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Maintenance Funds

State Governments often mandate that cemeteries set aside a fixed portion of cemetery plot sales for a maintenance fund, thereby creating an implied contract between cemeteries and consumers. In return for a portion of the consumers’ plot purchase price going into a state mandated fund, the cemetery agrees to maintain the graves and cemetery property forever. Many maintenance funds do not generate enough income to cover expenses.

The flow of funds becomes an obvious problem when the cemetery is full and no additional plots can be sold. At that point the cemetery must rely only on investment returns to cover maintenance costs. But this under-funding is a problem for other stakeholders at other times, too.  Plot owners and relatives need to be assured that perpetual maintenance funds do not run out of money and that cemetery owners will not be coming back to the descendants asking for funds for upkeep.

The governing body of a city or town having and maintaining a cemetery, may establish a maintenance fund to provide for the maintenance and care of such cemetery. Such maintenance fund shall consist of all amounts received by the city or town in the form of bequests, donations, grants or gifts of all kinds or property, in fee simple or otherwise, for the purpose of cemetery maintenance, and cities and towns are empowered to accept such bequests, donations, grants and gifts to become part of such maintenance funds. In addition, payment may be made into such fund each year as the governing body may determine.

By statute, cemetery associations often are required to establish and fund perpetual or maintenance trust funds, which can be funded by levying execution on cemetery assets. Fraternal or benevolent societies and religious cemeteries may be exempt from the requirements of a perpetual care fund statute. An organization for the perpetual care of a cemetery may take either the form of a corporation or a trust. Such a fund embodies the purpose of protecting the public from unsightly and ill-maintained cemeteries. Upon the sale of a cemetery, the vendor or transferor may be required to prove that there is no deficiency in the improvement or perpetual care trust fund. Arrangements with a grantor of cemetery lands to pay the grantor a percentage of the plot-sale proceeds, or to give the grantor an interest as a shareholder in the cemetery, violates state law regulating perpetual-care trust funds. A statute requiring deposits into a permanent maintenance fund can also require that a certain percentage of the sale of burial lots must be set aside and invested in approved investments. A trustee of a cemetery’s perpetual care fund may be personally liable for failing to maintain an adequate balance in the fund. Operating or continuing to operate a cemetery without establishing or maintaining an endowment care fund is a strict liability offense.

For instance, Ga. Code Ann. § 44-3-143(d) authorizes the secretary of state to levy an execution on cemetery assets and company property and sell them in order to fund the perpetual care trust fund and escrow account required by the Cemetery Act. These statutory provisions, which operate as to property rights, in effect grant a lien on company assets and property but are silent concerning the rights and priorities of competing liens[i].

The Cemetery Care Act, Ill. Rev. Stat. ch. 21, paras. 64.1 et seq. (1949) gives the Auditor of Public Accounts regulatory supervision of the care funds of “privately owned cemeteries”[ii].

38 USCS § 2408 provides that states shall provide aid for establishment, expansion, and improvement of veterans’ cemeteries. “The Secretary may make a grant to any State for the following purposes:
(A) Establishing, expanding, or improving a veterans’ cemetery owned by the State.
(B) Operating and maintaining such a cemetery.
(2) A grant under paragraph (1) may be made only upon submission of an application to the Secretary in such form and manner, and containing such information, as the Secretary may require.

(b) A grant under this section for a purpose described in subsection (a)(1)(A) shall be subject to the following conditions:
(1) The amount of such a grant may not exceed–
(A) in the case of the establishment of a new cemetery, the sum of: (i) the cost of improvements to be made on the land to be converted into a cemetery; and (ii) the cost of initial equipment necessary to operate the cemetery; and
(B) in the case of the expansion or improvement of an existing cemetery, the sum of: (i) the cost of improvements to be made on any land to be added to the cemetery; and (ii) the cost of any improvements to be made to the existing cemetery.
(2) If the amount of such a grant is less than the amount of costs referred to in subparagraph (A) or (B) of paragraph (1), the State receiving the grant shall contribute the excess of such costs over the grant.
(3) If a State that has received such a grant to establish, expand, or improve a veterans’ cemetery ceases to own such cemetery, ceases to operate such cemetery as a veterans’ cemetery, or uses any part of the funds provided through such grant for a purpose other than that for which the grant was made, the United States shall be entitled to recover from such State the total of all grants made under this section to such State in connection with such cemetery.

(c)   (1) In addition to the conditions specified in subsection (b) of this section, any grant to a State under this section to assist such State in establishing a veterans’ cemetery shall be made on the condition that such cemetery shall conform to such standards and guidelines relating to site selection, planning, and construction as the Secretary may by regulation prescribe. In prescribing regulations for the purposes of the preceding sentence, the Secretary shall take into account the standards and guidelines for site selection, planning, and construction that are applicable to cemeteries under the control of the National Cemetery Administration, including those provided in subsections (b), (c), and (d) of section 2404 of this title [38 USCS § 2404].
(2) The Secretary may by regulation prescribe such additional terms and conditions for grants under this section as the Secretary considers appropriate.

(d) (1) In addition to the conditions specified in subsections (b) and (c), any grant made to a State under this section shall be made subject to the condition specified in paragraph (2).
(2) For purposes of paragraph (1), the condition described in this paragraph is that, after the date of the receipt of the grant, such State prohibit the interment or memorialization in that cemetery of a person described in section 2411(b) of this title [38 USCS § 2411(b)], subject to the receipt of notice described in subsection (a)(2) of such section, except that for purposes of this subsection–
(A) such notice shall be furnished to an appropriate official of such State; and
(B) a finding described in subsection (b)(3) of such section shall be made by an appropriate official of such State.

(e) (1) Amounts appropriated to carry out this section shall remain available until expended. If all funds from a grant under this section have not been utilized by a State for the purpose for which the grant was made within three years after such grant is made, the United States shall be entitled to recover any such unused grant funds from such State.
(2) In any fiscal year, the aggregate amount of grants awarded under this section for the purposes specified in subsection (a)(1)(B) may not exceed $ 5,000,000.”

[i] Connolly v. State, 199 Ga. App. 887 (Ga. Ct. App. 1991)

[ii] Cedar Park Cemetery Ass’n v. Cooper, 408 Ill. 79 (Ill. 1951)

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