CHAPTER 743c

FUNERAL SERVICE CONTRACTS

Table of Contents

Sec. 42-200. Funeral service contracts: Definitions; requirements. Funeral service establishment to maintain copies of contracts. Notification to purchaser of transfer of more than fifty per cent ownership or of closure.

Sec. 42-201. Funeral service contracts limited to licensed firms and persons.

Sec. 42-202. Escrow accounts.

Sec. 42-203. Disposition of funds held in escrow.

Sec. 42-204. Cancellation of revocable funeral service contract.

Sec. 42-205. Funeral service contract not a burial insurance policy.

Sec. 42-206. Unfair trade practice.

Sec. 42-206a. Arranging, promoting or selling funeral service contract with intent to defraud.

Sec. 42-206b. Intentional deprivation of services, property or merchandise under funeral service contract.

Sec. 42-206c. Limitation on prosecution.

Sec. 42-207. Irrevocable funeral service contract. Revocation of revocable funeral service contract purchased by Medicaid beneficiary.

Secs. 42-208 and 42-209. Reserved


Sec. 42-200. Funeral service contracts: Definitions; requirements. Funeral service establishment to maintain copies of contracts. Notification to purchaser of transfer of more than fifty per cent ownership or of closure. (a) For the purposes of this section and sections 42-201 to 42-207, inclusive, “funeral service contract” means a contract which requires the payment of money, the delivery of securities or the assignment of a death benefit payable under an individual or group life insurance policy in exchange for the final disposition of a dead human body, including funeral, burial or other services, or the furnishing of personal property or funeral merchandise in connection with any such disposition, wherein the use or delivery of such services, property or merchandise is not required immediately, “beneficiary” means the person for whom the goods or services purchased in a funeral service contract are to be provided, and “purchaser” means the person who signs the funeral service contract.

(b) A funeral service contract shall be in writing and shall contain, except as provided in subsection (c) of this section, the following:

(1) The name, address, telephone number and Social Security number of the beneficiary and the purchaser;

(2) The name, address, telephone number and license number of the funeral director for the funeral service establishment providing the goods or services;

(3) A list of the selected goods or services, if any;

(4) The amount of funds paid or to be paid by the purchaser for such contract, the method of payment and a description of how such funds will be invested and how such investments are limited to those authorized pursuant to subsection (c) of section 42-202;

(5) A description of any price guarantees by the funeral service establishment or, if there are no such guarantees, a specific statement that the contract contains no guarantees on the price of the goods or services contained in the contract;

(6) The name and address of the escrow agent designated to hold the prepaid funeral services funds;

(7) A written representation, in clear and conspicuous type, that the purchaser should receive a notice from the escrow agent acknowledging receipt of the initial deposit not later than twenty-five days after receipt of such deposit by a licensed funeral director;

(8) A description of any fees to be paid from the escrow account to the escrow agent or any third party provider;

(9) A description of the ability of the purchaser or the beneficiary to cancel a revocable funeral service contract and the effect of cancelling such contract;

(10) For irrevocable contracts, a description of the ability of the beneficiary to transfer such contract to another funeral home; and

(11) The signature of the purchaser or authorized representative and the licensed funeral director of the funeral service establishment.

(c) A funeral service contract that is funded through an assignment of a death benefit payable under an individual or group life insurance policy, need not contain the provisions described in subdivisions (4), (6), (7) and (8) of subsection (b) of this section.

(d) A funeral service establishment shall maintain a copy of all funeral service contracts entered into or assigned to such establishment and a list of each escrow account established pursuant to such contracts. Such list shall include (1) the name and address of the escrow agent and the amount of funds deposited with such agent or the name and address of the insurance company issuing the individual or group life insurance policy, and (2) the name and address of the purchaser of the funeral services contract. Such contracts shall be maintained by the funeral service establishment for a period of six years after the completion of the contracted services. Such establishment shall disclose such information, upon request, to the Commissioner of Public Health, the Commissioner of Consumer Protection or the Attorney General.

(e) A funeral service establishment shall notify the purchaser of each funeral service contract with such establishment not later than ten days after any transfer of more than a fifty per cent ownership share of such establishment to another person or of the closure of such establishment.

(P.A. 85-376, S. 1; P.A. 05-248, S. 7; P.A. 06-87, S. 1; P.A. 12-36, S. 3.)

History: P.A. 05-248 replaced reference to Sec. 42-206 with Sec. 42-206c and made a technical change; P.A. 06-87 designated existing provisions as Subsec. (a) and defined “beneficiary” and “purchaser”, and added Subsec. (b) re requirements for funeral service contracts, Subsec. (c) requiring funeral service establishments to maintain copies of funeral service contracts and Subsec. (d) requiring notification of purchasers re transfer of more than 50% ownership share or closure of establishment; P.A. 12-36 amended Subsec. (a) by applying definitions to Sec. 42-207 and redefining “funeral service contract”, added new Subsec. (c) re exception for contracts funded through assignment of a death benefit, redesignated existing Subsecs. (c) and (d) as Subsecs. (d) and (e), amended redesignated Subsec. (d) by designating existing provisions as Subdivs. (1) and (2) and adding provision re list of escrow accounts to include name and address of insurance company in Subdiv. (1), and made technical changes, effective May 14, 2012.

Sec. 42-201. Funeral service contracts limited to licensed firms and persons. 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. Any person who violates the provisions of this section shall be guilty of a class A misdemeanor.

(P.A. 85-376, S. 2; P.A. 05-248, S. 3.)

History: P.A. 05-248 added provision making violation of section a class A misdemeanor.

Sec. 42-202. Escrow accounts. (a) A licensed funeral service establishment shall deposit any money or securities which such establishment receives pursuant to a funeral service contract, and not later than fifteen days after its receipt of such money or securities, in one or more escrow accounts established in accordance with the provisions of this section. Not later than ten days after the initial deposit of such money or securities, the escrow agent shall notify the purchaser, in writing, of the agent’s receipt of such initial deposit and the amount of such initial deposit. Such escrow agent shall notify the purchaser of any transfer of such funds or securities, except when such transfer is to pay for services as required by the funeral service contract. Such funds or securities shall not be transferred to an insurance contract without a description to the purchaser by the funeral director of any fees, costs or commissions associated with such insurance contract and without obtaining the written consent of the purchaser to such transfer.

(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; (5) insurance contracts with an insurance company licensed by the state of Connecticut to offer such contracts and maintaining not less than a B plus rating for financial security by A.M. Best; or (6) any other deposit account 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 specified in the funeral services contract, 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 such 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.

(h) The provisions of this section shall not apply to a funeral service contract funded through an assignment of a death benefit payable under an individual or group life insurance policy.

(P.A. 85-376, S. 3; P.A. 90-46, S. 1; P.A. 91-357, S. 62, 78; P.A. 06-87, S. 2; P.A. 12-36, S. 4.)

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); P.A. 06-87 amended Subsec. (a) to make technical changes, require escrow agent to provide certain notification to purchaser and prohibit transfer of funds or securities to insurance contract without description to purchaser of fees, costs or commissions and without obtaining purchaser’s written consent, made a technical change in Subsec. (b) and amended Subsec. (c) to add provision re investment of assets in insurance companies as new Subdiv. (5), redesignating existing Subdiv. (5) as (6) and deleting “insurance contract” therein; P.A. 12-36 amended Subsec. (e) by adding reference to services specified in the funeral services contract and making a technical change and added Subsec. (h) re provisions not applicable to contracts funded through assignment of a death benefit, effective May 14, 2012.

Sec. 42-203. Disposition of funds held in escrow. (a) 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 that has entered into a funeral service contract for the sale of services, personal property, or merchandise and that 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 that 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 that has provided such services, personal property or merchandise, and that 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.

(b) The provisions of this section shall not apply to a funeral service contract funded through an assignment of a death benefit payable under an individual or group life insurance policy.

(P.A. 85-376, S. 4; P.A. 88-364, S. 55, 123; P.A. 90-46, S. 2; P.A. 12-36, S. 5.)

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; P.A. 12-36 designated existing provisions as Subsec. (a) and made technical changes therein and added Subsec. (b) re provisions not applicable to contracts funded through assignment of a death benefit, effective May 14, 2012.

Sec. 42-204. Cancellation of revocable funeral service contract. The legal representative of the decedent or a person who has entered into a revocable funeral service contract with a funeral service establishment, upon written notice to such establishment and to the escrow agent, if any, and subject to the provisions of section 17b-91, may cancel any revocable 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; P.A. 12-36, S. 6.)

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; P.A. 12-36 added references to revocable funeral service contracts and made a technical change, effective May 14, 2012.

Sec. 42-205. Funeral service contract not a burial insurance policy. A funeral service contract shall not be deemed a burial insurance policy under section 38a-464.

(P.A. 85-376, S. 6; P.A. 05-288, S. 146.)

History: P.A. 05-288 made a technical change, effective July 13, 2005.

Sec. 42-206. Unfair trade practice. 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.)

Sec. 42-206a. Arranging, promoting or selling funeral service contract with intent to defraud. Any person who arranges, promotes or sells a funeral service contract with the intent to defraud another person shall be guilty of a class D felony.

(P.A. 05-248, S. 4.)

Sec. 42-206b. Intentional deprivation of services, property or merchandise under funeral service contract. Any person who enters into a funeral service contract and intentionally deprives the beneficiary of such contract or the estate or heirs of such beneficiary of the services, personal property or merchandise contracted for shall be guilty of a class D felony.

(P.A. 05-248, S. 5.)

Sec. 42-206c. Limitation on prosecution. Notwithstanding the provisions of section 54-193, no person may be prosecuted for an offense under section 42-206a or 42-206b except within five years from the date of death of the beneficiary of the funeral service contract or within five years from the date the victim notifies any police officer or state’s attorney acting in such police officer’s or state’s attorney’s official capacity of the commission of such offense, whichever is earlier.

(P.A. 05-248, S. 6.)

Sec. 42-207. Irrevocable funeral service contract. Revocation of revocable funeral service contract purchased by Medicaid beneficiary. An irrevocable funeral service contract may be entered into in which the amount held in escrow or a death benefit payable under an individual or group life insurance policy 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, growth or dividends accumulates to the escrow account or insurance policy and are inaccessible to the beneficiary. Such irrevocable funeral service contracts may be transferred from one funeral service establishment to another upon request of the beneficiary or a legal representative of the beneficiary. The purchase of an irrevocable funeral service contract shall not preclude an individual from purchasing other funeral service contracts that are revocable, provided any such revocable funeral service contract purchased by a Medicaid beneficiary may be revoked only upon written notice by the Medicaid beneficiary to the Commissioner of Social Services.

(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; P.A. 06-87, S. 3; P.A. 12-36, S. 7.)

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 $5,400 and made conforming changes, effective July 1, 1997; P.A. 06-87 added provision re revocation of revocable funeral contract purchased by Medicaid beneficiary; P.A. 12-36 added provisions re contract in which death benefit is payable under an insurance policy, added provision re transfer of contract at request of the beneficiary’s legal representative and made technical changes, effective May 14, 2012.

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.

Secs. 42-208 and 42-209. Reserved for future use.