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Timing of Steinbrenner's death could exempt heirs from estate tax


By Peter Whoriskey
Washington Post Staff Writer
Tuesday, July 13, 2010; 6:02 PM

George Steinbrenner never had to calculate when to hit a major league fastball, but in death, his timing was impeccable.

By dying this year, the Yankees' billionaire owner found the sweet spot in the U.S. tax code, exiting this earthly world during a year in which congressional dallying has allowed the estate tax to lapse, potentially saving his heirs hundreds of millions of dollars.

Had he died last year and tried to pass his fortune onto his children or grandchildren, they would have faced a 45 percent tax. Had he lived until next year, the rate would have been 55 percent. But Steinbrenner's death this year, like that of three other known billionaires who have died in 2010, gives his heirs a break.

Forbes estimated Steinbrenner's personal wealth last year at $1.15 billion.

The year-long hiatus of the estate tax, which normally falls on the very rich, could cost the U.S. Treasury an estimated $14.8 billion or more in 2010.

It has also complicated the financial plans of billionaires and their families, leading to the macabre possibility of heirs hoping that their benefactor will die this year, rather than next.

"Because of Mr. Steinbrenner's public name and stature, his death may draw the attention of Congress -- they simply have to decide what do," said Henry Christensen, the president of the International Academy of Trust and Estate Counsel and the author of the treatise International Estate Planning. "We've had this year of chaos in the estate planning world."

Christensen noted that Steinbrenner probably would have planned to reduce his exposure to the estate tax by establishing trusts and essentially bequeathing his fortune early. Moreover, the amounts passed on to his wife or to charity would be exempt from the tax. But the amount subject to the tax -- were it in place -- could be "substantial."

The estate tax continues to be debated by Congress. Three senators -- Bernard Sanders (I-Vt.), Tom Harkin(D-Iowa) and Sheldon Whitehouse (D-R.I.) -- proposed a bill last month that would put in place an escalating tax on estates valued at more than $3.5 million, rising to 55 percent, with an extra 10 percent levied on the estates of billionaires. Given the size of the national debt, they argued, the wealthy must pay their "fair share


"At a time when we have a growing gap between the very rich and everyone else, we have a situation now where the very wealthiest people in this country are seeing, when someone in their family dies, their estate tax is zero," Sanders said in a floor statement Tuesday.