Even in death, George Steinbrenner went out a winner.
The late New York Yankees owner, who died last Tuesday of a heart attack, left an estate estimated to be worth $1.15 billion and consisting primarily of his share of the Yankees' YES broadcasting network, according to Forbes.
But in all likelihood, the tax man will take the collar on this one — and won't get a penny from the Boss' estate.
Indeed, Mr. Steinbrenner's family looks set to inherit his estate practically tax-free, thanks to the expiration of the federal estate tax in 2010 and the light tax regime of his home state, Florida. By comparison, New York state has a 16% estate tax.
“It is the ultimate home run,” Ronald Aucutt, a partner at law firm McGuireWoods in McLean, Va., told Bloomberg.
If Mr. Steinbrenner had passed away last year, when the death tax rate was 45%, he might have left his heirs a tax bill of $500 million. Next year, the estate tax is slated to return at a whopping 55% rate.
Of course, it is likely that the Steinbrenner family had contingency plans in place to lessen the tax hit if Congress hadn't allowed the estate tax to expire. Such strategies could include passing the full estate to his wife, Joan, or setting up generation-skipping trusts.
Either way, the loss of tax revenue from Mr. Steinbrenner's death will no doubt have lawmakers in Washington clamoring to make the 2010 estate tax retroactive to last year's rate. Already, three other billionaires have died this year, including Houston oilman Dan L. Duncan, who left behind an estate believed to be worth nearly $10 billion.
That leaves a lot of tax dollars on the table.
Last month, three U.S. senators sent a letter criticizing the lack of an estate tax, citing the deaths of Mr. Duncan and others.
“At a time when we have a record-breaking $13 trillion national debt and an unsustainable federal deficit, people who inherit multimillion- and billion-dollar estates must pay their fair share in estate taxes,” according to the letter, which was signed by Sens. Tom Harkin, D-Iowa, Bernard Sanders, I-Vt., and Sheldon Whitehouse, D-R.I.
The three, along with several other Democrats, have introduced legislation that would implement a progressive estate tax and a 10% surtax on estates larger than $500 million. They would also like to see the 45% rate from last year imposed retroactively on all estates probated this year — something that Mr. Steinbrenner's heirs (sons Hank and Hal, and daughter Jennifer) might fight in court.
But beyond that, don't expect too much estate nastiness coming from Camp Steinbrenner.
— This story was supplemented with reporting from Bloomberg.
E-mail Lisa Shidler at lshidler@investmentnews.com.
