As an increasing number of Americans choose Cremation over traditional burials, Cremation Scams and Fraudulent Practices are also on the rise. As with IRS scams and Banking scams, Cremation Scams are aimed at people 65 and older. Fraudsters and scammers attempt to take advantage of the sadness, grief and confusion many feel in the aftermath of the loss of a loved one. This is a time of great vulnerability for families, especially those who did not take advantage of Pre-Planning Services.
The best way to combat Cremation Scams and Fraud is education. Here are some examples of Cremation Scams:
Now that you know what a Cremation Scam looks like, here are some steps you can take to avoid falling victim to such scams:
Cremation providers should be willing to answer any questions that you or your family may have. If a provider fails to answer questions, is evasive or tries to hurry your family into a decision that does not feel right, you could be at risk for a scam. Be sure to meet with family members and even a family attorney to organize your questions in advance. Such questions can include:
As more and more families opt for Cremation in lieu of burial, “fly by night” cremation-only providers have begun to appear. In the same way that you would investigate a general contractor before building a house or hiring an attorney to draft a will for your family, you should investigate the credentials and performance of your Cremation provider. Here are some ways to conduct your investigation:
Request that a family member or representative (such as an attorney) witness the Cremation to ensure that no mishandling or mistakes in identification happen at any point during the Cremation process. The family representative must be able to visually identify the individual being cremated as a safeguard to ensure to that your loved one’s cremains are being returned to the family. Keep in mind that some states do not allow witnesses and some crematories have specific rules and regulations concerning witnesses, including additional fees to allow for a witness.
Do not commit to any Cremation services until you have received all documentation in writing and have had a chance to review, including having legal counsel review the documents.
As a consumer, your rights are clear under the FTC’s Funeral Rule, which describes in detail how providers of funeral services should provide burial and cremation services. Knowing your rights can help you to avoid the cremation and funeral scams listed above.
The FTC’s Funeral Rule applies to all types of funeral and cremation service providers except third-party sellers like casket and urn dealers or cemeteries without an on-site funeral home. Your rights when purchasing or contracting services for burial or cremation include:
Not only can Pre-Planning save your family money, it is always better to make such important decisions ahead of time so that all aspects can be researched and evaluated. Rarely are proper decisions made under duress or during a time of grief and confusion.
The Department of Veterans Affairs provides certain burial benefits for veterans of U.S. military service that covers free interment in a National Cemetery and associated military honors, and those benefits can also be used for cremation services. Ask your cremation provider how they are equipped to accommodate veterans and their families.
What actions can you take if you experience cremation fraud or fall victim to a cremation scam? Your rights under the FTC’s Funeral Rule are protected by several agencies and organizations, and you can report any experiences of fraud or scams to these entities for further investigation. You can report a funeral or cremation scam to the FTC here. State Attorneys General also investigate consumer complaints pertaining to funeral services. You can contact the Attorney General’s Office in your state by searching online.
Business organizations also track complaints about the funeral and cremation industry. The Better Business Bureau and Consumer Protection Agency pursues reports of scams/fraud, and so does the Consumer Protection Agency.
As you can see above, education is the best way to avoid falling victim to any cremation or funeral scams. At Cremation Society of America, we are committed to providing you and your family with the most competitive and dignified Cremation services available. Please don’t hesitate to contact us for more information.
We at Cremation Society of America are often asked by our clients whether Direct Cremations are tax deductible. The short answer for Individual Taxpayers is No. But this merits further explanation. We also strongly recommend that you consult with your tax specialist.
These days, the median cost of a funeral can be $8,000 with many exceeding $10,000. Of course, a Direct Cremation is far more affordable option for a loved one. Even so, some families, upon advice from a trusted resource or due to reading an article, etc. are tempted to deduct funeral expenses on their personal income tax return. We suggest that you resist this temptation as you run the risk of an IRS audit and the heavy fines and penalties that come with it. The last thing you need after the loss of a loved one is to endure an IRS audit!
Funeral expenses are only deductible if they paid by a previously-established Estate. An Estate can be defined as everything comprising the net worth of an individual, including all land, possessions and other assets r that the individual owns or has a controlling interest in. As such, individuals cannot claim funeral expenses on their income tax returns (IRS Form 1040) and funeral expenses cannot be itemized or deducted on the decedent’s final tax return.
Per the IRS ‘Miscellaneous Deductions” guide (Publication 529), “Burial or funeral expenses, including the cost of a cemetery lot” are nondeductible. Please also keep in mind that if you pay funeral expenses for a loved one or other individual, you cannot treat those expenses as a medical deduction on your tax return.
The appropriate way to deduct funeral expenses is for the Estate to pay the burial costs and then claim the deduction for estate tax purposes on IRS Form 706 (United States Estate (and Generation-Skipping Transfer) Tax Return). The funeral expense deduction is one of several deductions that are used to determine the taxable estate, resulting in the taxable amount of the Estate. The executor or administrator of the estate is responsible for filing IRS Form 706, and such executor/administrator must attach a death certificate per the Form 706. The executor/administrator should notify the family involved in the Estate as well as those making funeral arrangements that reimbursement for funeral expenses may be affected by IRS regulation and other laws. Again, we cannot stress enough that you consult with your Tax Specialist and possibly an Estate Attorney for guidance and advice.
Itemized funeral expenses that may be eligible for deduction may include but not be limited to:
If the decedent’s Estate is reimbursed for any funeral costs, the reimbursement must be deducted from total expenses before claiming the deduction on Form 706 – this includes any federal payments such as Social Security or Veterans death benefits.
The person or family representative responsible for making the funeral arrangements and paying the resulting expenses should retain and preserve all invoices, receipts, contracts, agreements, etc. Note that the Estate may not receive full reimbursement if the funeral costs are deemed unreasonable, or the Estate becomes insolvent. This is why Pre-Planning for funeral or Cremation services can be so very helpful to your family during such a challenging time.
Do you have questions about arranging a Direct Cremation and whether any aspect can be tax deductible? Please feel free to give us a call. One of our Direct Cremation Specialists is here for you.