Check the background of this financial professional on FINRA's BrokerCheck.
MICHAEL HALL, CLU, LUTCF
   

Newsletters


The newsletter articles on this page provide valuable information on timely and interesting financial issues across a variety of subject areas, including retirement, investments, personal finance, annuities, insurance, taxes, college, and government benefits.


   
Four Numbers You Need to Know Now
Student Loan Debt: It Isn't Just for Millennials
Expect the Unexpected: What to Do If You Become Disabled
What is a funeral trust?
What is a pet trust?


SIGN UP NOW
Enter your name and e-mail to receive e-mail updates from me.
NAME:
E-MAIL:


 
 

What is a funeral trust?

A funeral trust is an arrangement entered into with a provider of funeral or burial services. Prepaying funeral expenses may allow you to "lock in" costs for future funeral or burial services at an agreed-upon price. The funeral home sometimes serves as trustee (manager of trust assets), and you usually fund the trust with cash, bonds, or life insurance. A revocable funeral trust can be changed and revoked by you at any time. An irrevocable trust can't be changed or revoked, and you generally can't get your money out except to pay for funeral services.

Irrevocable funeral trusts may also help you qualify for long-term care benefits through Medicaid. For example, these trusts may be funded with assets that would otherwise be countable resources for Medicaid (i.e., included in determining Medicaid eligibility). They are often sold through insurance companies, in which case they are typically funded with life insurance. And you can fund the funeral trust right before entering the nursing home — there's no "look-back" period for these transfers, unlike the case with certain other transfers that can cause a delay in the start of Medicaid benefits.

Another advantage of funding your trust with life insurance is that the trust will have no taxable income to report, because life insurance cash values grow tax deferred. Otherwise, income from trust assets may be taxed to you as the grantor of the trust, unless the trustee elects to treat the trust as a qualified funeral trust by filing Form 1041-QFT with the IRS, in which case trust income is taxed to the trust.

But what happens if you want to change funeral homes, or the facility you selected goes out of business? Does your irrevocable trust allow you to change beneficiaries (e.g., funeral homes)? Are trust funds protected from creditors of the funeral home? State laws regulating prepaid funeral trusts often require funeral homes to keep trust assets separate from their own business assets, keeping them safe from funeral home creditors. And most irrevocable trusts are transferable to another funeral home should the initial business fail or you change funeral homes.

There are expenses associated with the creation of a trust and the purchase of life insurance, and benefits are not guaranteed.

 
©2017 Broadridge Investor Communication Solutions, Inc. All rights reserved.
Tell A Friend Tell A Friend
Connect with us on: Go to Facebook  


 
 
 
7501 "O" Street • Suite 104 • LINCOLN, NE 68510 • 402-420-2274

Michael J Hall is an Investment Advisor Representative of and offers Securities and Investment Advisory Services through Woodbury Financial Services, Inc., Member FINRA/SIPC and Registered Investment Advisor. Insurance services offered through RHD Financial, which is not affiliated with Woodbury Financial Services, Inc. Neither RHD Financial, nor Woodbury Financial Services, Inc., offer tax or legal advice. 

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

PLEASE NOTE: The link(s) provided is strictly a courtesy. When you link to any of the websites provided here, you are leaving this website and assume total responsibility and risk for your use of the website you are linking to. We make no representation as to the completeness or accuracy of any information provided at these websites. Nor are we liable for any technical or system issues or any consequences arising out of your access to or your use of information and programs made available through this web site.


This communication is strictly intended for individuals residing in the state(s) of AZ, CA, CO, FL, IL, IA, KS, MN, NE, TX and WA. No offers may be made or accepted from any resident outside the specific states referenced.
 


Check the background of this financial professional on FINRA's BrokerCheck.