Disposition of proceeds received on contracts.

(1)(a) Any person who is paid, collects, or receives funds under a preneed contract for funeral services or merchandise or burial services or merchandise shall deposit an amount at least equal to the sum of 70 percent of the purchase price collected for all services sold and facilities rented; 100 percent of the purchase price collected for all cash advance items sold; and 30 percent of the purchase price collected or 110 percent of the wholesale cost, whichever is greater, for each item of merchandise sold. The board may, by rule, specify criteria for the classification of items sold in a preneed contract as services, cash advances, or merchandise.

(b) The method of determining wholesale cost shall be established by rule of the licensing authority and shall be based upon the preneed licensee’s stated wholesale cost for the 12-month period beginning July 1 during which the initial deposit to the preneed trust fund for the preneed contract is made.

(c) Unless the preneed contract has been fulfilled, such deposits shall be made within 30 days after the end of the calendar month in which payment is received, under the terms of a revocable trust instrument entered into with a trust company, with a national or state bank holding trust powers, or with a federal or state savings and loan association holding trust powers.

(d) The trustee shall take title to the property conveyed to the trust for the purpose of investing, protecting, and conserving it for the preneed licensee; collecting income; and distributing the fair market value as prescribed in this chapter. The preneed licensee is prohibited from sharing in the discharge of these responsibilities, except that the preneed licensee may request the trustee to invest in tax-free investments and may appoint an adviser to the trustee. The licensing authority may adopt rules limiting or otherwise specifying the degree to which the trustee may rely on the investment advice of an investment adviser appointed by the preneed licensee. The licensing authority may adopt rules limiting or prohibiting payment of fees by the trust to investment advisors that are employees or principals of the licensee to whom the trust fund relates.

(e) The trust agreement shall be submitted to the licensing authority for approval and filing prior to use. The licensing authority may adopt rules specifying procedures and establishing criteria and requirements not inconsistent with this chapter for approval of trusts submitted under this paragraph.

(f) The deposited funds shall be held in trust, both as to principal and any change in fair market value thereon, and shall remain intact, except that the cost of the operation of the trust or trust account authorized by this section may be deducted from the income earned thereon.

(g) The preneed contract purchaser shall have no interest whatsoever in, or power whatsoever over, funds deposited in trust pursuant to this section.

(h) In no event may trust funds be loaned, directly or indirectly, to any of the following persons: the preneed licensee; any entity under any degree of common control with the preneed licensee; any employee, director, full or partial owner, or principal of the preneed licensee; or any person related by blood or marriage to any of those persons. In no event may trust funds, directly or indirectly, be invested in or with, or loaned to, any business or business venture in which any of the following persons have an interest: the preneed licensee; any entity under any degree of common control with the preneed licensee; any employee, director, full or partial owner, or principal of the preneed licensee; or any person related by blood or marriage to any of those persons.

(i) The preneed licensee’s interest in said trust shall not be pledged as collateral for any loans, debts, or liabilities of the preneed licensee and shall not be transferred to any person without the prior written approval from the department and the trustee which shall not be unreasonably withheld.

(j) Even though the preneed licensee shall be deemed and treated as the settlor and beneficiary of said trust for all purposes, all of said trust funds are exempt from all claims of creditors of the preneed licensee except as to the claims of the preneed contract purchaser, her or his representative, the board, or the department.

(k) Beginning April 1, 2018, and on or before each April 1 thereafter, the trustee shall furnish the department with an annual report regarding each preneed licensee trust account held by the trustee at any time during the previous calendar year. The report shall state the name and address of the trustee; the name, address, and license number of the licensee to whom the report relates; the trust account number; the beginning and ending trust balance; and, as may be specified by department rule, a list of receipts showing the date and amount of any disbursement. The report must be signed by the trustee’s account manager for the trust account. The trustee shall submit the report in a format and pursuant to procedures specified by department rule.

(2) Except as provided in s. 497.283, the delivery of funeral merchandise before the death of the person for whom it is purchased does not constitute performance or fulfillment, either wholly or in part, of any preneed contract entered into after July 1, 1977.

(3)(a) The trustee shall make regular valuations of assets it holds in trust and provide a fair market value report of such valuations to the preneed licensee at least quarterly.

(b) Any person who withdraws appreciation in the value of trust, other than the pro rata portion of such appreciation which may be withdrawn upon the death of a contract beneficiary or upon cancellation of a preneed contract, shall be required to make additional deposits from her or his own funds to restore the aggregate value of assets to the value of funds deposited in trust, but excluding from the funds deposited those funds paid out upon preneed contracts which such person has fully performed or which have been otherwise withdrawn, as provided for in this chapter.

(c) The preneed licensee shall be liable to third parties to the extent that income from the trust is not sufficient to pay the expenses of the trust.

(4) The licensing authority may adopt rules exempting from the prohibition of paragraph (1)(h), pursuant to criteria established in such rule, the investment of trust funds in investments, such as widely and publicly traded stocks and bonds, notwithstanding that the licensee, its principals, or persons related by blood or marriage to the licensee or its principals have an interest by investment in the same entity, where neither the licensee, its principals, or persons related by blood or marriage to the licensee or its principals have the ability to control the entity invested in, and it would be in the interest of the preneed contract holders whose contracts are secured by the trust funds to allow the investment.

(5) The trustee of the trust established pursuant to this section shall only have the power to:

(a) Invest in investments as prescribed in s. 518.11 and exercise the powers set forth in part VIII of chapter 736. However, the trustee may not invest in, or count as assets, life insurance policies or annuity contracts; real estate may not compose more than 25 percent of the trust’s assets; and the licensing authority may by order require the trustee to liquidate or dispose of any investment within 30 days after such order, or within such other times as the order may direct. The licensing authority may issue such order if it determines that the investment violates any provision of this chapter or is not in the best interests of the preneed contract holders whose contracts are secured by the trust funds.

(b) Borrow money up to an aggregate amount of 10 percent of trust assets, at interest rates then prevailing from any individual, bank, insurance company, or other source, irrespective of whether any such person is then acting as trustee, and to create security interests in no more than 10 percent of trust assets by mortgage, pledge, or otherwise, upon the terms and conditions and for such purposes as the trustee may deem advisable.

(c) Commingle the property of the trust with the property of any other trust established pursuant to this chapter and make corresponding allocations and divisions of assets, liabilities, income, expenses, and capital gains and losses.

(6) The amounts required to be placed in a trust by this section for contracts previously entered into shall be as follows:

(a) For contracts entered into before October 1, 1993, the trust amounts as amended by s. 6, chapter 83-316, Laws of Florida, shall apply.

(b) For contracts entered into on or after October 1, 1993, the trust amounts as amended by s. 98, chapter 93-399, Laws of Florida, shall apply.