accounts,
and/or pre-need insurance policies or annuities by a licensed funeral
establishment, or any agent or employee thereof, shall comply with all
other applicable state and federal laws and regulations pertaining to
such advertising.
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4.12: - Recordkeeping Requirements
- Each licensed funeral
establishment shall maintain a separate, legible written record for
each pre-need funeral contract to which that funeral establishment is a
party. Said records shall be maintained at all times on the premises of
that funeral establishment, or on the premises of another
specifically-identified licensed funeral establishment within the
Commonwealth which is owned and operated by the same proprietor,
corporation, partnership, association, limited liability company,
limited liability partnership or other business entity. At a minimum,
such records shall contain all of the following information:
- A fully-executed
copy of the pre-need funeral contract;
- A fully-executed
copy of each amendment or modification of the terms of that pre-need
funeral contract;
- In the case of any
pre-need funeral contract which was transferred to another funeral
establishment after its original execution, the name and address of the
funeral establishment to which that pre-need funeral contract was
transferred and written documentation that the buyer and/or beneficiary
has authorized that transfer;
- In the case of any
pre-need funeral contract which has been performed (i.e., the funeral
goods and services specified in that contract have been provided to the
beneficiary of that contract), a copy of the death certificate for the
beneficiary of that pre-need funeral contract and written documentation
that the funeral goods and services specified in that contract were
provided;
- Where the funding
source for the funeral goods and services to be provided pursuant to
that pre-need funeral contract is a funeral trust account:
- The name,
address, date of birth and social security number of the named trust
beneficiary;
- Copies of bank
statements and deposit slips from the bank or financial institution
which is holding the funds deposited in the funeral trust account which
show the date on which the funeral trust was originally established,
the amount of money originally deposited in the funeral trust account
at the time the funeral trust account was originally established, and
the date and amount of each subsequent deposit in the funeral trust
account, if any;
- The name and
address of the bank or financial institution which is holding the funds
deposited in the funeral trust account;
- The balance in
the funeral trust account, on a monthly basis;
- A description of
the form and manner in which the trust funds are invested;
- A copy of the
individual trust agreement, or, in the case of a common or commingled
funeral trust account established pursuant to 239 CMR 4.09(4), a copy
of the Master Trust Agreement for the common account; and
- Written
documentation sufficient to demonstrate compliance with all applicable
requirements of 239 CMR 4.00 with respect to all changes in the terms
or provisions of the funeral trust account; and
- Where the funding
source for the funeral goods and services to be provided pursuant to
that pre-need funeral contract is a pre-need insurance policy or
annuity:
- the name and
address of the insurance company which issued the policy or annuity;
- the amount of
money originally paid to that insurance company for the issuance of
that policy or annuity; and
- the face value of
that insurance policy or annuity.
- In the case of any
common or commingled funeral trust account established pursuant to 239
CMR 4.09(4), a separate written record which complies with the
requirements of 239 CMR 4.12(1) above shall be maintained for each
separate trust beneficiary.
- Any and all records
established and maintained pursuant to 239 CMR 4.12 shall be available
upon request, at any time during regular business hours, to any duly
authorized representative of the Board for inspection.
- Any and all records
required by 239 CMR 4.12 shall be made available by the licensed
funeral establishment during regular business hours, to the buyer of
the pre-need funeral contract to whom those records pertain, the
beneficiary of the pre-need funeral contract to whom those records
pertain, or the legal representative of either, for inspection within
ten days after receipt of any written request from any such person to
examine such records. Upon the written request of the buyer, the
contract beneficiary, or the legal representative of either, the
licensed funeral establishment shall furnish copies of all such records
to the requesting party. The licensed funeral establishment may charge
a reasonable fee, not to exceed the actual costs of reproduction, for
such copies.
- Every licensed
funeral establishment shall file with the Board, on or before June 30
of each calendar year, a written report setting forth the following
information:
- The number of
pre-need funeral contracts entered into during the preceding calendar
year;
- The total number of
pre-need funeral contracts to which the funeral establishment is a
party;
- The funding method
used to finance each pre-need funeral contract to which the licensed
funeral establishment is a party;
- The number of
pre-need funeral contracts to which the licensed funeral establishment
was a party and which were performed during the preceding calendar year;
- The number of
pre-need funeral contracts to which the licensed funeral establishment
was a party which were transferred during the preceding calendar year;
- The number of
pre-need funeral contracts to which the licensed funeral establishment
was a party which were cancelled during the preceding calendar year;
- The names and
addresses of all banks, trust companies, and insurance companies
holding any funds received in connection with any such pre-need funeral
contracts during the preceding calendar year; and
- The location within
the Commonwealth of Massachusetts where its records pertaining to
pre-need funeral contracts are maintained.
Said
report shall be made in such form and manner as the Board may direct.
- Upon request by any
authorized representative of the Board in connection with any official
inquiry, a licensed funeral establishment shall furnish complete
written information regarding the total amount of assets being held in
connection with pre-need funeral contracts by each institution or
company identified pursuant to 239 CMR 4.12(6) which is holding any
such funds.
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4.13: Penalties
Violation
of any provision of this chapter shall be considered a violation of
M.G.L. c. 112, § 84A(j), and may also be considered
"gross misconduct in the practice of the profession" within the meaning
of M.G.L. c. 112, § 61, and shall constitute grounds for
disciplinary action by the Board.
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4.14: Effective Date
- The provisions of 239
CMR 4.00 shall apply in full to all pre-need funeral contracts which
are established on or after January 1, 2004.
- With respect to any
and all pre-need funeral contracts established prior to January 1, 2004:
- Such pre-need
funeral contracts shall be in compliance with the record-keeping
requirements of 239 CMR 4.12 no later than June 30, 2004; and
- All other
requirements of 239 CMR 4.00 shall apply to the administration and
performance of such pre-need funeral contracts as of January 1, 2004.
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REGULATORY
AUTHORITY
239 CMR 4.00: M.G.L. c. 112, § 85.
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