DEPARTMENT OF FINANCIAL SERVICES
Division of Funeral, Cemetery, and Consumer Services
RULE NO.: RULE TITLE:
69K-7.0012 Care and Maintenance Trust Fund Withdrawals
NOTICE OF CHANGE
Notice is hereby given that the following changes have been made to the proposed rule in accordance with subparagraph 120.54(3)(d)1., F.S., published in Vol. 42 No. 119, June 20, 2016 issue of the Florida Administrative Register.
The change is in response to written comments submitted by the staff of the Joint Administrative Procedures Committee in a letter dated July 7, 2016. The changes are as follows:
69K-7.0012 Care and Maintenance Trust Fund Withdrawals
(1) No change
(2) Procedure for making withdrawal election.
(a) Regarding the election referenced under section 497.2675(2), F.S., the initial election and each subsequent change of election shall be made by filing a completed, signed, and dated Election of Care and Maintenance Trust Fund Distribution Method, Form DFS-N1-2177, effective 05/2016 Form A with the Division at least 60 days prior to the effective date specified in the election. This form is incorporated herein by reference, and may be obtained from http://www.flrules.org/Gateway/reference.asp?No=Ref- , or from the Board’s office or from the Board’s website http://www.myfloridacfo.com.
(b) Upon receipt by the Division of a completed, signed, and dated Election of Care and Maintenance Trust Fund Distribution Method, Form DFS-N1-2177, effective 05/2016 Form A, the Division shall affix the Division's dated receipt stamp to the form Form A and shall within five business days return a copy of the form Form A as thus stamped to the contact person shown on the form Form A. This form is incorporated herein by reference, and may be obtained from http://www.flrules.org/Gateway/reference.asp?No=Ref- , or from the Board’s office or from the Board’s website http://www.myfloridacfo.com.
(c) No change
(3) Calculation of distribution under total return withdrawal method.
(a) through (b) No change
(c) The fair market value of trust assets shall be determined by the trustee or the servicing agent who is not under common control with the cemetery licensee to whom the trust relates. Neither the trustee nor the servicing agent shall rely on asset valuations provided by or on behalf of the cemetery. Provided, a cemetery that is authorized to act as its its’ own trustee under section 497.266(2), F.S., may calculate the fair market value of its trust assets and calculate the amount of its total return distribution.
(d) through (e) No change.
Example A
(a) Example A ignores growth or reduction in investment values, and distributions from the trust. Assume the trustee or servicing agent wants to determine dete l mine the average fair market value of the trust for a 2016 distribution under the total return withdrawal method. This computation will involve averaging the trust fair market value as of January 1, 2014, 2015, and 2016. Assume the fair market value of the trust was $100 on 1-1 -2014. Assume that cemetery sales of interment spaces resulted in deposits to the Care and Maintenance Trust Fund of $2.00 in 2014 and $2.20 in 2015. The computation of average fair market value for the 2016 distribution under the total return withdrawal method will be as follows:
Table A l
2014
2015
2016
Beginning market value Principal addition
$100
$102.00
2.00 + 2.20
2.20
FMV for averaging purposes
The average fair market value for the 2016 distribution equals $104.20.
(b) through (c) No change
Example B
(a) through (c) No change
Example C
(a) through (b) No change
(4) No change
(5) Application of Prudent Investor Rule.
(a) No change
(b) For purposes of application of section 518.11, F.S., the trustee of the Care and Maintenance trust shall consider the primary purpose of the Care and Maintenance Trust Fund to be providing for the future care and maintenance of the cemetery, as defined at section 497.005(11 10), F.S., after the cemetery ceases to produce any revenue stream from which care and maintenance costs may be paid.
(c) No change
(6) Monitoring Trust Fair Market Value; action or adverse trends.
(a) The Division shall monitor the fair market value of care and maintenance trust funds as reported by trustees in annual trust reports. If the Division shall detect that the ending fair market value of the trust for the most recent calendar year has decreased as compared to the average ending balance of the trust for the over the three most recent calendar years, the Division may shall conduct such investigation of the matter as it deems merited and may thereafter set the matter for review and action by the Board at a regularly scheduled meeting of the Board, and shall provide the licensee with 30 days advance notice that the matter will be set before the Board. The Board shall thereupon review the matter and for the protection of the care and maintenance trust fund may order any one or a combination of the following corrective measures as the Board finds appropriate for the protection of the care and maintenance trust fund:
1. through 3. No change
(b) Exceptions. The Board may in particular cases temporarily except a licensee that comes before the Board under subparagraph (a) above, from imposition of corrective measures, if the Board finds that the cause of the adverse trend in the fair market value of the trust is due to one or more unusual temporary factors affecting all or a majority of the licensed cemeteries in the state or in a particular area of the state, and that for the protection of such cemeteries from insolvency the exception is necessary and appropriate.
(7) Miscellaneous provisions
(a) No change
(b) The effective date of an initial election and any subsequent change in n election shall coincide with the first day of a care and maintenance trust fund accounting year to which the election relates. All elections shall be prospective only; no retroactive elections shall be allowed.
(c) through (d) No change
(e) No Election of Care and Maintenance Trust Fund Distribution Method, Form DFS-NI-2177, effective 05/20/16, shall be filed unless the cemetery licensee has been advised by the Care and Maintenance Trust Fund trustee or servicing agent that the trustee or servicing agent will be able to implement the change of distribution method indicated in the form Form A to be filed.
(f) No change
(g)(e) A trustee shall not make a distribution under the total return withdrawal method unless the trustee or servicing agent determines it has reliable records establishing all fair market values needed to calculate average fair market value of the trust in prior periods included in the averaging calculation.
(8) Annual Report of Trustee
(a) Any entity which for all or any part of a calendar year served as trustee of a Care and Maintenance Trust Fund under section 497.266, F.S., shall by not later than April 1 of the following year file a Care and Maintenance Trust Fund, Annual Trustee Report (Revised), Form DFS-N1-2178, effective 05/2016, on Form B for all or that portion of the said calendar year in which it acted as trustee of the trust. This form is incorporated herein by reference, and may be obtained from http://www.flrules.org/Gateway/reference.asp?No=Ref- , or from the Board’s website http://www.myfloridacfo.com.
(b) No change
Rulemaking Authority 497.101(8), 497.103, 497.2675 FS, Law Implemented 497.266, 497.2675, 497.268, 4987.269 F.S., History - New
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Ellen Simon, Assistant Director, Division of Funeral, Cemetery, and Consumer Services, Department of Financial Services, 200 East Gaines Street, Tallahassee, Florida 32399-0361, (850)413-4985, Ellen.Simon@MyfloridaCFO.com.
Document Information
- Related Rules: (1)
- 69K-7.0012. Care and Maintenance Trust Fund Withdrawals