Qualified Funeral Trust


Also found in: Acronyms.

Qualified Funeral Trust

A trust constituted exclusively to pay for the funeral expenses of beneficiaries. In order to qualify for favorable tax treatment by the IRS, contributions made to the trust may not exceed certain limits per beneficiary and the trust must be the result of a contract with a funeral director or the equivalent.
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Qualified Funeral Trust (QFT) status was first made available through the Taxpayer Relief Act of 1997, which created Form 1041-QFT [26].
Before the limitation was repealed, a qualified funeral trust that had aggregate contributions in excess of $7,000 ceased to be a qualified funeral trust, and its income would be taxed as ordinary income of the grantor of the trust--at a lower individual income tax rate.
770-14( b), certain state law trusts, pooled income funds, cemetery perpetual care funds, qualified funeral trusts, etc.

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