STATE OF NEW YORK
________________________________________________________________________
3686
2023-2024 Regular Sessions
IN ASSEMBLY
February 3, 2023
___________
Introduced by M. of A. ZEBROWSKI -- read once and referred 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
25 the amount of funds to be appropriated for such expenditure and its
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02084-01-3
A. 3686 2
1 effect on the permanent maintenance fund. Such proposed appropriation
2 shall become effective sixty days after receipt of such notice, unless
3 the cemetery board within such sixty-day period notifies the cemetery
4 corporation that the board objects to the proposed appropriation.
5 Notwithstanding the foregoing provisions of this subparagraph, all prin-
6 cipal of the permanent maintenance fund shall remain inviolate, except
7 that, upon application to the supreme court in a district where a
8 portion of the cemetery grounds is located, the court may make an order
9 permitting the principal or a part thereof to be used for the purpose of
10 current maintenance and preservation of the cemetery or otherwise.] In
11 addition, in any year, the governing board of a qualified corporation,
12 as defined below, may appropriate for expenditure solely for the mainte-
13 nance and preservation of the cemetery grounds, and treat as income for
14 all purposes, an amount of trust principal equal to the excess, if any,
15 of a percentage of the fair market value of the principal of the trust,
16 as of the last day of the cemetery's immediately preceding fiscal year,
17 as is prudent under the standard established by article five-A of this
18 chapter, the prudent management of institutional funds act over interest
19 and ordinary dividends received in such year; provided, however, that an
20 appropriation of an amount (the safe harbor amount) of trust principal
21 equal to the excess of up to four percent of the fair market value of
22 the principal of the trust, as of the last day of the cemetery's imme-
23 diately preceding fiscal year over interest and ordinary dividends
24 received in such year shall be deemed to be prudent in all events. A
25 "qualified corporation" means a cemetery corporation which adopts a
26 written investment policy setting forth guidelines on investments and
27 delegation of management and investment functions in accord with the
28 standards of article five-A of this chapter. If a cemetery corporation
29 seeks to appropriate any percentage of the principal of the permanent
30 maintenance fund in accordance with this subparagraph, the cemetery
31 corporation shall provide notice of such proposed appropriation and
32 provide a copy of its written investment policy by certified mail to the
33 cemetery board not less than sixty days in advance of such proposed
34 appropriation and shall disclose such appropriation as part of and in
35 addition to their annual reporting requirements as defined in section
36 fifteen hundred eight of this article, setting forth the amount of prin-
37 cipal to be appropriated for such expenditure and its effect on the
38 permanent maintenance fund. Such proposed appropriation shall become
39 effective sixty days after receipt of such notice, unless the proposed
40 appropriation exceeds the safe harbor amount or the written investment
41 policy is not provided or is not prepared in accordance with the stand-
42 ards of article five-A of this chapter, and the cemetery board within
43 such sixty-day period notifies the cemetery corporation that the board
44 objects to the proposed appropriation. Except to the extent that princi-
45 pal is utilized as the result of the foregoing, all principal of the
46 permanent maintenance fund shall remain inviolate, with the further
47 exception that, upon application to the supreme court in a district
48 where a portion of the cemetery grounds is located, the court may make
49 an order permitting the principal or a part thereof to be used for the
50 purpose of current maintenance and preservation of the cemetery or
51 otherwise. Such application may be made by the cemetery board on notice
52 to the corporation or by the corporation on notice to the cemetery
53 board. Unless the cemetery can clearly demonstrate that it lacks suffi-
54 cient future revenue to make repayment, any such allowance from the
55 permanent maintenance fund shall be in the form of a loan, and the court
A. 3686 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,
A. 3686 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.