Mr. Dan Duncan passed away in March of this year. It is estimated his net worth was $9 billion, making him one of the top 100 most affluent people in the world. A self-made man, he amassed his fortune in energy. He was also very philanthropic, giving away hundreds of millions of dollars.
If we had applied the tax rules in effect from 2009, the estate tax would be about $4 billion. However, in 2010, there is no estate tax. That's quite a savings. Nevertheless, there is speculation that Congress will pass an estate tax and make it retroactive. Hmmm…it's not like they haven't made laws retroactive in the past. It's just that as time marches on, having the tax become retroactive becomes much more difficult to implement. And, well, there's a lot of money on the table here!
Just because there is no federal estate tax in 2010, there are still state estate taxes to consider. State estate taxes are usually based on the fair market value of your assets at the date of death after allowing for some exclusion. You'll need to know what the exclusion is in your state to plan properly.
If there is no change to the federal estate tax, beginning in 2011 it will go back to the old rules. There will be a $1 million exclusion and the highest tax rate will be 55%.
ACTION ITEM: Contact your estate planning attorney and CPA to make sure all of your estate planning documents are up to date. Even with no federal estate tax, taxpayers need to be concerned with state estate taxes, having a Will, a Power of Attorney, and a Health Care Proxy.
Thomas F. Scanlon, CPA, CFP®