1111.19 Preneed funeral contracts.

(A) As used in this section:

(1) “Financial institution” means a bank, savings bank, or savings association located in this state and insured by the federal deposit insurance corporation or a credit union authorized to do business in this state.

(2) “Preneed funeral contract” means a written agreement, contract, or series of contracts to sell or otherwise provide any funeral services, funeral goods, or any combination thereof, to be used in connection with the funeral or final disposition of a dead human body, where payment for the goods or services is made either outright or on an installment basis, prior to the death of the person purchasing them or for whom they are purchased. A preneed funeral contract that includes funeral services may be sold only by a funeral director licensed pursuant to Chapter 4717. of the Revised Code. For the purpose of this section, “funeral goods” includes caskets. “Preneed funeral contract” does not include any preneed cemetery merchandise and services contract or any agreement, contract, or series of contracts pertaining to the sale of any burial lot, burial or interment right, entombment right, or columbarium right with respect to which an endowment care fund is established or is exempt from establishment pursuant to section 1721.21 of the Revised Code.

(B)(1) Any preneed funeral contract that involves the payment of money shall be in writing and in compliance with the laws and rules of this state. One hundred per cent of all payments for funeral goods and services made under a preneed funeral contract shall remain intact and held in trust for the benefit of the person for whose benefit the contract is made. No money in a preneed funeral contract trust shall be distributed from the trust except as provided in this section. Any purchaser on initially entering into a preneed funeral contract may, within seven days, rescind the contract and request and receive from the seller one hundred per cent of all payments made under the contract.

(2) Every preneed funeral contract entered into on or after the effective date of this amendment shall include the following notices in substantially the following form:

NOTICE: Under Ohio law, the person holding the right of disposition of the remains of the beneficiary of this contract pursuant to section 2108.70 or 2108.81 of the Revised Code will have the right to make funeral arrangements inconsistent with the arrangements set forth in this contract. However, the beneficiary is encouraged to state his or her preferences as to funeral arrangements in a declaration of the right of disposition pursuant to section 2108.72 of the Revised Code, including that the arrangements set forth in this contract shall be followed.

NOTICE: You, as the purchaser of this contract, will be notified in writing when the trustee of this contract has received a deposit of the funds you paid the seller under this contract. If you do not receive the notice within sixty days of the date you paid the funds to the seller, you should contact the trustee.

(C) Within thirty days after the seller of funeral goods or services receives any payment under a preneed funeral contract, the seller shall deliver the moneys received and not returned to the purchaser as provided in division (B) of this section, to the trustee designated in the preneed funeral contract or an amendment to it.

(D) The trustee of each preneed funeral contract trust shall be a financial institution or a natural person not required by this chapter to be licensed to do trust business. A natural person acting as trustee of a preneed funeral contract trust shall be bonded by a corporate surety bond in an amount not less than one hundred per cent of the funds in all of the preneed funeral contract trusts the person serves as trustee.

(E)(1) A trustee shall establish a separate preneed funeral contract trust for the moneys paid under each preneed funeral contract, unless the purchaser under a preneed funeral contract authorizes the trustee to place the moneys paid in a combined preneed funeral contract trust. The trustee of a combined preneed funeral contract trust shall keep exact records of the corpus, income, expenses, and disbursements with regard to each beneficiary of a preneed funeral contract for whom moneys are held in the trust. The terms of a preneed funeral contract trust shall be governed by this section.

(2) A trustee may charge a fee for managing a preneed funeral contract trust. The fee shall not exceed the amount regularly or usually charged for similar services rendered by the financial institution when serving as a trustee, and shall be paid only from the income on that trust.

The trustee of a preneed funeral contract shall notify the purchaser of the contract in writing of the amount of any deposit with the trustee of a payment under the contract within fifteen days of receiving the deposit from the seller of the contract.

(F) No preneed funeral contract shall restrict the purchaser from making the contract irrevocable. On the purchase by an individual of an irrevocable preneed funeral contract, the selling funeral director assumes the legal obligation to provide for the funeral of the individual pursuant to the terms of the contract.

(G) The purchaser of a preneed funeral contract that is not irrevocable may, on not less than fifteen days’ notice, cancel the contract and request and receive from the trustee payments made under the contract and any income earned up to the time of cancellation, less fees, distributions, and expenses made pursuant to this section; except, if a preneed funeral contract stipulates a firm or fixed or guaranteed price for funeral services and goods for future use at a time determined by the death of the beneficiary of the preneed funeral contract, the purchaser, on not less than fifteen days’ notice, may cancel the contract and receive from the trustee ninety per cent of the principal paid pursuant to the preneed funeral contract, not less than eighty per cent of any interest earned up to the time of cancellation, and not less than eighty per cent of any income earned on the funds since the funds were paid to the seller and up to the time of cancellation less any fees, distributions, and expenses. On cancellation, after the funds have been distributed to the purchaser pursuant to this division, the trustee shall distribute all remaining funds attributable to the canceled preneed funeral contract to the seller. If more than one purchaser enters into the contract, all of those purchasers must request cancellation for it to be effective under this division, and the trustee shall refund to each purchaser only those funds that purchaser has paid under the contract and a proportionate amount of any income earned on those funds, less any fees, distributions, and expenses.

(H) A certified copy of the certificate of death or other evidence of death satisfactory to the trustee shall be furnished to the trustee as evidence of death, and the trustee shall promptly pay the accumulated payments and income, if any, according to the preneed funeral contract. The payment of the accumulated payments and income pursuant to this section and, when applicable, the preneed funeral contract, shall relieve the trustee of any further liability on the accumulated payments and income.

(I) For purposes of this section, the seller is deemed to have delivered funeral goods pursuant to a preneed funeral contract when either of the following occurs:

(1) The seller makes actual delivery of the goods to the beneficiary;

(2) The seller does all of the following:

(a) Receives delivery of the goods on behalf of the beneficiary;

(b) Stores the goods upon the real property of a funeral home licensed in this state;

(d) At the time of the purchaser’s final payment, provides the beneficiary with evidence of ownership in the beneficiary’s name showing the goods to be free and clear of any liens or other encumbrances.

(J) The seller of funeral goods or services under a preneed funeral contract annually shall submit to the board of embalmers and funeral directors the reports the board requires.

(K) The general assembly intends this section to be construed as a limitation on the manner in which a person is permitted to accept funds in prepayment for funeral services to be performed in the future, or funeral goods to be used in connection with the funeral or final disposition of human remains, to the end that at all times members of the public may have an opportunity to arrange and pay for funerals for themselves and their families in advance of need while at the same time providing all possible safeguards to ensure that prepaid funds cannot be dissipated, whether intentionally or not, but remain available for payment for funeral goods and services in connection with the funeral or final disposition of dead human bodies.

(L) This section does not apply when the seller of funeral goods or services under a preneed funeral contract is an established and legally cognizable church or denomination that is exempt from federal income taxation under section 501(c)(3) of the “Internal Revenue Code of 1986,” 100 Stat. 2085, 26 U.S.C.A. 501, as amended, and the preneed funeral contract pertains to a cemetery owned and operated entirely and exclusively by the church or denomination; provided the church or denomination adopts, on a voluntary basis, rules and other measures to safeguard and secure all funds received under any preneed funeral contract.

(M) This section does not prohibit persons who are not licensed funeral directors from selling funeral goods pursuant to a preneed funeral contract; however, all sellers of funeral goods pursuant to a preneed funeral contract shall comply with this section unless the seller is specifically exempt from compliance by this section.

Effective Date: 10-20-1999; 10-12-2006