S T A T E O F N E W Y O R K
________________________________________________________________________
7418
2011-2012 Regular Sessions
I N A S S E M B L Y
May 4, 2011
___________
Introduced by M. of A. BRENNAN -- read once and referred to the Commit-
tee on Corporations, Authorities and Commissions
AN ACT to amend the not-for-profit corporation law, in relation to regu-
lation of cemetery trust funds and finances by the cemetery board
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraphs (a) and (i) of section 1506 of the not-for-pro-
fit corporation law, paragraph (a) as added by chapter 871 of the laws
of 1977 and paragraph (i) as amended by chapter 292 of the laws of 1999,
are amended to read as follows:
(a) Purchase of land; notice to CEMETERY board [and court approval].
No cemetery corporation, in purchasing real property hereafter, shall
pay or agree to pay more than the fair and reasonable market value ther-
eof. The terms of the purchase, including the price to be paid and the
method of payment, shall be subject[, upon notice] to NOTICE AND
APPROVAL OF the cemetery board[, to approval by the supreme court in a
district where any portion of the land is located]. In determining the
fair and reasonable market value, the [court] CEMETERY BOARD may take
into consideration the method by which the purchase price is to be paid.
(i) Sale or disposition of cemetery lands. (1) No cemetery corporation
may sell or dispose of the fee of all or any part of its lands dedicated
to cemetery use, unless it shall prove to the satisfaction of the
[supreme court in the district where any portion of the cemetery lands
is located] CEMETERY BOARD, either: (A) that all bodies have been
removed from each and every part of the cemetery, that all the lots in
the entire cemetery have been reconveyed to the corporation and are not
used for burial purposes, and that it has no debts and liabilities, or
(B) that the land to be sold or disposed of is not used or is not phys-
ically adaptable for burial purposes and that the sale or disposition
will benefit the cemetery corporation and the owners of plots and graves
in the cemetery, and (C) that the sale or disposition is not to a funer-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11001-01-1
A. 7418 2
al entity as defined in paragraph (c) of section fifteen hundred six-a
of this article. (2) If the sale or disposition is made pursuant to
subparagraph (A) of subdivision one of this paragraph, the cemetery
shall satisfy the [court] CEMETERY BOARD that it is in the public inter-
est to dispose of such cemetery land in the manner proposed; that the
subject land is not suitable for cemetery purposes or is no longer need-
ed by the community for such cemetery uses or purposes; and that the
subject land is being sold for its current market value. (3) If the sale
or disposition of the land is made pursuant to subparagraph (B) of
subdivision one of this paragraph, the [court] CEMETERY BOARD shall
order that the consideration received by the cemetery corporation, less
the necessary expenses incurred, shall be deposited into the permanent
maintenance fund established by the cemetery corporation pursuant to
paragraph (a) of section fifteen hundred seven of this article. (4)
Notice of any application hereunder shall be given IN ADDITION to the
cemetery board, to the holders of certificates of indebtedness and land
shares of the cemetery corporation, and to any person [interested]
HAVING INFORMED THE CEMETERY BOARD BY PETITION OR NOTICE OF INTEREST in
the proceeding [pursuant to section five hundred eleven of this chapter
(Petition for leave of court)].
S 2. Subparagraph 2 of paragraph (a), paragraph (e) and subparagraph 2
of paragraph (e-1) of section 1507 of the not-for-profit corporation
law, subparagraph 2 of paragraph (a) as amended by chapter 679 of the
laws of 2004, paragraph (e) as added by chapter 871 of the laws of 1977
and subparagraph 2 of paragraph (e-1) as amended by chapter 111 of the
laws of 2000, are amended to read as follows:
(2) The permanent maintenance fund is hereby declared to be and shall
be held by the corporation as a trust fund, for the purpose of maintain-
ing and preserving the cemetery, including all lots, crypts, niches,
plots, and parts thereof. The principal of such fund shall be invested
in such securities as are permitted for the investment of trust funds by
section 11-2.3 of the estates, powers and trusts law. The income in the
form of interest and ordinary dividends therefrom shall be used solely
for the maintenance and preservation of the cemetery grounds. In addi-
tion, the governing board of the corporation may appropriate for expend-
iture solely for the maintenance and preservation of the cemetery
grounds a portion of the net appreciation, realized (with respect to all
assets) and unrealized (with respect only to readily marketable assets),
in the fair market value of the principal of the trust in excess of its
adjusted historic dollar value, as defined in this subparagraph, as is
prudent under the standard established by section seven hundred seven-
teen of this chapter (duty of directors and officers) and as limited by
the maximum annual appropriation defined in this subparagraph. For the
purposes of this subparagraph, the adjusted historic dollar value of the
trust principal shall be the market value of the principal three full
calendar years prior to the effective date of the amendments made to
this subparagraph, plus all subsequent additions thereto, minus all
allowable deductions therefrom, adjusted by the rate of inflation as
measured by the applicable consumer price index. The maximum annual
appropriation shall be sixty percent of the average of the net appreci-
ation in the fund for the immediately preceding three years, but only to
the extent that it exceeds the adjusted historical dollar value of the
fund in the current year. Cemetery corporations shall keep complete
records of the adjusted historic dollar value of the permanent mainte-
nance fund. In the event that a cemetery corporation seeks to appropri-
ate any percentage of its net appreciation in its permanent maintenance
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fund in accordance with this subparagraph, the cemetery corporation
shall send a notice of such proposed appropriation by certified mail to
the cemetery board, setting forth the amount of funds to be appropriated
for such expenditure and its effect on the permanent maintenance fund,
and certifying that such amount does not exceed the maximum annual
appropriation defined in this subparagraph. Such proposed appropriation
shall become effective sixty days after receipt of such notice, unless
the cemetery board within such sixty-day period notifies the cemetery
corporation that the board objects to the proposed appropriation.
Notwithstanding the foregoing provisions of this subparagraph, all prin-
cipal of the permanent maintenance fund shall remain inviolate, except
that, upon application to the [supreme court in a district where a
portion of the cemetery grounds is located, the court] CEMETERY BOARD,
THE CEMETERY BOARD may make an order permitting the principal or a part
thereof to be used for the purpose of current maintenance and preserva-
tion of the cemetery or otherwise. Such application may be made by the
cemetery board on notice to the corporation or by the corporation on
notice to the cemetery board. Unless the cemetery can clearly demon-
strate that it lacks sufficient future revenue to make repayment, any
such allowance from the permanent maintenance fund shall be in the form
of a loan, and the court shall determine the method for repayment of
such a loan by the cemetery to the fund. Any loan from the permanent
maintenance fund shall be ignored for the purpose of computing the
adjusted dollar value of the fund. In the event that the [court] CEME-
TERY BOARD determines that an outright grant of principal from the
permanent maintenance fund is necessary, the amount of such grant shall
be deducted from the adjusted historic dollar value of the trust princi-
pal for the purposes of this subparagraph.
(e) Designation of fiduciary corporation by directors or trustees of
cemetery corporation to act as custodians of funds. Notwithstanding the
provisions of any other law, the directors or trustees of cemetery
corporations are hereby authorized to designate a bank or trust company
to act as custodian and trustee of any or all of the respective funds of
such cemetery corporation received by it for the perpetual care of lots
in the cemetery thereof pursuant to subdivision (b), of this section,
the permanent maintenance of such cemetery pursuant to subdivision (a)
of this section, and for special purposes pursuant to subdivision (f) of
this section. Such corporate trustee shall be designated by a resolution
duly adopted by the board of directors or trustees [and approved by a
justice of the supreme court of the judicial district in which the ceme-
tery of said corporation is located]; and the directors or trustees of
such cemetery corporation may[, with the approval of the justice of the
supreme court,] revoke such trust, and either take over such trust fund
or name another trustee to handle the same, but if not so revoked, such
trust shall be perpetual. NOTICE OF SUCH A CHANGE IN DESIGNATION SHALL
BE PROVIDED TO THE CEMETERY BOARD WITHIN SIXTY DAYS OF SUCH DESIGNATION
BY THE BOARD OF DIRECTORS OR TRUSTEES OF THE CEMETERY CORPORATION. Any
bank or trust company accepting any such cemetery fund shall keep the
same separate from all other funds, except that it may, irrespective of
any provision contained in this article invest the same in a legal
common trust fund or in shares of a mutual trust investment company
organized under the banking law, and shall pay over the net income to
the directors or trustees of the cemetery corporation by whom it shall
be expended and applied to the purpose for which such trust fund was
paid to the cemetery corporations and accounted for in accordance with
such subdivisions (a), (b) and (f) of this section.
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(2) The principal of the fund shall be invested in securities permit-
ted for the investment of trust funds by sections 11-2.2 and 11-2.3 of
the estates, powers and trusts law. The principal of such fund shall
remain inviolate, except that upon application to the [supreme court in
a district where a portion of the cemetery grounds is located, the
court] CEMETERY BOARD, WHICH may make an order permitting the principal
or a part thereof to be used for the purpose of restoring monuments
damaged or defaced by an act of vandalism. The income arising from such
investment shall be used solely for the costs and expenses resulting
from an act of vandalism against monuments in such cemetery.
S 3. This act shall take effect immediately.