What is the primary purpose of setting up an irrevocable funeral trust?

The primary purpose of establishing an irrevocable funeral trust is to prepay for funeral expenses. This type of trust is designed specifically for covering the costs associated with a funeral and burial, allowing individuals to plan financial arrangements in advance. By doing so, they can lock in prices at current rates and relieve their families of the financial burden at the time of death.

Irrevocable funeral trusts are not meant for generating investment income, as the focus is on securing funds for future funeral services rather than creating revenue. They also do not serve as a mechanism for evading tax liabilities; such trusts are generally handled with transparency regarding financial assets. Although they can indirectly impact inheritance matters by ensuring funeral costs are covered, their primary function is not to provide an inheritance but to prepay specific funeral-related expenses.