HR121.DOC

WHEREAS, Hawaii has a growing, aging population, and needs strong, comprehensive legislation for cemetery and funeral trusts to protect consumers; and

WHEREAS, adequate oversight of these so-called pre-need funeral contracts are often hampered by non-existent rules and state regulators' lack of authority and resources; and

WHEREAS, in 1998, the average cost of a traditional funeral was more than $4,600, and an in-ground burial was an additional $2,400, according to national statistics, making funeral and burial purchases the third highest lifetime expenditure, ranking behind a home and automobile; and

WHEREAS, most funeral and burial purchases are made when buyers are vulnerable emotionally and lack the time and information to negotiate prices effectively; and

WHEREAS, this is a major reason why consumers enter into pre-need funeral contracts to purchase funeral and burial goods and services prior to death; and

WHEREAS, according to a report by the American Association of Retired Persons, as of 1999, funds in outstanding pre-need funeral contracts exceeded $25 billion; and

WHEREAS, funds in outstanding pre-need funeral contracts are projected to grow substantially as the population continues to age and to plan for death expenses; and
WHEREAS, nationwide, problems such as the following have been experienced with respect to pre-need funeral contracts:

(1) Mishandling of trust funds that may go undetected for years since there is generally a significant length of time between the signing of the contract and the need for the goods and services described in the contract;

(2) Overpaying for goods or services since it is often difficult to determine whether specific provisions of the contract were fulfilled since the person who signed the contract is likely deceased; and

(3) Increasing potential for fraud since pre-need contracts are becoming increasingly complex, with more decisions, creating opportunity for criminal misconduct;

and

WHEREAS, Hawaii could follow the example of New York, a state that has some of the strongest pre-need funeral contract laws in the nation in connection with trust accounts, portability, and the disclosure of financial information; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-sixth Legislature of the State of Hawaii, Regular Session of 2011, that the Department of Commerce and Consumer Affairs is requested to study the State's laws governing cemetery and funeral trusts, and provide recommendations to ensure consumer protection by:

(1) Allowing full portability of pre-need funeral plans;

(2) Requiring placement into trust of 100 percent of moneys paid with interest and earnings to be applied at the time the plan is redeemed;

(3) Providing deadlines for the transfer of funds to the trust after receipt from the purchaser and notice confirming such transfer;

(4) Allowing a cemetery or pre-need authority to deduct certain allowable expenses from a trust;

(5) Requiring annual statements of the disposition of trust funds, including the amount of funds deposited, where the funds are deposited, and the amount of interest earned;

(6) Requiring that if the pre-need funeral contract is canceled or terminated, the purchaser should be entitled to a refund of the amounts paid by the purchaser plus interest earned, less amounts that may be retained by the cemetery or pre-need funeral authority for its costs; and

(7) Requiring that refunds to the purchaser be made within 30 days of receipt of the purchaser's written notice of cancellation or termination of the contract;

and

BE IT FURTHER RESOLVED that the Department of Commerce and Consumer Affairs report its findings and recommendations to the Legislature no later than 20 days prior to the convening of the Regular Session of 2012; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Director of Commerce and Consumer Affairs, Governor, and Chief Executive Officer of the National Funeral Directors Association.

	OFFERED BY:	_____________________________

Report Title:

Funeral expenses resolution

HOUSE OF REPRESENTATIVES	H.R. NO.	121
TWENTY-SIXTH LEGISLATURE, 2011
STATE OF HAWAII