Death Care Compliance Law

Death Care Compliance Law

Preneed: A Pandora's Box of Problems

William Stalter is the founder of Stalter Legal Services and the Preneed Resource Company. Bill focuses his law practice on preneed and death care compliance, serving banks, funeral homes, crematories, and cemeteries. He has written multiple published articles

Category Archives: Preneed Tax

Subscribe to Preneed Tax RSS Feed

Plaintiff’s Star Witness: Doug Cassity

Posted in Insurance Funded, NPS/Lincoln, Preneed Tax, Trust Funded, Uncategorized
The NPS civil trial is scheduled for trial in February 2015, and the SDR’s strategy took a twist when her litigation team filed a motion to dismiss Doug Cassity as a defendant in the lawsuit.  The dismissal probably signals the SDR’s intent to use Mr. Cassity’s testimony.  Now convinced that Mr. Cassity does not have … Continue Reading

Qualified Funeral Trusts: once a simple concept

Posted in Master Trusts, Non-guaranteed, Preneed Tax, Taxes, Uncategorized
In has been almost twenty years since the Balanced Budget Act of 1995 introduced the concept of a simplified tax return for preneed trusts.  Initially, the “Qualified Funeral Trust” concept called for a flat 15% tax on accounts with contributions of $5,000 or less.  A conference committee succeeded in getting a higher contribution limitation ($7,000) … Continue Reading

The Medicare Tax and QFTs: Don’t look a gift horse in the mouth

Posted in Administration, Preneed, Preneed Tax, Taxes, Trust Funded
 Over the past few years, preneed trust administrators have been wondering whether a Section 685 qualified funeral trust could look to each individual trust’s income and apply the lower tax rates for long term capital gains and qualified dividends.  The issue has taken on more relevance as preneed trusts look to diversify out of fixed … Continue Reading

Too Literal of an Interpretation: Mississippi and Preneed Taxes

Posted in Preneed, Preneed Tax, Reporting
The Mississippi Secretary of State seems to be taking a very proactive approach to the regulation of preneed and perpetual care funds. Over the course of the last few years, the Regulation and Enforcement Division of the Secretary of State’s office has averaged an enforcement proceeding per month. We were curious what type of enforcement … Continue Reading

Taxes and the Bounty Hunter

Posted in Preneed, Preneed Tax
When news of the indictment of 6 National Prearranged Service officers was reported last November, many newspapers picked up the AP version that included a quote from the Internal Revenue Service criminal investigator. The fact is that the Federal investigation of NPS involves investigators from the IRS, the FBI and the U.S. Postal Inspection Service. … Continue Reading

Tax Day and next year’s QFT

Posted in Fiduciary, Preneed, Preneed Tax
Many preneed trusts either experienced significant capital losses last year or are sitting on assets that have unrealized losses. For those trusts that have taken a Section 685 election, these losses may be carried into future years as a capital loss carryover. While everyone would prefer to avoid realizing those losses, that loss can be … Continue Reading

The Transfer-for-value Rule and insurance funded preneed

Posted in Preneed, Preneed Tax
In reporting on Forethought’s cut in growth payments last month, the Funeral Service Insider made a curious statement about the taxability. Referencing one of Forethought’s products, the article stated that a funeral home would have received the product’s growth tax free, and now would have to recognize the bonus as income. The article suggests that … Continue Reading

NPS and Taxes

Posted in NPS/Lincoln, Preneed Tax
Everyone complains about continuing education, but occasionally the concept is reinforced when a timely program provides needed insight. Such should be the case when the Missouri Funeral Directors and Embalmers Association sponsors a class on the tax consequences of servicing an NPS contract.  Funeral directors need to understand that they do not necessarily incur a tax … Continue Reading

Preneed trusts and insurance investments

Posted in Preneed, Preneed Tax
One of the many issues facing regulators in the Clayton Smart debacle was the surrender of thousands of Forethought life insurance policies by a Forest Hill preneed trustee. New light will probably be shed on this issue with revelations that Robert Nelms and Clayton Smart may each have been using the same financial management company: Security … Continue Reading

Deductibility of Investment Advisor Fees

Posted in Fiduciary, Preneed Tax
Whether it is because of state law restrictions or preneed purchaser demographics, death care trusts have unique requirements when it comes to investments.  Consequently, it is fairly common for a death care trust to utilize an investment advisor who has experienced with the industry.  However, the deductibility of the fees paid to outside advisors by … Continue Reading

Section 685 – Removing the Cap

Posted in Funeral, Preneed Tax
The National Funeral Directors Association has taken the lead in getting legislation introduced to eliminate the dollar cap imposed on qualified funeral trusts.  While I hope the NFDA succeeds, it won’t be without a fight from the IRS.  As the death care industry inches towards the non-guaranteed preneed transaction, the IRS will express its concerns over abusive trusts.  … Continue Reading