New York Estate Planning & Elder Law Blog
Comedian and trailblazer Joan Rivers passed away this week, with friends and family saying goodbye at a memorial service in Manhattan. Details about her estate and funeral have not been made public, but it was no secret that Joan Rivers wanted her funeral to be as extravagant as the rest of her life.
In her 2012 book, I Hate Evenyone…Starting with Me, she detailed her wishes for her funeral by writing, “When I die, I want my funeral to be a huge showbiz affair with lights, cameras, action…I want Craft services, I want paparazzi and I want publicists making a scene! I want it to be Hollywood all the way. I don’t want some rabbi rambling on; I want Meryl Streep crying, in five different accents. I don’t want a eulogy; I want Bobby Vinton to pick up my head and sing ‘Mr. Lonely.’ I want to look gorgeous, better dead than I do alive. I want to be buried in a Valentino gown and I want Harry Winston to make me a toe tag. And I want a wind machine so that even in the casket my hair is blowing just like Beyoncé’s.”
However, what may come as a surprise is the federal tax deduction that can come with such a funeral, and how it can apply in other people’s estates.
Federal Estate Tax and Funerals
Federal estate tax applies to all estates that amount to more than $5.34 million. In Joan Rivers’ case, with a $30 million penthouse and infamous Faberge egg collection, federal taxes will definitely apply to her estate. However, an estate is allowed to claim certain deductions against the overall estate, and under the federal tax code expenses that are associated with a funeral are considered tax deductible.
There is no dollar cap limit on funeral expenses in the federal code. Instead, the limit on deductions for a funeral is whatever is “allowable under local law.” The only solid rule about funeral expenses is that they may not exceed the overall value of the estate.
The IRS provides some brief guidance through memos and court cases. The cap on funeral expenses is generally interpreted in accordance with state and local law but is also considered in light of a person’s life and circumstances at the time of their death. This means that if Joan Rivers’ got the funeral she wished for it would most likely be deductible from her estate because it reflected her wealth and lifestyle at the time of her death.
Deductible Expenses
Deductible expenses for a funeral include those that you would expect, such as costs for the funeral home, gravestone, transportation to the cemetery, and payments to a church or other religious institution. Other expenses that most people do not realize can be included are flowers and a funeral luncheon. However, these types of expenses are only allowed if a solid paper trail exists and the event of extras is clearly part of the funeral service.
Funeral expenses are also deductible on state estate taxes, if your state imposes that type of tax. In places like New York and Connecticut where Joan Rivers had property there is an estate tax imposed on certain estates.