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Tuesday, August 16, 2022

Haneman: Pay as you go Dying

Victoria J. Haneman (Creighton; Google Scholar), Pay as you go Dying, 59 Harv. J. on Legis. 329 (2022):

Harvard J. on Legis.The price of an grownup funeral exceeds $9,000. Funerals are costly and demise is just not thought of an applicable time to cut price store. The patron is usually inexpert and susceptible on account of bereavement. Choices are sometimes time-pressured and perceived as irreversibly closing. Accordingly, the demise care trade advantages each from data asymmetry and etiquette uncertainty. Defending the bereaved client requires reversing the present norm of at-need (after demise) buying in favor of pre-need (earlier than demise) planning and prepayment. Attributable to extreme affect of the trade over its state regulators, known as regulatory seize, present pre-need prepayment devices are so deeply flawed that typical knowledge recommends towards prepayment.

This Article borrows from nudge idea to form an intervention that can right unfairness and inefficiency in an imperfect market, in a approach that deftly sidesteps an all-out assault on the trade itself. The proposed paradigm shapes an incentive that enables the buyer to pay for pre-need demise care service with pre-tax earnings by means of Inner Income Code Part 125 and versatile spending account rules. Untangling regulatory seize turns into pointless: federal tax-sheltering of pre-need prepayment {dollars} will generate client demand for dependable and certified pre-need prepayment monetary devices. This elevated demand for pre-need devices will, in flip, present an incentive for funeral suppliers to supply the engaging phrases essential to compete for this new base.

https://taxprof.typepad.com/taxprof_blog/2022/08/haneman-prepaid-death.html

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