Wednesday, April 14, 2010

The Big Fish


Central on the mind of estate planners around the country is the status of the federal estate tax. Firms around the country, including our own, have made changes to clients’ plans to take into consideration the possibility that if a client with an otherwise taxable estate were to pass away during 2010 prior to Congress making a change to the tax law, we would be able to effect a plan wherein the entire estate passes free of federal estate tax. On the Jeffrey Burr Blog we have made a coordinated effort not to bore our readers with too frequent discussion of this topic.

Well, the big one has occurred. According to The Trust Advisor Blog1 “Houston gas pipeline mogul Dan Duncan was the 74th richest person in the world when he died on March 28 [2010]. If he’d passed away three months earlier or ten months later, his $9 billion estate could have generated up to $4 billion for the IRS. But because there’s no federal estate tax this year, the government gets nothing.”

The blog also points out that Mr. Duncan’s death may present a “tempting opportunity for a revenue-strapped Congress to follow through on threats to reinstate the tax for 2010 and possibly make it retroactive to the beginning of the year.” This is certainly plausible with such a generous reward awaiting the Treasury.

On the other hand, and the article quote above also raises this point, with this “big fish” out there, there is also significant incentive for a presumably well-equipped legal team on behalf of the estate of Mr. Duncan to fight against retroactive passing of federal estate tax legislation. Even if the Duncan family has to spend tens of millions to fight a retroactive tax law, they will still be miles further ahead than if Mr. Duncan had passed away during a time that the federal estate tax law was in place and the Treasury could claim approximately $4 billion in estate tax revenue.

1 Billionaire’s Heirs First to Win 2010 Estate Tax Jackpot; posted by Scott Martin in News on April 10, 2010 on http://thetrustadvisor.com/

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