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. While funeral directors ponder whether consumers will embrace a preneed transaction that does not provide price guarantees, the IRS will question whether the transaction will be abused as a tax shelter.
The Section 685 needs to be increased substantially, but I anticipate the Service will pull no punches while fighting the NFDA’s efforts.