[Congressional Record Volume 152, Number 85 (Tuesday, June 27, 2006)]
[Senate]
[Page S6584]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH:
  S. 3586. A bill to amend the Internal Revenue Code of 1986 to repeal 
the dollar limitation on contributions to funeral trusts; to the 
Committee on Finance.
  Mr. HATCH. Mr. President, I rise today to introduce a bill that will 
eliminate the current limit on the amount individuals can place into a 
trust to provide for funeral expenses. Given the rising costs of 
funeral expenses, this change would have a positive impact on the lives 
of older Americans and on their families. In addition, according to the 
Joint Committee on Taxation, it would have a slight, but positive, 
impact on the Federal Treasury.
  Current law limits a funeral trust to $8,500, but this is generally 
no longer sufficient to cover a family's funeral expenses. In Utah, the 
average cost of a full funeral and burial is $12,685. I am sure that in 
many other States it is even higher. Because of this contribution 
limit, even those who preplan their own funerals too often leave their 
heirs with substantial expenses. Even those who attempt to cover the 
entire expense may not have enough to cover all costs after 
administrative fees and taxes are deducted.
  This proposal would make qualified funeral trusts more effective. The 
principal reason individuals set up qualified funeral trust plans is to 
lift a financial burden from their children.
  I recall the case of one constituent who wrote to me about this 3 
years ago. He was suffering from Parkinson's disease began preplanning 
his own funeral so these decisions and this burden would be lifted from 
his children. Because of the ``QFT Cap'' which at the time was $7,800, 
this Utahn was not able to preplan completely the funeral services he 
desired. It became necessary to have one of his sons complete this 
preplanning for him by opening up his own trust that would help to 
cover all expenses. It seems silly to make families go to these extra 
steps when they are attempting to make responsible decisions, well in 
advance of need, for themselves and their families.
  For older Americans, the primary benefits of this legislation are the 
ability to have all the money they have saved in the trust to be 
applied to final expenses, instead of taxes, and the incentive to 
increase the amount of their contribution. Sixty percent of prefunded 
funerals were funded by trusts and elimination of the cap should raise 
this percentage. For funeral directors, this change would eliminate the 
burden and expense of issuing information documents to report income 
earned from the trust.
  I think we can all agree that we should make it easier for those who 
are willing to provide for these necessary expenses in advance. Today, 
I ask my colleagues to join me in an effort to enact this important 
measure.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3586

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. REPEAL OF DOLLAR LIMITATION ON CONTRIBUTIONS TO 
                   FUNERAL TRUSTS.

       (a) In General.--Subsection (c) of section 685 of the 
     Internal Revenue Code of 1986 (relating to treatment of 
     funeral trusts) is repealed.
       (b) Conforming Amendment.--Subsections (d), (e), and (f) of 
     such section are redesignated as subsections (c), (d), and 
     (e), respectively.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.




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