[Marxism] George Steinbrenner's death saves heirs money
dmozart1756 at gmail.com
Thu Jul 15 10:19:29 MDT 2010
> The Yankees owner's death comes during an unplanned year-long gap in the
> estate tax
> By DAVE CARPENTER and STEPHEN OHLEMACHER, Associated Press
> Born on the Fourth of July, George Steinbrenner left the world stage with a
> great sense of timing too.
> By dying in 2010, the billionaire and long-time New York Yankees owner's
> wealth avoids the federal estate tax, likely saving his heirs enough money
> to field an entire team of Alex Rodriguezes.
> Steinbrenner's death Tuesday came during an unplanned year-long gap in the
> estate tax, the first since it was enacted in 1916. Political wrangling has
> stalemated efforts in Congress to replace the tax that expired in 2009.
> That deprives the government of billions of dollars in annual revenue but
> represents an unexpected bonanza for those who inherit wealth.
> "If you're super-wealthy, it's a good year to die," said Jack Nuckolls, an
> attorney and estate planner with the accounting firm BDO Seidman. "It really
> The death of the 80-year-old Steinbrenner, who had been in poor health for
> years, highlights a quirky tax situation that has drawn much scrutiny among
> the moneyed but little on Main Street. Only those with estates valued at
> more than $3.5 million had to pay under the old law.
> Without knowing the exact details of Steinbrenner's holdings and estate
> plan, it's impossible to say how much money will be saved. But estate
> planners and tax experts say it's likely that the estate benefited hugely by
> the timing of his death.
> A glance at some numbers suggests roughly how it may work.
> Forbes magazine has estimated Steinbrenner's estate at $1.1 billion. The
> federal estate tax in 2009 was 45 percent, with the $3.5 million per-person
> exemption. If he had died last year, his estate could thus have faced
> federal taxes of almost $500 million, depending on how the estate was
> That doesn't mean his heirs permanently escape all taxes related to his
> assets. They will still have to ultimately pay a capital gains tax if and
> when assets are sold. And due to a change in tax law this year, the tax
> would be applied to the amount by which the assets have appreciated since
> Steinbrenner acquired them.
> Even if the Steinbrenners sold the assets right away, the top capital gains
> tax rate is 15 percent. Worst-case scenario, depending on how much the
> assets appreciated after Steinbrenner acquired them: a $165 million tax
> That's a tax break of about $328 million. A-Rod's 2010 salary: $32 million.
> The Steinbrenner family has not suggested any sale is planned.
> "There are no succession issues, and the team will not be sold," Yankees
> president Randy Levine said.
> The Steinbrenners therefore are expected to avoid what happened to the
> family of Chicago Cubs owner P.K. Wrigley after he died in 1977. The family
> was forced to sell the Cubs to the Tribune Co. four years later to pay the
> taxes on Wrigley's estate.
> As Steinbrenner's Yankees transformed into Yankee Global Enterprises, which
> includes the cable TV operation YES Network and Legends Hospitality, estate
> planning issues for a transfer to his children were dealt with, according to
> a Yankees official who spoke on condition of anonymity because those details
> weren't released
> Estate taxes can be reduced through certain planning measures -- such as
> gifts and asset sales to family members at discounted values. However,
> except for the unusual circumstances of 2010, they cannot be eliminated
> unless you give it all to charity.
> Some wealthy families use trusts to lower estate taxes. But even
> transferring assets to family trusts wouldn't have significantly lessened
> Steinbrenner's federal tax liability unless he gave vast amounts of assets
> to relatives as gifts before he died. Those would have been subject to a
> large gift tax.
> That's unlikely since very few people choose to pay a large tax anount
> sooner than necessary, according to Richard Behrendt, senior estate planner
> for Baird Financial Advisors in Milwaukee and a former estate tax attorney
> for the Internal Revenue Service.
> The estate tax is scheduled to return in 2011, with a top rate of 55
> percent. The House passed a bill last year that would have extended the
> estate tax at the 2009 rates, but it stalled in the Senate. Many Republicans
> want to eliminate the federal estate tax altogether, while many Democrats
> want to extend it at the 2009 rates.
> There had been talk on Capitol Hill of reinstating it retroactively, to the
> start of the year. But as the year progresses, lawmakers say that is
> increasingly unlikely.
> "If Congress doesn't go retroactive, then he picked a great year to die,"
> said Robert Steele, who heads of the trusts and estates department at the
> law firm of Wolf Haldenstein Adler Freeman & Herz in New York. "There will
> be possibly tremendous capital gains tax, but the capital gains rate is a
> lot lower than the estate tax rate would have been."
> Ohlemacher reported from Washington. AP Sports Writer Ronald Blum also
> contributed to this report.
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