Texas Billionaire Dies, No Estate Tax

Texas billionaire Dan Duncan died in March of 2010.  He saved his family billions of dollars in estate taxes by passing away this year, the first year since 1917 when there has been no federal estate tax.

Almost 10 years ago, Congress passed a bill “phasing out” the estate tax and setting this year as tax free.  While the Republican majority at the time wanted to eliminate the estate tax entirely, it did not have the 60 votes needed for a permanent repeal.  As a result, the law “sunsets” this year, and next year a federal estate tax will apply to all those with taxable estates over $1 million (though there are exceptions, for instance for estates passing to spouses or to charity).

No one believes that there’s any logic to this situation — billionaires die tax free this year, while those who are merely affluent pay rates of up to 55% next year.  Everyone thought that long before now Congress would come to agreement on a plan that would re-impose the estate tax for this year and come to a compromise for next year, and most predicted a $3.5 million threshold, which was the amount in 2009. 

There are plenty of everyday folks who will be  kicked in the teeth by a tax on estates valued over $1 million (remember, your “estate” for tax purposes includes not only real estate and bank accounts, but also IRAs, 401(k)s, life insurance, small businesses and even some joint assets).  In any event, stay tuned for more, as Congress decides what, if any, changes will be made to the estate tax law.

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One Comment on “Texas Billionaire Dies, No Estate Tax”

  1. MLM Says:

    Interesting and well written. Enjoyed it.


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