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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)…

The International Cemetery, Cremation and Funeral Association (ICCFA) made an old but persuasive argument to get the IRS to exempt cemetery care trusts from the Medicare tax that will fund ObamaCare.  As discussed in a prior post, the IRS had initially proposed to apply the tax to both cemetery care trusts and preneed trusts.  With …

 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 …

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.

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…

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…

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…