From the desk of Darlynn Morgan, Orange County Estate Tax Lawyer
George Steinbrenner, the fiery owner of the New York Yankees, passed away on July 13. Mr. Steinbrenner became one of the most recognizable professional sports owners in America after having paid around 10 million dollars for ownership of the Yankees in 1973. While often controversial, Mr. Steinbrenner was also hugely successful and made the Yankees worth anywhere from 1.5 to 4 billion.
Several sources have claimed that the heirs of George Steinbrenner’s estate would have to pay in the neighborhood of 500 million in the estate or “death” tax. But because of lapse in the estate law anyone who dies in this calendar year will not have to pay the estate tax.
Steinbrenner’s heirs will receive his entire estate – tax free.
George Steinbrenner is not the only billionaire to avoid the estate tax this year. Texas billionaire Dan L. Duncan also died this year, leaving his 9 billion dollar estate to his heirs without being taxed. Both these two men avoided the estate tax, but the lapse in the law that made this possible will be corrected by January 1, 2011 if the Congress does not elect to extend it.
In 2001 President Bush put in this lapse as part of his tax cuts. Democrats were unable to come to an agreement after promising to fix the glitch, so the lapse went into affect on the 1st of this year. The lapse in the estate tax will end on January 1, 2011 and will actually rise to 55%, which is higher than 2009 max which was 45%.
Congress is discussing repealing the tax break for 2010, which could be retroactive and the family of George Steinbrenner, and others, would then be required to repay the amount they would have paid if the lapse never existed. Ouch!
While Congress can potentially prolong the estate tax break into next year, that is highly unlikely. The estate tax impacts individuals who are worth over 1 million dollars, but that can include, bank accounts, retirement accounts, mutual funds, and other assets. It adds up faster than you think!
That means if something happens to you in 2011 your family could lose up to 55% of your assets to taxes.
If you don’t plan to die in 2010 but also don’t want to hand 55% of your assets over to the government, there are alternatives available to you. Proper estate planning can save your family thousands. By working with an experienced Orange County estate tax lawyer you are taking a big step toward protecting your family. That is why I invite 10 families per month to come in for a Family Wealth Planning session at no-charge (normally $750). Make your appointment today so you can be sure that your assets stay in your family and not given over to the government.