How Did the Deaths of Four People Cost the U.S. Government $6.5 Billion?
No, it wasn’t because of lawsuits.
No, it wasn’t because the four people were buried with trade secrets worth a lot of money.
It was because they happened to die in a year during which the estate/death tax is zero. From a post at ElderLawAnswers.com:
[George] Steinbrenner was worth an estimated $1.5 billion, meaning his heirs could save as much as $600 million in taxes because he died this year. Steinbrenner’s wealth — mostly consisting of the Yankees, a new stadium and a regional cable network — could pass to his wife tax-free even if the estate tax were in effect, but this year she might have an incentive to disclaim (or turn down) any bequest, which would allow the assets to pass to Steinbrenner’s four children free of federal tax. (But, as the Probate Lawyer Blog points out, Steinbrenner’s family would have to pay a huge capital gains tax if it were to sell any highly appreciated assets, since along with the disappearance of the estate tax, there is no “step-up” in the cost basis of inherited assets during 2010.)
The other billionaires to die in 2010 are Janet Morse Cargill of the family that founded Cargill Inc. (net worth: $1.6 billion), Texas pipeline magnate Dan Duncan ($9.8 billion), and California real estate mogul Walter Shorenstein ($1.1 billion). By rough calculation, their deaths in 2010 have cost the government some $6.5 billion.
We’ve blogged on this topic before. The inconsistencies of U.S. tax law, if it weren’t rather serious, would be comical.
Question: this being December, with a January to follow that may see an entirely different estate-tax law, might there be some surprising death activity this month among the wealthiest American families?
(HT: Van Brenner)