| Arkansas Prepaid Funeral Benefits Law |
| §
23-40-113 |
Change
of Ownership |
| (a) |
The seller shall
apply for change of ownership or control when: |
|
(1) |
The seller transfers
all or a portion of the interest in any contract for prepaid funeral benefits; |
|
(2) |
The seller transfers
one (1) or more of its establishments for providing funeral goods or services; |
|
(3) |
All or a portion of
the equity ownership of a seller has been transferred which will result in a change of: |
|
|
(A) |
The controlling
interest of a seller when the seller is a corporation; |
|
|
(B) |
Ownership of a seller
when the seller is other than a corporation; |
|
(4) |
The seller transfers
all of its business assets relating to providing funeral goods or services; |
|
(5) |
The seller terminates
its business of providing funeral goods or services. |
| (b) |
At least fifteen (15)
days prior to the proposed occurrence of an event described in subsection (a) of this
section, the seller shall file a verified change of ownership application with the
Insurance Commissioner which shall contain the following: |
|
(1) |
The name and address
of the seller; |
|
(2) |
The name and address
of the organization proposing to acquire property of the seller, hereinafter referred to
as the "transferee"; |
|
(3) |
A description of the
property and of the proposed transaction, as set forth in subsection (a) of this section; |
|
(4) |
An accounting of the
trust fund and all outstanding contracts, which accounting shall contain all the
information required in the annual report, prepared as of a date within thirty (30) days
of the required application filing date; |
|
(5) |
Any required
documents or amendments thereto relating to the trust fund; |
|
(6) |
A copy of any notice
proposed to be sent to the contract buyers after the transfer; |
|
(7) |
A filing fee of five
hundred dollars ($500.00); and |
|
(8) |
Any other information
which may reasonably be required by the Insurance Commissioner pursuant to rule or order. |
| (c) |
The Insurance
Commissioner shall approve the seller's application for change of ownership by order if: |
|
(1) |
The transferee set
forth in the application holds a valid, current permit pursuant to the provisions of this
chapter; |
|
(2) |
The accounting
required is complete, accurate, and reflects the trust fund whole and intact; and |
|
(3) |
All required
information and documents are filed with and approved by the Insurance Commissioner. |
| (d) |
The Insurance
Commissioner shall have the authority by rule or order to waive or reduce any or all of
the requirements contained in subsection (b) of this section as not being necessary or
appropriate in the public interest or for the protection of the contract buyers. |
| (e) |
The seller, or
interest therein, shall remain liable for all funds and transactions to the effective date
of the transfer. The Insurance Commissioner shall recover from the seller, for the benefit
and protection of contract buyers, all contract proceeds which the seller has not properly
accounted for and deposited into the trust fund. |
| §
23-40-114 |
Trust
Funds - Creation - Deposits, Withdrawals, and Trandsfers of Funds |
| (a) |
All contract proceeds
collected under contracts for prepaid funeral benefits, including funds collected under
contracts entered into before June 28, 1985, shall be deposited with a trustee within
forty-five (45) days after collection, to be held, invested, and administered in a trust
fund for the benefit and protection of the contract purchasers pursuant to this chapter. |
| (b) |
Each trust fund shall
be created by a letter or written agreement which shall be filed with and approved by the
Insurance Commissioner prior to placement of funds. |
| (c) |
The seller
may deposit money or property as surplus at any time. |
| (d) |
The Insurance
Commissioner shall prescribe by regulation proper affidavits and forms for the withdrawal
of funds from the trust fund. |
| (e) |
The Insurance
Commissioner shall first approve and authorize in writing any transfer of funds from an
existing trustee to a proposed new trustee if the proposed new trustee meets the
requirements of this chapter and the rules and regulations promulgated thereunder. |
| (f) |
The licensee shall
file a request for a transfer of funds, together with a filing fee of two hundred and
fifty dollars ($250.00), and any other information required by rule or regulation. |
| (g) |
This
section shall not apply to the proceeds of insurance policies or contracts, and it shall
not be necessary to establish a trust for the payment of such proceeds to the beneficiary
designated in the policy or contract or the assignee or transferee thereof. |
| §
23-40-115 |
Trust
Funds - Investments |
| (a) |
(1) |
The trustees shall
invest the trust fund only in the following: |
|
|
(A) |
Demand
deposits, savings accounts, certificates of deposits, and all other accounts which are
insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation; |
|
|
(B) |
Bonds and
obligations which are insured by, fully guaranteed as to principal and interest by, and
due from the United States Government or any of its agencies, including the Federal
National Mortgage Association and the Government National Mortgage Association, and any
repurchase obligations which are secured by any of the foregoing; |
|
|
(C) |
i |
Corporate,
state, municipal, or political subdivision bonds or obligations which are rates Aa or
better by Moody's or AA or better by Standard & Poor's rate services; or |
|
|
|
ii |
(a) |
Bonds of any school
district in this state. |
|
|
|
|
(b) |
Provided, however, no
more than thirty percent (30%) of the total trust assets may be invested in such school
bonds; and |
|
|
(D) |
(1) |
Mutual
funds or common trust funds whose portfolio is made up of investments that are described
in subdivisions (a)(1)(A)-(C) of this section. |
|
|
|
(2) |
Investments
described in subdivisions (a)(1)(B)-(D) of this section shall be purchased and held by the
trustee which has trust powers under a trust agreement filed with and approved by the
Insurance Commissioner. |
| (b) |
The trustee shall
maintain the trust fund in a manner consistent with the following investment policies; |
|
(1) |
Not less than one
hundred thousand dollars ($100,000.00) of the trust fund shall be invested in investments
described in subdivision (a)(1) of this section. However, if the total amount of the trust
fund is less than one hundred thousand dollars ($100,000.00), then all of the trust fund
shall be invested in investments described in subdivision (a)(1) of this section; |
|
(2) |
The trust fund shall
contain at all times liquid investments having a cost basis not less than thirty percent
(30%) of the total contract proceeds disbursed from the trust fund as described in Section
23-40-116(1)-(3) during the preceding calendar year; |
|
(3) |
No investment shall
be sold, exchanged, or liquidated at less than its cost if it would result in the
aggregate cost basis of the trust fund minus undistributed net investment income being
less than the aggregate amount of contract proceeds held in the trust fund. However, this
prohibition shall not apply if the seller contemporaneously deposits with the trustee a
sum of money or other property in an amount equal to the loss realized upon the sale,
exchange, or liquidation of such investment; |
|
(4) |
The portion of the
contract proceeds collected for cash accommodation items pursuant to the terms of a
contract shall be deposited in a separate account which shall be clearly identified as
"cash accommodation funds" and shall set forth the name of the contract buyer.
All income earned on the cash accommodation funds shall become a part of the principal of
the respective accounts. |
| §
23-40-116 |
Trust
Funds - Disbursements |
| The
trustee shall disburse money or other property from the trust fund only as follows: |
| (1) |
Upon the death of the
contract beneficiary and upon proper proof and documentation being submitted to and
approved by the Insurance Commissioner, or pursuant to such other method as may be
permitted under valid rules and regulations adopted by the Insurance Commissioner, in
which event the contract proceeds shall be paid to the seller; |
| (2) |
Upon cancellation of
the prepaid contract pursuant to Section 23-40-122 and upon proper proof and documentation
being submitted to and approved by the Insurance Commissioner, or pursuant to such other
method as may be permitted under valid rules and regulations adopted by the Insurance
Commissioner. |
| (3) |
Upon the breach of
contract by either party, in which event the contract proceeds shall be paid according to
a judgment of a court of competent jurisdiction; |
| (4) |
Upon the withdrawal
of net investment income or surplus by the seller, which may be made at any time and from
time to time. |
