Existing law, the Cemetery and Funeral Act, prohibits a funeral establishment from entering into a preneed arrangement, contract, or plan that requires payment to the licensee for the final disposition of human remains or for funeral services or for the furnishing of personal property or funeral merchandise, wherein the use or delivery of those services, property, or merchandise is not immediately required unless the contract requires that all money paid under the agreement is held in trust, as specified. Existing law authorizes the income from the trust to be used to pay a reasonable annual fee for administering the trust and to establish a reserve as a revocation fee in the event of cancellation on the part of the beneficiary. Existing law prohibits the corpus of the trust from being used to pay any commission or other expenses of trust administration, or for the payment of taxes on the earnings of the trust. Existing law specifies that a willful violation of the act is a crime.
This bill would authorize the revocation fee to be paid to the trustee for administering the trust in the event that the corpus escheats to the state because a funeral establishment has been closed or dissolved, or has had its license revoked.
Existing law, the Unclaimed Property Law, provides that all intangible personal property maintained in a deposit or account, and the income or increment on that property held in a fiduciary capacity for the benefit of another that has remained unclaimed by the owner for more than 3 years escheats to the state. Under existing law, a person who claims to have been the owner, as defined, of property paid or delivered to the Controller under that law may file a claim to the property or to the net proceeds from its sale. Existing law requires to Controller to consider each claim, as specified, to determine if the claimant is the owner.
This bill would recast provisions of the Cemetery and Funeral Act to permit the corpus of the trust and any income accrued in the trust, including interest, dividends, and capital gains, to escheat to the state, in accordance with the Unclaimed Property Law, if for more than 3 years after the funds became payable and distributable, as defined, to the funeral establishment or the trustor, the beneficiary or trustor has not corresponded electronically or in writing concerning the property or otherwise indicated an interest. The bill would require a funeral establishment to report and pay or deliver all unclaimed preneed funeral trust funds, including the corpus of the trust, together with any income accrued, less a revocation fee, to the Controller, as specified. The bill would also specify that all funds maintained in a preneed funeral trust held by a trustee for a funeral establishment that has been dissolved, closed, or had its license revoked shall be returned to the beneficiary, trustor, or the legal representative of either the beneficiary or trustor within 30 days of dissolution, closure, or license revocation; however, if that person cannot be located, the funds shall escheat to the state in accordance with the Unclaimed Property Law, as specified. The bill would make other conforming changes.
Because this bill would change the definition of a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Statutes affected:
AB2332: 7735 BPC, 7737 BPC
02/14/20 - Introduced: 7735 BPC, 7737 BPC
05/04/20 - Amended Assembly: 7735 BPC, 7737 BPC
AB 2332: 7735 BPC, 7737 BPC