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FUNERAL SERVICE CONTRACTS |
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No person, firm or corporation shall enter into a funeral service contract to provide such
services, property or merchandise unless such person, firm or corporation is licensed
in accordance with the provisions of chapter 385. No person may arrange, promote or
sell any funeral service contract on behalf of a funeral service establishment unless such
person is an embalmer or funeral director licensed in accordance with the provisions of
chapter 385.
(P.A. 85-376, S. 2.)
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(a) A licensed funeral service establishment shall
deposit any money or securities which such establishment receives pursuant to a funeral
service contract, and within fifteen days of its receipt of such money or securities, in one
or more escrow accounts established in accordance with the provisions of this section.
(b) Each escrow account established pursuant to this section shall be administered
and maintained by an escrow agent. The funeral service establishment which deposits
money or securities in such escrow account shall appoint such agent who shall be one
of the following: (1) A national banking association; (2) a state bank and trust company;
(3) a federal or state chartered savings bank; (4) a federal or state chartered savings and
loan association; (5) a licensed insurance company, or (6) a registered broker-dealer.
No such institution shall be appointed as an agent unless such institution is authorized
by law to act as an escrow agent.
(c) Assets held in escrow accounts established pursuant to this section shall be invested in one or more of the following: (1) Deposit accounts insured by the Federal
Deposit Insurance Corporation; (2) accounts insured against loss of principal by an
agency or instrumentality of the United States government; (3) bonds in which savings
banks in this state may, by law, invest; (4) bonds of the United States or any agency
thereof or of this state or any municipality of this state; or (5) any other deposit account,
insurance contract, or security of a quality, safety and expense comparable to those set
forth in this subsection.
(d) All interest, dividends and other income earned on the amounts deposited in an
escrow account pursuant to this section shall be retained in such escrow account and
credited, less any administration expenses, to the respective interests of those persons
for whose benefit the escrow account is maintained. Amounts in an escrow account
shall be removed from such account only as provided in sections 42-200 to 42-206,
inclusive. Each party to a funeral service contract shall receive an annual statement of
the amount credited to such party's escrow account. Such statement shall include the
name and address of the escrow agent.
(e) If a purchaser of funeral services, property or merchandise defaults in making
payments required under the terms of such contract, or if the purchaser or the person
responsible for making funeral arrangements for a deceased beneficiary fails to have
the funeral service establishment provide services, the funeral service establishment
may retain any origination fee and any costs actually and reasonably incurred by such
establishment in the performance of the contract as liquidated damages, provided the
sum of the amount retained as an origination fee and the amount retained to pay for
costs incurred by the funeral establishment in the performance of the contract shall not
exceed an amount equal to five per cent of the amount in the escrow account at the time
the purchaser of funeral services defaults in making such payments. The balance of any
amount remaining in the escrow account shall be paid to such purchaser upon request.
(f) A person, firm or corporation licensed in accordance with the provisions of
chapter 385 which enters into a funeral service contract shall furnish the agent of an
escrow account established in accordance with the provisions of this section with the
name of the purchaser of such services, property or merchandise, the address and name
of the beneficiary of the funeral service contract and the amount contracted for, together
with a copy of the contract listing the services, personal property or merchandise to be
furnished by the funeral service establishment. Nothing in this section shall prohibit the
commingling within an escrow account of the money or securities received under more
than one funeral service contract for the purpose of management and investment of
funds in such escrow account.
(g) A funeral service contract shall provide that, if the particular merchandise provided for in the contract is not available at the time of death, the funeral service establishment shall furnish merchandise similar in style and at least equal in quality of material
and workmanship to the merchandise provided for in the contract.
(P.A. 85-376, S. 3; P.A. 90-46, S. 1; P.A. 91-357, S. 62, 78.)
History: P.A. 90-46 amended section to require that only one escrow agent be named to administer escrow accounts
established pursuant to funeral service contracts, where previously two were required; P.A. 91-357 deleted reference to
the Federal Savings and Loan Insurance Corporation from Subsec. (c).
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Funds held in an escrow account
in accordance with the provisions of a funeral service contract shall remain intact unless
such funds are commingled in accordance with the provisions of subsection (f) of section
42-202 or the purchaser of funeral services, property or merchandise defaults in making
payments required under the terms of the contract, as provided in subsection (e) of
section 42-202 or until the services contracted for have been performed or the contracted
for property or merchandise has been delivered. Upon submission to the escrow agent,
by the funeral service establishment, of proof that the services, personal property and
merchandise contracted for have been fully performed or delivered, the escrow agent
shall pay to such funeral service establishment the amounts deposited therein pursuant
to such funeral service contract, and all income earned thereon and retained in the escrow
account. If, for any reason, the funeral service establishment which has entered into a
funeral service contract for the sale of services, personal property, or merchandise and
which has deposited the funds into an escrow account in accordance with the provisions
of sections 42-200 to 42-206, inclusive, fails to meet its obligation under such contract
promptly after the death of the person to be benefited, the family, the next of kin, or the
legal representative of the deceased person, having provided for such services, personal
property or merchandise on behalf of the deceased person, may receive from the escrow
agent the amount of money in such escrow account. An affidavit which states that services have been performed or property delivered, signed by a member of the family,
next of kin, or legal representative of the deceased, and by the funeral service establishment which has provided such services, personal property or merchandise, and which
is delivered to the escrow agent shall be sufficient to authorize an escrow agent, acting
alone, to make such payment without liability to the person making the deposit of such
money into the escrow account or to any other person. Nothing contained in this section
shall relieve the funeral service establishment of its liability for nonperformance.
(P.A. 85-376, S. 4; P.A. 88-364, S. 55, 123; P.A. 90-46, S. 2.)
History: P.A. 88-364 changed incorrect references to "this section" to references to Sec. 42-202; P.A. 90-46 amended
section to require that only one escrow agent, rather than two, be named to administer escrow accounts established pursuant
to funeral service contracts.
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The legal representative of the decedent
or a person who has entered into a funeral service contract with a funeral service establishment, upon written notice to such establishment and to the escrow agent and subject
to the provisions of section 17b-91, may cancel any funeral service contract prior to the
performance by such establishment. In the event of such a cancellation, all money in
the escrow account paid by such person, together with all accrued income, less costs
actually and reasonably incurred by the funeral service establishment in the performance
of such contract, shall be returned to such person.
(P.A. 85-376, S. 5; P.A. 86-290, S. 7, 10; P.A. 90-46, S. 3.)
History: P.A. 86-290 amended section by adding a reference to Sec. 17-83a; P.A. 90-46 amended section to require
that only one escrow agent, rather than two, be named to administer escrow accounts established pursuant to funeral service
contracts.
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A funeral
service contract shall not be deemed a burial insurance policy under section 38-32.
(P.A. 85-376, S. 6.)
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A violation of any of the provisions of sections
42-200 to 42-205, inclusive, shall be deemed an unfair or deceptive trade practice in
accordance with the provisions of chapter 735a.
(P.A. 85-376, S. 7.)
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An irrevocable funeral contract may
be entered into in which the amount held in escrow may be disbursed only upon the
death of the beneficiary, provided such a contract does not exceed five thousand four
hundred dollars and all interest accumulates to the escrow account and is inaccessible to
the beneficiary. Such irrevocable funeral contracts may be transferred from one funeral
service establishment to another upon request of the beneficiary. The purchase of an
irrevocable funeral contract shall not preclude an individual from purchasing other funeral contracts that are revocable.
(P.A. 86-290, S. 8, 10; P.A. 88-239; P.A. 92-168; June 18 Sp. Sess. P.A. 97-2, S. 162, 165.)
History: P.A. 88-239 changed the value of an irrevocable funeral contract from two to three times the highest amount
payable for the burial of a public assistance recipient; P.A. 92-168 changed the value of an irrevocable funeral contract
from three to four times the highest amount payable for the burial of a public assistance recipient; June 18 Sp. Sess. P.A.
97-2 changed the value of an irrevocable funeral contract from four times the highest amount payable for the burial of a
public assistance recipient to five thousand four hundred dollars and made conforming changes, effective July 1, 1997.
It is insufficient to merely think that one has complied with statute; compliance means that the irrevocable contract
must be with a licensed funeral establishment. 57 CA 695.
