Berman & Asbel, LLP

Billionaire's Heirs Big Winners in 2010 Estate Tax Gap

Fortuitous timing has saved a billionaire's estate huge estate taxes.  According to a New York Times report, Dan Duncan, who made a fortune from a network of natural gas processing plants and pipelines died in March of this year at the age of 77.  Had he died three months earlier, his multi-billion dollar estate would have been taxed at a rate of 45 percent or higher and, under current law, had lived into 2011, his estate would have been taxed at a rate of 55 percent.  Instead, Mr. Duncan's heirs benefit from the fact that Congress did not prevent the 2010 temporary lapse of the estate tax.  This was a result that was never really intended in Washington.  It was part of a gimmick compromise between the Bush Administration and its Republican allies on the one hand and Congressional Democrats on the other back in 2001.  Wanting to have tax relief but to cap the cost, they agreed to a sunset provision of the law with a one year moratorium on the estate tax.  Everyone, including me, assumed that something would be worked out before that happened but it did not.  An attempt to amend the law failed in December 2009.  So, Mr. Duncan's heirs benefit from some fortuitous timing.  While it may seem crass,  I think it is a good bet that discussions in some wealthy families are taking place about how long Grandpa or Grandma should be kept on life support - discussions that will become more urgent as the end of 2010 or (less likely) Congressional action approaches.  This strange legal situation could potentially put estate planning lawyers in the uncomfortable position of being asked to advise clients on the tax implications of the timing of death.  I also will not be surprised if we see an episode of one of the Law and Order shows based on a scenario of an elderly parent's demise being hastened due to estate tax considerations - are you reading and listening Dick Wolf?

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