Legendary New York Yankees owner, George Steinbrenner, died on July 13, 2010, leaving an estate worth approximately $1.1 billion, according to Forbes.
Because there is no estate tax this year, Steinbrenner’s family may save approximately $500 million in taxes. How did this happen?
In 2001, Congress decided to increase the estate tax exemption over the next 8 years, to a maximum of $3.5 million a person in 2009. In 2010, the estate tax was repealed, but in 2011, the exemption reverts to 2001 levels ($1.0 million a person).
Thus, a huge windfall for billionaires in 2010 could become a disaster for estates worth more than $1.0 million in 2011.
President Obama has proposed retaining the estate tax exemption at $3.5 million a person, but Congress refuses to act.
Steinbrenner joins billionaires Walter Shorenstein of San Francisco and Houston’s Dan Daniels whose estates will escape estate taxes because they died in 2010..
Steinbrenner hedged his bets against a retroactive change: According to his Will, if the law remains unchanged, the 2010 law will apply; otherwise the bulk of his assets will be transferred in trust for his wife’s benefit (called a “Q-TIP” trust), which will postpone any estate tax until her death.