HLS 23RS-803 ORIGINAL
2023 Regular Session
HOUSE BILL NO. 554
BY REPRESENTATIVE RISER
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
CEMETERIES: Provides relative to the cemetery care fund
1 AN ACT
2To amend and reenact R.S. 8:454.1(A) and to enact R.S. 8:454.2, relative to the cemetery
3 care fund; to provide for income distributions within a perpetual care trust fund; to
4 provide for income distribution methods; to provide for definitions; to provide for
5 an application for a total return distribution method; and to provide for related
6 matters.
7Be it enacted by the Legislature of Louisiana:
8 Section 1. R.S. 8:454.1(A) is hereby amended and reenacted and R.S. 8:454.2 is
9hereby enacted to read as follows:
10 §454.1. Administration of trust funds; maintenance; exemption from seizure
11 A. The principal of the trust fund shall remain permanently intact and only
12 the income therefrom shall be expended. The income shall be used solely for the
13 care of those portions of the cemetery in which interment spaces have been sold with
14 a provision for perpetual or endowed care. It is the intent of this Section that the
15 income of the fund shall be used solely for the care of interment spaces sold with a
16 provision for perpetual or endowed care and for the care of other portions of the
17 cemetery immediately surrounding the spaces as may be necessary to preserve the
18 beauty and dignity of the spaces sold. Income distributions within a perpetual care
19 trust fund means the net income or total return distribution method as provided for
20 an R.S. 8:454.2. The fund or its income shall never be used for the development,
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HB NO. 554
1 improvement, or embellishment of unsold portions of the cemetery so as to relieve
2 the cemetery authority of the ordinary cost incurred in preparing such property for
3 sale.
4 * * *
5 §454.2. Income distribution methods; application; and restrictions
6 A. For the purposes of this Section, the following terms have the following
7 meanings ascribed to them:
8 (1) "Average fair market value" means the average of the fair market value
9 of assets held by the trust fund on the last day of the current calender year and the
10 last day of each of the two preceding calendar years, or the average of the fair market
11 value for the entire term of the trust fund if there are less than two preceding years.
12 (2) "Board" means the Louisiana Cemetery Board.
13 (3) "Inception" means the first day of the calendar year when the perpetual
14 care trust fund started making distributions based on the total return distribution
15 method.
16 (4) "Net income" means interest and dividends reduced by permissible fees
17 and taxes.
18 (5) "Total return distribution" means the distribution of funds from the
19 perpetual care fund based on the average fair market value of the fund assets
20 multiplied by the total return percentage.
21 (6) "Total return percentage" means the annual percentage selected by the
22 cemetery authority and approved by the board in accordance with this Section. The
23 total return percentage shall not exceed four percent of the average fair market value
24 of the trust fund.
25 B. Income distributions from perpetual care trust funds shall be made with
26 consideration of either net income or total return distribution.
27 C. A perpetual care trust fund may only elect to use the total return
28 distribution method if the trust fund is administered by either a qualified institutional
29 trustee as provided for by R.S. 8:454(B) or where the trustee or investment advisor
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1 managing the funds demonstrates sufficient knowledge and expertise related to total
2 return investing and distributions including but not limited to registered investment
3 advisors, certified public accountants, and those with an educational background in
4 the fields of accounting, finance, economics, or actuarial science at an accredited
5 university.
6 D. The cemetery authority shall apply to the board at least ninety days prior
7 to the effective date of the election to use the total return distribution method. The
8 cemetery authority or trustee shall provide the board with all of the following:
9 (1) A written investment policy, with investment goals to achieve principal
10 growth through permissible investments pursuant to this Title for perpetual care trust
11 funds and with a secondary goal of achieving current income.
12 (2) An amended perpetual care trust agreement on board approved forms that
13 clearly states the selection of the total return distribution method.
14 (3) A written distribution policy establishing the total return percentage and
15 initial estimated average fair market value, using the most recent month end balances
16 as the estimate for the current calendar year, signed by the cemetery authority or
17 trustee.
18 (4) The board may require such information, supporting documentation, and
19 proof as it deems reasonable concerning the applicant's compliance with this Title
20 and the rules and regulations of the board.
21 (5) The board shall determine that the cemetery authority or trustee has met
22 the requirements provided for in this Section prior to approving the application to
23 implement a total return distribution method. If the board refuses to approve the
24 application, such notification shall contain details of the information needed to
25 remedy any deficiencies with the application. The board shall notify the cemetery
26 authority no later than ninety days after receiving the application. Applications
27 submitted ninety days prior to the beginning of the calendar year, once approved by
28 the board, shall be retroactive to the beginning of the calendar year.
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1 (6) The cemetery authority shall submit the information required in this
2 Subsection on an application form prescribed by the board, accompanied by an
3 application fee set by the board not to exceed one thousand five hundred dollars to
4 cover the board's reasonable and ordinary expenses associated with determining
5 compliance with applicable provisions of this Title.
6 E. A cemetery authority may select a distribution method by delivering
7 written instructions to the trustee of the fund no later than thirty days prior to the
8 beginning of a calendar year. Once approved by the board, the distribution method
9 and the total return distribution rate shall remain in effect unless the cemetery
10 authority notifies the trustee of its desire to effect a change, provides an application
11 for such change to the board, and provides copies of such documentation to the
12 trustee. In the event that the trustee does not receive written instructions from the
13 cemetery authority informing the trustee of the distribution method chosen, the
14 trustee shall calculate and distribute based on the net income distribution method.
15 F. The approved total return distribution percentage may be reduced by the
16 cemetery authority but may not be increased unless an additional application is made
17 to the board with documentation demonstrating the rate of return of the perpetual
18 care funds over the last three years to support an increase in the percentage.
19 G. A cemetery authority that has implemented the total return distribution
20 method may elect to reconvert to a net income distribution method by submitting
21 written documentation to the board in support of the reconversion, including a copy
22 of the trust agreement, a written notification on the proposed effective date of the
23 reconversion, and any additional information required by the board. No cemetery
24 authority may change its distribution method more than once within a three year
25 period unless required by the board.
26 H.(1) The board shall require corrective measures be taken, including
27 reducing the approved total return percentage, requiring a distribution of only net
28 income for a calendar year, or requiring a monthly retest outlined in this Section
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1 applies with no distribution of any income until the failed test is passed, if any the
2 following circumstances occur:
3 (a) The average fair market value of the trust fund at the end of the most
4 recent rolling three year period, as compared to the average fair market value of the
5 previous rolling three year period, declines by ten percent or more.
6 (b) The fair market value of the trust fund at the end of a calendar year is less
7 than ninety percent of the sum of the fair market value of the fund at inception plus
8 all deposits made since inception.
9 (c) A cemetery authority has failed to meet the tests in this Subsection, and
10 after a full calendar year of distributing only net income, still fails to meet the tests
11 in this Subsection.
12 (d) There is an uncorrected financial- or investment-related perpetual care
13 deficiency as determined by the board after review of the annual trust fund report or
14 onsite examination.
15 (2) If a cemetery authority fails to take any required action, it shall be subject
16 to any and all enforcement actions or penalties pursuant to this Chapter.
17 I. In the event that permissible fees paid from the perpetual care fund exceed
18 one and one-half percent of the fair market value in a given year, the amount in
19 excess shall be deducted from the approved total return distribution.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 554 Original 2023 Regular Session Riser
Abstract: Relative to cemeteries, creates income distribution methods that can be
implemented for perpetual care trust funds.
Present law requires the principal of a cemetery trust fund to remain permanently intact and
for any income generated to be expended. Present law further requires for the income to
only be used for the care for the portion of the cemetery where interment spaces have been
sold for perpetual or endowed care.
Present law provides that income funds are intended and shall only be used for the care of
interment spaces sold for perpetual or endowed care and for the care of other portions of the
cemetery immediately surrounding spaces that need to be preserve.
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HB NO. 554
Proposed law retains present law and includes that income distributions within a perpetual
care trust fund shall mean the net income or total return distribution method as provided for
in proposed law (R.S. 8:454.2).
Proposed law defines "average fair market value", "board", "inception", "net income", "total
return distribution", and "total return percentage".
Proposed law requires income distributions from perpetual care trust funds to be made with
consideration of either net income or total return distribution.
Proposed law requires that a perpetual care trust fund may elect to use the total return
distribution method, if the trust fund is administered by either a qualified institutional trustee
as provided for in present law or when the trustee or investment advisor managing the funds
demonstrates sufficient knowledge and expertise related to total return investing and
distributions.
Proposed law provides that the cemetery authority shall apply to the board at least 90 days
prior to the effective date of the election to use the total return distribution method.
Proposed law requires the cemetery authority or trustee to provide all of the following to the
board:
(1)A written investment policy that details investment goals for achieving principal
growth through permissible investments for perpetual care trust fund in addition to
a secondary goal for achieving current income.
(2) An amended perpetual care trust agreement on board approved forms that clearly
states the selection of the total return distribution method.
(3) A written distribution policy that establishes the total return percentage and initial
estimated average fair market value, using the most recent month end balances as the
estimate for the current calendar year, signed by the cemetery authority or trustee.
(4) The board acquisition of any information, supporting documentation, and proof
concerning the applicant's compliance.
(5) The board shall determine if the cemetery authority or trustee has met all
requirements prior to approving the application to implement a total return
distribution method. Proposed law further provides the procedure for when the
board refuses to approve an application.
(6) The cemetery authority shall submit the information required by proposed law on an
application form prescribed by the board, accompanied by an application fee not to
exceed $1,500.
Proposed law allows a cemetery authority to select a distribution method by delivering
written instructions to the trustee of the fund no later than 30 days prior to the beginning of
a calendar year.
Proposed law provides that the distribution method and the total return distribution rate shall
remain in effect unless the cemetery authority notifies the trustee of its desire to effectuate
change, provides the board an application with such change, and provides copies of such
documentation to the trustee.
Proposed law allows a cemetery authority that has implemented the total return distribution
method, the option to elect to reconvert to a net income distribution method. Proposed law
provides that if the cemetery authority elects to do so, the cemetery authority must submit
written documentation to the board in support of the reconversion.
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HB NO. 554
Proposed law provides that, unless required by the board, no cemetery authority may change
its distribution method more than once within a three year period.
Proposed law requires the board to take corrective measures if any of the following
circumstances occur:
(1)When the average fair market value of the trust fund at the end of the most recent
rolling three year period, in comparison to the average fair market value of the
previous rolling three year period, declines by 10% or more.
(2)When the fair market value of the trust fund at the end of a calendar year is less than
90% of the sum of the fair market value of the fund at inception in addition to all
deposits made since inception.
(3)When a cemetery authority has failed to meet the tests required by proposed law and
after a full calendar year of distributing only net income, the cemetery board still
fails to meet the tests required by proposed law.
(4) When, upon review of the annual trust fund report or on-site examination, the board
determines there is an uncorrected financial or investment related perpetual care
deficiency.
Proposed law provides that in addition to the aforementioned corrective measures, the board
can also reduce the approval total return percentage, require a distribution of only net income
for a calendar year, or require a monthly retest.
Proposed law requires that if a cemetery authority fails to take any required action, the
authority will be subject to any and all enforcement actions or penalties provided for in
present law.
Proposed law states that if permissible fees paid from the perpetual care fund exceed 1.5%
of the fair market value in a given year, the amount in excess shall be deducted from the
approved total return distribution.
(Amends R.S. 8:454.1(A); Adds R.S. 8:454.2)
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