Funeral Trust Dollar Limitation Repealed


Editor: Alistair M. Nevius, J.D.

On August 29, 2008, President Bush signed into law the Hubbard Act, P.L. 110-317, which repealed the dollar limitation on funeral trusts.

Under Sec. 685(c) (prior to repeal), aggregate contributions to a qualified funeral trust could not exceed $7,000. That limitation has been eliminated, effective August 29. The Congressional Budget Office estimates that this change will raise a small amount of revenue ($6 million from 2009 through 2018) because income earned by a qualified funeral trust is taxed at estate and trust tax rates.

Before the limitation was repealed, a qualified funeral trust that had aggregate contributions in excess of $7,000 ceased to be a qualified funeral trust, and its income would be taxed as ordinary income of the grantor of the trust—at a lower individual income tax rate. Because the limitation has been removed, qualified funeral trusts will no longer be disqualified for excess contributions and will be able to hold more funds; therefore they should have more income, and all the income will be taxed at estate and trust tax rates.

Newsletter Articles

TAX REFORM

Traps for the unwary: Tax Cuts and Jobs Act changes

By now many of us are familiar with the various provisions of the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. Here is a list of changes together with (perhaps) unexpected nuances.

DEDUCTIONS

Qualified business income deduction regs. and other guidance issued

The package includes final regulations, guidance on how to calculate W-2 wages, a safe-harbor rule for rental real estate businesses, and new proposed rules on the treatment of previously suspended losses.