STATE OF NEW YORK ________________________________________________________________________ 6285 2023-2024 Regular Sessions IN SENATE April 11, 2023 ___________ 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. LBD02084-01-3

S. 6285 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. 6285 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. 6285 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.

Relates to cemetery trust funds

What's Happening

Why It Matters