Md. Code Regs. 10.29.06.04

Current through Register Vol. 51, No. 12, June 14, 2024

Section 10.29.06.04 - Disposition of Preneed Contract Fund

A. Within 10 days of receiving payment under a preneed contract, the seller shall deposit into an interest-bearing escrow or trust account that is insured by the Federal Deposit Insurance Corporation (FDIC):

(1) An amount from the payment that is equal to at least 80 percent of the selling price of a casket or casket vault under the preneed contract; and

(2) 100 percent of the payment that is for all other goods and services under the preneed contract.

B. The seller need not have a separate interest-bearing escrow or trust account for each preneed contract executed.

C. The seller may place in the escrow account with the other funds up to 100 percent of the price of the casket or casket vault.

D. Interest on Preneed Contract Fund.

(1) The interest or dividends earned by the interest-bearing escrow or trust account belongs to the buyer of the contract.

(2) The seller shall send to the buyer a tax form stating the amount of the interest accumulated in the account each year that the contract is in effect until the time of death of the beneficiary.

(3) It is the responsibility of the buyer to pay the taxes due on that interest.

(4) Money remaining in the interest-bearing escrow or trust account after the performance of the contract belongs to the seller.

E. The seller may not withdraw from the account the money received from the buyer unless the services and merchandise have been provided as agreed to in the contract or unless the buyer terminates the contract.

F. The seller may withdraw money from the account if one of the following conditions are met:

(1) The buyer or legal representative of the buyer forwards a notarized statement and withdrawal request stating that the seller may:

(a) Cancel the prepaid contract if revocable; or

(b) Transfer the monies to a named substitute trustee if the prepaid contract is irrevocable; or

(2) The funeral home presents a copy of a filed or certified death certificate to the banking institution holding the account funds for payment of services provided under a preneed contract.

Md. Code Regs. 10.29.06.04

Regulation .04 amended effective March 18, 2002 (29:5 Md. R. 504)
Regulation .04A amended effective August 27, 2007 (34:17 Md. R. 1508)
Regulation .04F adopted effective August 27, 2007 (34:17 Md. R. 1508)