Congresswoman Linda T. Sánchez (D-CA) and Congressman Drew Ferguson (R-GA) re-introduced legislation that would restore appropriate tax deductions for advisory expenses related to funeral and cemetery trusts.
“Memorials offer families a place to remember those they’ve lost, and they should be properly cared for across generations. The inability to deduct certain expenses related for burial costs has threatened the financial solvency of the trusts that must fulfill that sacred obligation to families,” said Congresswoman Linda Sánchez. “When trusts are no longer able to cover needed upkeep, cash-strapped state and local governments are often ultimately on the hook for their fiduciary responsibility. This bill would enable the trusts to retain more income, so cemetery authorities and funeral homes can carry out their duties and meet the needs of those already struggling with grief.”
“During a time of immeasurable loss, families shouldn’t be burdened with their loved ones’ final resting places,” Congressman Drew Ferguson said. “From my time as a mayor, I understand firsthand the financial responsibility to maintain community cemeteries, which is why the solvency of funeral trusts is immensely important to families as well as small local governments. Families, funeral homes, and municipalities deserve our support when making financial decisions to preserve our local cemeteries.”
The loss of the deduction option has been particularly impactful to the deathcare industry because funeral homes and cemeteries utilize trusts uniquely from traditional trusts where funds are provided to a beneficiary. Despite the lower tax rates authorized for trusts under the TCJA, many cemetery and funeral trusts are now paying more in taxes because the taxable income of many trusts is now higher without the deduction.
Additionally, this bill would finally increase the distribution deduction for care and maintenance and index that figure for inflation. Internal Revenue Code Section 642(I) allows such trusts a $5 per gravesite distribution deduction for each gravesite purchased prior to the start of the taxable year for which care and maintenance are provided. However, since its creation in 1976, the $5 distribution deduction has never been increased in value or indexed for inflation. As a result, the value is greatly diminished from what it was 45 years ago, and in today’s dollar, would be nearly five times higher.
This bill would enable the trusts to retain more income, so cemetery authorities and funeral homes can carry out their duties and meet their contractual obligations.
You can view the full bill text here.