Tax Sheltering Death Care

Abstract

Death is not free. Funeral, burial, or cremation costs are the third largest category of expense over the lifetime of the average American, while poverty paradoxically remains the fourth leading cause of death. Many are unable to shoulder the often-exorbitant cost of death care without being forced to beg, borrow, or simply abandon human remains. Sufficient resources exist to ensure that everyone is laid to rest with dignity in the United States, but those resources are not evenly distributed. This is a conversation about affordable and humane disposition of remains as a right versus a privilege. It is a discussion made more difficult because several underlying issues are colliding in one space: consumer behavior is aberrational because of a desire to render death invisible; the funeral industry has an outsized voice in its own regulation; there are no reliable and broadly accessible death care prepayment instruments; and, expanding the (arguably inadequate) social safety net in the U.S. is usually an idea that meets with resistance. This Article proposes a way of leveraging the Internal Revenue Code to deliver death benefits to low- and middle-income taxpayers through 529 savings infrastructure. 529 plans are the fastest growing investment product in the U.S., with every state administering a structure that provides parents with a tax-advantaged way to save for college. These existing pathways may be used to tax shelter death care savings. The 529 End-of-Life Plan is politically strategic in its subtlety, but the same scaffolding that provides substantial tax incentives may be dual-purposed to deliver targeted safety-net death benefits to our most vulnerable. 

Keywords: death, funeral, 529, 529 account, funeral poverty, estate planning, wills and trusts, deceased, probate, burial, funeral law, burial law, poverty, affordability, green burial