CA Estate Planning Blog

Tuesday, September 23, 2014

Estate Planning Lessons from Joan Rivers

Many of us like to make an entrance.  But, some of us, like recently passed Joan Rivers, want to make an exit.  When referring to an exit, we mean a final exit, or a funeral.  Rivers wanted her funeral to be Hollywood affair. She wanted a flashy, star-studded event, a Valentino gown and even a Harry Winston toe tag.  While most of her requests were facetious, she did want a larger than life funeral and that costs money.  After her recent passing, her family has been charged with this task and expense.  Luckily, funeral expenses can be deducted when calculating Federal estate taxes, which will save them a lot of money.  

Currently, the Federal estate tax will be assessed on estates worth over $5,340,000.  As Rivers’ estate is most likely worth much more than that, it will probably be subject to the tax.  Just like with an income tax return, certain things can be used as deductions on an estate tax return.    One of these deductions is funeral expenses.  Funeral costs can be claimed as deductions on Schedule J of the Federal estate tax return.  There is no cap on how much can be claimed except that it cannot be more than the gross estate is worth.  There are really no other regulations governing the amount, but there are some guidelines.  The costs have to be reasonable in light of the life of the person who has passed.  The costs that may be deducted include expenses for basic funeral components such as the funeral home, burial plot and marker, bringing the body to the place of rest and even flowers and sometimes the refreshments after the burial or service.

As the State of California does not assess an estate tax, if your loved ones estate is above the Federal exemption, the only place to claim these expenses as deductions would be on an estate tax return.  If you have questions about the Federal estate tax or estate planning in general, call OC Wills and Trust Attorneys at (949)347-5256.

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