Benefits of Qualified Funeral Trusts (QFTs) for Cemeteries
There are countless benefits of Qualified Funeral Trusts (QFTs) for cemeteries.
However, this choice comes with both tax advantages and complex reporting requirements.
While QFTs allow the trust to handle the tax burden instead of individual customers, managing the tax reporting for potentially thousands of QFTs can be a daunting task.
That’s where Everspot comes in—our cemetery software provides the necessary data to make IRS reporting easy, so cemeteries can focus on their operations rather than paperwork.
Tax Benefits of Qualified Funeral Trusts (QFT)
One of the largest benefits of qualified funeral trust status for your cemetery’s pre-need trusts is how the IRS treats the income earned by these trusts.
Instead of reporting each individual’s trust income on their personal tax return (or the cemetery reporting all of the earnings), the trust itself becomes responsible for paying taxes on any earnings -- typically only a 10% tax rate. This not only simplifies tax management for customers but also makes the process more transparent and manageable for your cemetery.
By centralizing tax reporting within the trust, QFTs offer a clear advantage over other pre-need funding mechanisms.
The income generated by the trust—whether from interest, dividends, or other investment gains—is taxed at the trust level, which can often result in a lower overall tax liability compared to individual reporting.
This tax-efficient approach helps increase the value of the pre-need contracts while ensuring that the trust remains compliant with IRS regulations.
The Complexity of Managing QFT Tax Reporting
Despite the tax advantages, one of the most complex aspects of managing Qualified Funeral Trusts is the sheer number of individual trusts involved.
For each pre-need contract your cemetery sells, a separate QFT is created. Depending on the size of your operation, this could mean handling thousands of individual trusts—each of which must be tracked and reported to the IRS.
Every QFT requires a tax filing, which includes submitting Form 1041-QFT outlining the income for each QFT. The volume of reporting can quickly become overwhelming, especially when income needs to be tracked separately for every customer.
If your cemetery doesn’t have a streamlined system in place, you could be facing hours of manual work and the risk of costly errors.
How Everspot Simplifies QFT Reporting
At Everspot, we understand the unique challenges cemeteries face in managing pre-need trusts, especially when it comes to the complexities of QFT tax reporting.
That’s why our cemetery software is designed to greatly simplify the process.
Our platform provides detailed QFT data for IRS reporting, making it easier to track income, manage thousands of individual trusts, and generate the necessary data for tax filing. With Everspot, you can be confident that your trust data is accurate, up-to-date, and compliant with IRS standards.
This not only saves your cemetery valuable time but also reduces the risk of errors and penalties associated with misreporting.
By leveraging Everspot’s software, cemeteries can transform what was once a complicated and time-consuming process into an efficient, streamlined workflow.
You’ll be able to easily manage the tax reporting for thousands of QFTs, ensuring compliance while keeping your focus on growing your business and serving your customers.
Conclusion
While there are numerous benefits of Qualified Funeral Trusts (QFTs) for cemeteries, managing the tax reporting for thousands of individual trusts can be complex.
The good news is that Everspot is here to help.
Our software provides the QFT data you need to simplify IRS reporting, making it easier for your cemetery to stay compliant and reduce administrative overhead.
With Everspot’s specialized tools, cemeteries can unlock the tax benefits of Qualified Funeral Trusts (QFTs) without being overwhelmed by reporting complexity.
Let us handle the heavy lifting so you can focus on what matters most: providing excellent service to your families.