Hire the Funeral Clowns, Blast My Ashes into Orbit and Deduct it All
Congress made all funeral expenses deductible under Internal Revenue Code § 2053(a), if those same expenses are allowed under applicable probate law. In doing so, Congress did not create a separate reasonableness requirement under federal law. However, Treasury Regulation § 20.2053-2 “creates a negative implication that certain categories of funeral expenses must be reasonable to be deductible.”
Brennan stipulates that “as there is no federal reasonableness requirement in the statute for deductibility of funeral expenses, the regulation may be invalid because it seeks to impose an extra requirement on some funeral expenses.”
This may be especially true for families that want to use funeral clowns in order to “let [their] loved one go down with a smile.” Or for a person that want their ashes spread in a spectacular manner, like rocketing them into outer space. The later example is even more likely these days as the cremation rates continue to increase. In 1947, only 4% of US decedents were cremated and 96% were buried; in 2019, almost 55% were cremated and only 39% were buried.
At death, a decedent’s loved ones have an obligation to dispose of the decedent’s corpse in a respectable manner, so in a way, funeral expenses are involuntary. The statutory language regarding funeral expense deductions allows a deduction for “funeral expenses . . . as are allowable by the laws of the jurisdiction . . . under which the estate is being administered.”
Essentially, the federal tax deduction is dependent on the application of state law, which could pose a problem, especially because there are public policy doctrines that could affect an “allowable” test.
Given the unpredictable nature of the doctrine of public policy, funeral expense deductions for federal estate tax purposes could go unrestricted.
See William A. Drennan, Hire the Funeral Clowns, Blast My Ashes into Orbit and Deduct it All , American Bar Association: Probate & Property, March/April 2021.