Funeral Trust Dollar Limitation Repealed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On August 29, 2008, President Bush signed into law the Hubbard Act, P.L. 110-317, which repealed the dollar limitation on funeral trusts.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Before the limitation was repealed, a qualified funeral trust that had aggregate contributions in excess of $7,000 ceased to be a qualified funeral trust, and its income would be taxed as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

50th ANNIVERSARY

50 years of The Tax Adviser

The January 2020 issue marks the 50th anniversary of The Tax Adviser, which was first published in January 1970. Over the coming year, we will be looking back at early issues of the magazine, highlighting interesting tidbits.

PRACTICE MANAGEMENT

2019 tax software survey

This annual survey shows how CPAs rate the tax preparation software they used during last tax season and how it handled the recent tax law changes.