Bill Text: NY S05463 | 2019-2020 | General Assembly | Introduced

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Bill Title: Relates to cemetery trust funds and the maintenance and preservation of cemetery grounds.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2020-12-28 - COMMITTED TO RULES [S05463 Detail]

Download: New_York-2019-S05463-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                          5463
                               2019-2020 Regular Sessions
                    IN SENATE
                                       May 1, 2019
                                       ___________
        Introduced  by  Sen.  COMRIE -- read twice and ordered printed, and when
          printed to be committed to the Committee on Corporations,  Authorities
          and Commissions
        AN ACT to amend the not-for-profit corporation law, in relation to ceme-
          tery trust funds
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. Subparagraph 2 of paragraph (a)  of  section  1507  of  the
     2  not-for-profit corporation law, as amended by chapter 509 of the laws of
     3  2014, is amended to read as follows:
     4    (2)  The permanent maintenance fund is hereby declared to be and shall
     5  be held by the corporation as a trust fund, for the purpose of maintain-
     6  ing and preserving the cemetery, including  all  lots,  crypts,  niches,
     7  plots,  and  parts thereof. The principal of such fund shall be invested
     8  in such securities as are permitted for the investment of trust funds by
     9  section 11-2.3 of the estates, powers and trusts law. The income in  the
    10  form  of  interest and ordinary dividends therefrom shall be used solely
    11  for the maintenance and preservation of the cemetery grounds. [In  addi-
    12  tion, the governing board of the corporation may appropriate for expend-
    13  iture  solely  for  the  maintenance  and  preservation  of the cemetery
    14  grounds a portion of the net appreciation, in the fair market  value  of
    15  the principal of the trust, as is prudent under the standard established
    16  by  article  five-A  of this chapter, the prudent management of institu-
    17  tional funds act. In the event that  a  cemetery  corporation  seeks  to
    18  appropriate  any  percentage  of  its  net appreciation in its permanent
    19  maintenance fund in accordance  with  this  subparagraph,  the  cemetery
    20  corporation  shall  provide  notice  of  such  proposed appropriation by
    21  certified mail to the cemetery board not less than sixty days in advance
    22  of such proposed appropriation and shall disclose such appropriation  as
    23  part  of  and  in  addition  to  their  annual reporting requirements as
    24  defined in section fifteen hundred eight of this article, setting  forth

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11423-01-9
        S. 5463                             2

     1  the  amount  of  funds  to  be appropriated for such expenditure and its
     2  effect on the permanent maintenance fund.  Such  proposed  appropriation
     3  shall  become  effective sixty days after receipt of such notice, unless
     4  the  cemetery  board  within such sixty-day period notifies the cemetery
     5  corporation that  the  board  objects  to  the  proposed  appropriation.
     6  Notwithstanding the foregoing provisions of this subparagraph, all prin-
     7  cipal  of  the permanent maintenance fund shall remain inviolate, except
     8  that, upon application to the  supreme  court  in  a  district  where  a
     9  portion  of the cemetery grounds is located, the court may make an order
    10  permitting the principal or a part thereof to be used for the purpose of
    11  current maintenance and preservation of the cemetery or  otherwise.]  In
    12  addition,  in  any year, the governing board of a qualified corporation,
    13  as defined below, may appropriate for expenditure solely for the mainte-
    14  nance and preservation of the cemetery grounds, and treat as income  for
    15  all  purposes, an amount of trust principal equal to the excess, if any,
    16  of a percentage of the fair market value of the principal of the  trust,
    17  as  of the last day of the cemetery's immediately preceding fiscal year,
    18  as is prudent under the standard established by article five-A  of  this
    19  chapter, the prudent management of institutional funds act over interest
    20  and ordinary dividends received in such year; provided, however, that an
    21  appropriation  of  an amount (the safe harbor amount) of trust principal
    22  equal to the excess of up to four percent of the fair  market  value  of
    23  the  principal  of the trust, as of the last day of the cemetery's imme-
    24  diately preceding fiscal  year  over  interest  and  ordinary  dividends
    25  received  in  such  year  shall be deemed to be prudent in all events. A
    26  "qualified corporation" means a  cemetery  corporation  which  adopts  a
    27  written  investment  policy  setting forth guidelines on investments and
    28  delegation of management and investment functions  in  accord  with  the
    29  standards  of  article five-A of this chapter. If a cemetery corporation
    30  seeks to appropriate any percentage of the principal  of  the  permanent
    31  maintenance  fund  in  accordance  with  this subparagraph, the cemetery
    32  corporation shall provide notice  of  such  proposed  appropriation  and
    33  provide a copy of its written investment policy by certified mail to the
    34  cemetery  board  not  less  than  sixty days in advance of such proposed
    35  appropriation and shall disclose such appropriation as part  of  and  in
    36  addition  to  their  annual reporting requirements as defined in section
    37  fifteen hundred eight of this article, setting forth the amount of prin-
    38  cipal to be appropriated for such expenditure  and  its  effect  on  the
    39  permanent  maintenance  fund.   Such proposed appropriation shall become
    40  effective sixty days after receipt of such notice, unless  the  proposed
    41  appropriation  exceeds  the safe harbor amount or the written investment
    42  policy is not provided or is not prepared in accordance with the  stand-
    43  ards  of  article  five-A of this chapter, and the cemetery board within
    44  such sixty-day period notifies the cemetery corporation that  the  board
    45  objects to the proposed appropriation. Except to the extent that princi-
    46  pal  is  utilized  as  the result of the foregoing, all principal of the
    47  permanent maintenance fund shall  remain  inviolate,  with  the  further
    48  exception  that,  upon  application  to  the supreme court in a district
    49  where a portion of the cemetery grounds is located, the court  may  make
    50  an  order  permitting the principal or a part thereof to be used for the
    51  purpose of current maintenance  and  preservation  of  the  cemetery  or
    52  otherwise.  Such application may be made by the cemetery board on notice
    53  to the corporation or by the  corporation  on  notice  to  the  cemetery
    54  board.  Unless the cemetery can clearly demonstrate that it lacks suffi-
    55  cient future revenue to make repayment,  any  such  allowance  from  the
    56  permanent maintenance fund shall be in the form of a loan, and the court
        S. 5463                             3
     1  shall  determine the method for repayment of such a loan by the cemetery
     2  to the fund.
     3    §  2.  Subparagraph 2 of paragraph (c) of section 1507 of the not-for-
     4  profit corporation law, as amended by chapter 509 of the laws  of  2014,
     5  is amended to read as follows:
     6    (2)  The  principal  of such funds, whether kept in the perpetual care
     7  fund or otherwise, and unless already so invested when  received,  shall
     8  be  invested  within  a  reasonable time after receipt thereof, and kept
     9  invested, in such securities as are  permitted  for  the  investment  of
    10  trust  funds  by  sections  11-2.2 and 11-2.3 of the estates, powers and
    11  trusts law. The income arising therefrom shall be used  solely  for  the
    12  perpetual  care and maintenance of the lot or plots or parts thereof for
    13  which such income has been provided. [In addition, the  governing  board
    14  of  the  corporation  may  appropriate  for  expenditure  solely for the
    15  perpetual care and maintenance of the lot or plots or parts thereof  for
    16  which  such  income has been provided, a portion of the net appreciation
    17  in the fair market value of the principal of the  trust  as  is  prudent
    18  under  the  standard  established by article five-A of this chapter, the
    19  prudent management of institutional funds act. In the event that a ceme-
    20  tery corporation seeks to appropriate any percentage of its net appreci-
    21  ation in its perpetual care fund in accordance with  this  subparagraph,
    22  the  cemetery  corporation shall provide notice of such appropriation to
    23  the cemetery board not less than sixty days in advance of such  proposed
    24  appropriation  and  shall  disclose such appropriation as part of and in
    25  addition to their annual reporting requirements as  defined  in  section
    26  fifteen  hundred eight of this article setting forth the amount of funds
    27  appropriated for such expenditure and its effect on the  perpetual  care
    28  funds.  Such  proposed  appropriation  shall become effective sixty days
    29  after receipt of such notice, unless  the  cemetery  board  within  such
    30  sixty  day  period  notifies  the  cemetery  corporation  that the board
    31  objects to the proposed appropriation.] In addition, in  any  year,  the
    32  governing board of a qualified corporation, as defined below, may appro-
    33  priate  for  expenditure  solely for the maintenance and preservation of
    34  the cemetery grounds, and treat as income for all purposes, an amount of
    35  trust principal equal to the excess, if any, of a percentage of the fair
    36  market value of the principal of the trust, as of the last  day  of  the
    37  cemetery's  immediately  preceding  fiscal year, as is prudent under the
    38  standard established by article five-A  of  this  chapter,  the  prudent
    39  management  of  institutional funds act over interest and ordinary divi-
    40  dends received in such year; provided, however, that an appropriation of
    41  an amount (the safe harbor amount)  of  trust  principal  equal  to  the
    42  excess  of  up to four percent of the fair market value of the principal
    43  of the trust, as of the last day of the cemetery's immediately preceding
    44  fiscal year over interest and ordinary dividends received in  such  year
    45  shall  be  deemed to be prudent in all events. A "qualified corporation"
    46  means a cemetery corporation which adopts a  written  investment  policy
    47  setting forth guidelines on investments and delegation of management and
    48  investment  functions  in accord with the standards of article five-A of
    49  this chapter.  If  a  cemetery  corporation  seeks  to  appropriate  any
    50  percentage  of  the  principal  of the perpetual care fund in accordance
    51  with this subparagraph, the cemetery corporation shall provide notice of
    52  such proposed appropriation and provide a copy of its written investment
    53  policy by certified mail to the cemetery board not less than sixty  days
    54  in advance of such proposed appropriation and shall disclose such appro-
    55  priation  as  part of and in addition to their annual reporting require-
    56  ments as defined in section  fifteen  hundred  eight  of  this  article,
        S. 5463                             4
     1  setting  forth  the  amount  of  principal  to  be appropriated for such
     2  expenditure and its effect on the perpetual  care  fund.  Such  proposed
     3  appropriation  shall  become  effective sixty days after receipt of such
     4  notice, unless the proposed appropriation exceeds the safe harbor amount
     5  or  the  written investment policy is not provided or is not prepared in
     6  accordance with the standards of article five-A of this chapter, and the
     7  cemetery board within such sixty-day period notifies the cemetery corpo-
     8  ration that the board objects to the proposed appropriation.
     9    § 3. This act shall take effect immediately.