| Washington State House of Representatives Office of Program Research |
BILL ANALYSIS |
| Commerce & Labor Committee | |
HB 2740
This analysis was prepared by non-partisan legislative staff for the use of legislative members in
their deliberations. This analysis is not a part of the legislation nor does it constitute a
statement of legislative intent.
Brief Description: Concerning private cemeteries.
Sponsors: Representatives Hudgins, Conway and Condotta.
Brief Summary of Bill |
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Hearing Date: 1/24/08
Staff: Brian Considine (786-7290).
Background:
In Washington, corporations are expressly granted the authority to own and operate cemeteries.
The cemetery statute was enacted in 1943 and sections of the Cemeteries Act were rewritten in
2005. A Limited Liability Company (LLC) is a relatively new business structure, and
Washington authorized LLCs in 1994. When the law was changed in 1994, many businesses and
professions were given the authority to form as a LLC. Cemeteries were not given the authority
to form as a LLC.
Business Entities
Under state law, there are several different business entities that may legally exist. Some factors
a business may consider when selecting its entity's structure include: limiting liability; taxation;
transferability of interests; and desired level of formality.
Corporations
Corporations are formed according to formal statutorily prescribed procedures. A corporation is
managed by directors and officers, but is owned by shareholders who may have very little direct
role in management. A corporation exists for perpetuity unless the articles of incorporation state
an ending time or event. Corporations may generally own property, sign binding contracts, pay
taxes in a capacity that is separate from that of its shareholders, and the corporation is treated as a
taxable entity.
A corporation has three main characteristics: (i) transferable shares (shareholders can change
without affecting its status as a legal entity); (ii) perpetual succession capacity (its possible
continued existence despite shareholders' death or withdrawal); and (iii) limited liability
(including, but not limited to, the shareholders' limited responsibility for corporate debt,
insulation from judgments against the corporation, and shareholders' amnesty from criminal
actions of the corporation).
General Partnerships
General partnerships are business entities recognized at common law that require no formal
creation, are owned and managed by the same individuals, and each owner/partner is liable for
the debts of the partnership. A general partnership is not a taxable entity.
Limited Liability Companies
LLCs are formed by one or more individuals or entities through a special written agreement
called a certificate of formation. The agreement details the organization of the LLC, including
provisions for management, assignability of interests, and distribution of profits or losses. A
LLC exists for perpetuity unless the articles of formation state an ending time or event.
The main characteristics for an LLC are: limited personal liability by the members for the LLC's
debts and actions (similar to a corporation); allows the owners to participate actively in
management; no double taxation (profits are taxed personally at the member level, not the LLC
level); and may generally own property, sign contracts, and its liability ensures members are
mostly protected from acts and debts of the LLC.
Summary of Bill:
LLCs may own and operate cemeteries in Washington.
Rules Authority: The bill does not address the rule-making powers of an agency.
Appropriation: None.
Fiscal Note: Not requested.
Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.