Oklahoma § 36-7103 - Perpetual Care Fund - Deposits into fund - Investments Distribution methods

§ 36-7103. Perpetual Care Fund - Deposits into fund - Investments Distribution methods

A. In all cemeteries in this state where burial spaces are

sold, not less than ten percent (10%) of the purchase price thereof

shall be segregated and set aside as a permanent trust fund to be

known as the "Perpetual Care Fund". The Perpetual Care Fund shall

be invested as hereinafter prescribed, and the income only shall be

used in improving, caring for, and embellishing the lots, walks,

drives, parks and other improvements in the cemeteries and

maintenance of office and care of records.

B. If a cemetery allows a person or other entity to construct

or otherwise establish a burial space at the cemetery that is not

purchased from the cemetery, the cemetery shall collect from the

person or entity an amount not less than ten percent (10%) of the

construction or retail cost of the burial space, to be deposited in

the Perpetual Care Fund of the cemetery.

Oklahoma Statutes - Title 36. Insurance

C. The owner or designated agent of a cemetery shall set aside

and deposit the amounts required in subsections A and B of this

section in a financial institution authorized by law, as trustee, to

administer the trusts, not later than thirty (30) days after the

close of the month in which was received the final payment on the

purchase price of each burial space. The amounts shall be held by

the trustee of the Perpetual Care Fund in trust for the specific

purposes stated in a written trust agreement. The trust agreement

may provide for an individual or other entity to exist as cotrustee;

provided, however, in no instance shall the cotrustee have sole

access to deposits held in the Perpetual Care Fund, except as

otherwise provided in this act.

D. Notwithstanding the requirements of subsection C of this

section, if the total amount of the Perpetual Care Fund maintained

by the cemetery is an amount equal to or less than the standard

insurance amount per depositor as provided by the Federal Deposit

Insurance Corporation, the cemetery may, in lieu of depositing the

funds in a trust account, purchase a certificate of deposit from a

financial institution according to the terms of this subsection.

The certificate of deposit shall be pledged in favor of the Oklahoma

Insurance Department with no right of withdrawal by the cemetery,

whether before or after maturity, except upon application to, and

approval by, the Insurance Commissioner. The terms of the

certificate of deposit shall provide for notice to the Insurance

Department within thirty (30) days prior to maturity. Only interest

accruing from the certificate of deposit may be withdrawn by the

cemetery and shall be considered income for purposes of subsection A

of this section. If a cemetery maintains a certificate of deposit

in lieu of a trust fund, as it collects funds which are required to

be deposited into its Perpetual Care Fund, it shall segregate those

funds from its other operating funds and contribute those funds to

the certificate of deposit upon its next maturity date. If a

Perpetual Care Fund of a cemetery is maintained in a certificate of

deposit, but grows in an amount greater than the standard insurance

amount per depositor as provided by the Federal Deposit Insurance

Corporation, the cemetery shall comply with the provisions of

subsection C of this section by placing all of its Perpetual Care

Fund in trust and shall no longer maintain a certificate of deposit

as authorized by this subsection.

E. A cemetery regulated under this section may choose

distribution from the perpetual care fund in the form of either all

net ordinary income or an amount, not to be reduced by taxes or

fees, not exceeding five percent (5%) of the average fair market

value of the trust funds.

1. A cemetery may select a distribution method by delivering

written instructions to the trustee of the fund no later than thirty

(30) days prior to the beginning of the calendar year. Such

Oklahoma Statutes - Title 36. Insurance

notification shall also be provided to the Insurance Commissioner.

The distribution method and distribution rate selected shall remain

in effect unless the cemetery notifies the trustee and the Insurance

Commissioner of its desire to effect a change.

2. Disbursements from the trust shall be made on a monthly,

quarterly, semi-annual or annual basis, as agreed upon by the

cemetery and the trustee.

3. In the event that the trustee does not receive written

instructions from the cemetery informing the trustee of the method

of calculation chosen, then the trustee shall calculate and disburse

the net ordinary income, as earned, on a monthly basis.

4. If the cemetery company selects a distribution based on the

average fair market value calculation, the trustees must ensure that

an investment policy is in place whose goals and objectives are

supportive of the growth of the care and maintenance fund. In order

to withdraw up to five percent (5%) of trust funds, the current

market value of the trust after the withdrawal shall be greater than

the aggregate of eighty percent (80%) of the market value of the

trust as of the preceding calendar year, plus the total

contributions made to trust principal from such date to the date

that the method of calculation is selected. If this is not the

case, distributions will be limited for that year to the net

ordinary income.

5. The Insurance Commissioner may limit or prohibit the

distribution based on average fair market value calculation in

situations where investment returns and distribution practices have

not resulted in sufficient protection of the care fund's trust

principal from a three to five year analysis, or where the trustee

and any investment manager are not able to demonstrate sufficient

knowledge and expertise regarding the effective implementation of

distributing income for the maintenance of the cemetery using this

method.

F. Without regard to the withdrawal method selected pursuant to

subsection E of this section, capital gains taxes shall be paid from

the trust principal.

Added by Laws 1953, p. 16, § 3, emerg. eff. May 19, 1953. Amended

by Laws 1993, c. 218, § 2, eff. Sept. 1, 1993; Laws 2007, c. 80, §

9, eff. Jan. 1, 2008; Laws 2008, c. 275, § 8, eff. July 1, 2008;

Laws 2010, c. 58, § 3, eff. July 1, 2010. Renumbered from Title 8,

§ 163 by Laws 2010, c. 58, § 28, eff. July 1, 2010; Amended by Laws

2016, c. 118, § 4, eff. Nov. 1, 2016.