Creation and Content of Pre-need Funeral Contracts

(1) Parties to Pre-need Funeral Contracts. All Pre-need Funeral Contracts shall be between a Buyer and a Licensed Funeral Establishment. The Licensed Funeral Establishment may not accept cash or checks made payable to the Licensed Funeral Establishment or individual registrants for purposes of funding the Pre-need Funeral Contract unless said checks are endorsed and sent to the banking institution or insurance company within one business day. Such funds must be made payable directly to the banking institution or insurance company. (2) Who May Prepare Pre-need Funeral Contracts. No person shall prepare, negotiate or execute a Pre-need Funeral Contract with a Buyer or potential Buyer; or receive, or manage any funds made payable to a banking institution or insurance company as payment for the Funeral Goods and/or Services identified in such a Pre-need Funeral Contract; unless: (a) he or she is a Type 3; or (b) he or she is a Type 6 and meets the conditions outlined in 239 CMR 3.04(5): Pre-need Funeral Arrangements. (3) Location of Offices in Which Pre-need Funeral Contracts May Be Prepared. All Pre-need centers or offices which engage in the preparation, negotiation or execution of Pre-need Funeral Contracts or arrangements shall be located within a duly Licensed Funeral Establishment. (4) Provision of Buyer's Guide Required. A copy of a Buyer's Guide to Pre-need Funeral Contracts, approved by the Board, shall be furnished to every person or identifiable group of persons who enter into negotiations or discussions with a Type 3 or Type 6 regarding a Pre-need Funeral Contract prior to the signing of any such contract by the parties. A Buyer's Guide to Pre-need Funeral Contracts shall, at a minimum, inform the consumer that: (a) A consumer can pre-plan his or her funeral arrangements without paying for such arrangements in advance; (b) The cost of the funeral goods and services purchased through a Pre-need Funeral Contract may be higher or lower at the time of the Beneficiary's death than the amounts set forth in the contract, and the Beneficiary's rights and obligations with respect to such changes in price are determined by the contract; (c) There are various methods of financing Pre-need Funeral Contracts, including but not limited to trusts, Pre-need insurance policies, funeral insurance, traditional life insurance policies, annuities, and separately-created Medicaid-compliant burial accounts; (d) Each such financing method has certain briefly-described tax, Medicare and Medicaid eligibility, and cancellation consequences; (e) The consumer has a legal right to cancel such a Pre-need Funeral Contract within ten days of its execution without penalty; (f) Cancellation or revocation of a Pre-need Funeral Contract after the expiration of the ten-day "cooling-off" period may have adverse consequences in terms of eligibility for Medicaid or other government benefits programs; (g) A Licensed Funeral Establishment may not impose any surcharge, fee, or other penalty upon any person who seeks to exercise his or her rights to cancel or transfer a Pre-need Funeral Contract. (h) The funeral establishment will report any changes in the Pre-need Funeral Contract, or withdrawals of funds which were originally received in connection with that contract, to the applicable governmental authority responsible for the administration of Medicaid or other governmental benefits programs to the extent that such reporting is required by law. (i) The Licensed Funeral Establishment must: 1. deposit any Pre-need funds received from the consumer into a Funeral Trust Account not later than five business days after the ten-day "cooling-off" period; or 2. pay any Pre-need funds received from the consumer to an insurance company not later than five business days after the ten-day "cooling-off period". (j) The Licensed Funeral Establishment must send the consumer and the Beneficiary (if different) written confirmation that the Pre-need funds have been deposited in a Funeral Trust Account or used to purchase a Pre-need Insurance Policy or Annuity not later than ten days after the funds are deposited or paid. Such written confirmation must bear the signature of a duly-authorized representative of the insurance company which issued the Pre-need Insurance Policy or Annuity, whichever applies. (k) The consumer may transfer his or her Pre-need Funeral Contract to another Licensed Funeral Establishment at any time. (l) The Licensed Funeral Establishment may not accept cash or check made payable to the Licensed Funeral Establishment for purposes of funding the Pre-need Funeral Contract unless said checks are endorsed and sent to the banking institution or insurance company within one business day. Such funds must be made payable directly to the banking institution or insurance company. (5) Required Form and Contents of Pre-need Funeral Contracts. (a) All Pre-need Funeral Contracts shall be in writing and shall be prepared and executed on one of the Pre-need Funeral Contract forms prescribed by the Board. (b) Each Pre-need Funeral Contract shall be complete and shall contain all information specified on the form used, including but not limited to: 1. The signature of the Buyer; and 2. The signature of the Type 3 or Type 6 who is acting as the authorized representative of the contracting funeral establishment. (c) Each Pre-need Funeral Contract shall: 1. State conspicuously on the first page of the contract, in a manner reasonably calculated to attract the attention of a reasonable person, whether or not the Buyer has selected specific Funeral Goods and/or Services; 2. Be accompanied by an Itemized Statement of Funeral Goods and Services which meets the requirements of the Federal Trade Commission Funeral Rule (16 CFR Part 453), M.G.L. c. 112, § 84B and 239 CMR 3.14: Price Disclosure to Consumer, which shall be attached to that Pre-need Funeral Contract and incorporated by reference into that contract; 3. If the Buyer has selected specific Funeral Goods and/or Services, the Itemized Statement of Funeral Goods and Services shall specify the prices for each identified funeral good or service selected by the Buyer to the extent known at the time the Pre-need Funeral Contract is prepared; 4. If the Buyer has not selected any specific Funeral Goods and/or Services, the Itemized Statement of Funeral Goods and Services shall have the words "No Goods or Services Selected" clearly and conspicuously marked thereon; and 5. Permit the buyer to specify if the selected Funeral Goods and/or Services may be deemed Revocable or Irrevocable, subject to any attachments by Medicaid or other government benefit programs. With regards to specific goods and services, the Pre-need Funeral Contract may specify the selections become irrevocable upon death of the Beneficiary. If the Pre-need Funeral Contract itself is irrevocable, the substitution or removal of specific goods and services may not be utilized to provide a refund for any monies paid for the Pre-need Funeral Contract back to the Beneficiary's estate. (d) Each Pre-need Funeral Contract shall indicate, in the spaces designated for such information on the Board-prescribed Pre-need Funeral Contract form: 1. The percentage of the total cost of the funeral which is attributable to the goods and services which are being provided directly by the Licensed Funeral Establishment itself, which shall be calculated by dividing the total cost of the goods and services being provided by the funeral establishment itself, as set forth in the Itemized Statement of Funeral Goods and Services required by 239 CMR 4.02(5)(c), by the total cost of the funeral as set forth in that Itemized Statement of Funeral Goods and Services; and 2. The percentage of the total cost of the funeral which is attributable to goods and services provided by suppliers or vendors other than the Licensed Funeral Establishment (the Non-funeral Establishment Charges or "Cash Advance Item" Charges), which shall be calculated by dividing the total cost of the goods and services being provided by suppliers or vendors other than the Licensed Funeral Establishment (the Non-funeral Establishment Charges or "Cash Advance Item" Charges), as set forth in the "cash advance items" section of the Itemized Statement of Funeral Goods and Services required by 239 CMR 4.02(5)(c), by the total cost of the funeral as set forth in that itemized statement. The percentages so calculated for preneed arrangements shall be rounded off to the nearest whole number (e.g., 75.28% = 75%, 75.67%= 76%) and the sum of such percentages shall in all cases equal 100%. (e) Each Pre-need Funeral Contract shall contain the initials or signature of the Buyer acknowledging receipt of the Board-approved Buyer's Guide to Pre-need Funeral Contracts required under 239 CMR 4.02(4). (f) Each Pre-need Funeral Contract shall recite: 1. The amount of money which the Buyer has tendered and made payable to a banking institution or insurance company in connection with that contract at the time the contract was made; 2. The amount(s) of any future payment(s) which are to be made by the Buyer in order to fully fund that contract and the date(s) on which such payments are due; 3. Whether the money tendered and made payable to a banking institution or insurance company in connection with that contract was placed in a Funeral Trust Account or used to pay for a Pre-need Insurance Policy or Annuity; and 5. The identity of the banking institution which serves as Trustee of the Funeral Trust Account established pursuant to 239 CMR 4.09, or the insurance company which issued the Pre-need Insurance Policy or Annuity pursuant to 239 CMR 4.10, whichever applies. (g) Each Pre-need Funeral Contract shall recite conspicuously on its face whether it is Revocable or Irrevocable, and that an attempt to revoke or cancel an Irrevocable Pre-need Funeral Contract after the expiration of the ten-day "cooling-off" period described in 239 CMR 4.07(1) may have adverse consequences in terms of eligibility for Medicaid or other government benefit programs. (h) If the Buyer has not tendered funds made payable to a banking institution or insurance company to the funeral establishment in connection with a proposed Pre-need Funeral Contract, any document which sets forth the terms and provisions of a proposed Pre-need Funeral Contract shall be treated as a non-binding Pre-need Funeral Contract estimate pursuant to 239 CMR 4.02(6). (i) A proposed or attempted Pre-need Funeral Contract shall be deemed null and void and unenforceable by either party if: 1. The parties fail to prepare and execute the Pre-need Funeral Contract on one of the Pre-need Funeral Contract forms prescribed by the Board; 2. The parties fail to fully and properly complete any portion of the prescribed Pre-need Funeral Contract Form used; or 3. The parties fail to comply with any other applicable provision of 239 CMR 4.02(5) with respect to the preparation or execution of the proposed or attempted Pre-need Funeral Contract. (j) In the event a proposed or attempted Pre-need Funeral Contract is to be deemed null and void and unenforceable, any and all monies tendered and made payable to a banking institution or insurance company to the funeral establishment by the Buyer in connection with the proposed Pre-need Funeral Contract shall be returned to the Buyer immediately, without penalty or deduction of any kind. (k) Notwithstanding the provisions of 239 CMR 4.02(5)(h), a proposed or attempted Pre-need Funeral Contract which has not been signed by one or both parties shall be treated as a non-binding Pre-need funeral estimate pursuant to 239 CMR 4.02(6). (l) The Licensed Funeral Establishment shall furnish a complete, fully-executed copy of the Pre-need Funeral Contract to the Buyer at the time the Pre-need Funeral Contract is made. In the event that the Beneficiary of the Pre-need Funeral Contract is someone other than the Buyer, the funeral establishment shall furnish an additional fully-executed copy of the Pre-need Funeral Contract to the Beneficiary not later than five business days after the Pre-need Funeral Contract is made. (6) Non-binding Pre-need Funeral Estimates. A Licensed Funeral Establishment may issue a non-binding estimate or proposal for a Pre-need Funeral Contract to a Buyer or potential Buyer, as long as: (a) The estimate or proposal is prepared and issued on the Pre-need Funeral Contract Form prescribed by the Board; (b) The estimate or proposal specifies the funeral goods or services which the issuing funeral establishment proposes to provide; and (c) The estimate or proposal contains, or is accompanied by, an Itemized Statement of Funeral Goods and Services which meets the requirements of 239 CMR 4.02(5) and which specifies the prices for each identified funeral good or service which the funeral establishment proposes to provide to the extent known at the time the estimate is prepared. (d) Any such estimate or proposal expires and becomes null and void after a specified period of time, not to exceed 30 days from the date of its issuance, unless the Buyer or potential Buyer, prior to that expiration date, enters into a Pre-need Funeral Contract which meets the requirements of 239 CMR 4.02(5) and tenders full or partial payment made payable to a banking institution or insurance company of the specified price for the identified funeral goods and services to the funeral establishment which issued the estimate. (7) Sale of Monuments or Interment Space Prohibited. Type 3s and Type 6s who prepare, negotiate and/or execute Pre-need Funeral Contracts shall arrange only for Funeral Goods and/or Services, and shall not sell interment space or monuments in such contracts. Nothing in 239 CMR 4.02(7) shall be construed to prohibit a Licensed Funeral Establishment from contracting with a vendor or supplier which is not a Licensed Funeral Establishment for the purchase of a monument or interment space on behalf of the Beneficiary pursuant to the terms of a Pre-need Funeral Contract which specifically identifies that monument or interment space as one of the cash-advance items selected by the Buyer.