In a trust program, the consumer arranges his or her funeral in advance of need. Monies to pay for the funeral at the time of need are deposited in a special grantor trust, such as a bank certificate of deposit. The funds in the trust account earn interest, which tend to offset the effect of inflation. The I.R.S. revenue ruling 87-127 determined that the purchaser will be treated for tax purposes as the grantor of the trust. As the owner of the trust funds, interest income earned on the trust fund is taxable to the purchaser as income. (Therefore, you are responsible for any taxes owed on the accumulated interest.) Monies paid to the funeral home are taxed to the funeral home as ordinary income at the time of distribution when money is actually received.

If you have any additional questions regarding funeral trusts or burial insurance, our staff would be happy to speak with you regarding your questions or concerns. We can be reached at (920) 432-5579 or (920) 499-4100.