New York Yankees’ owner George Steinbrenner died from on July 13, 2010 at the age 80. Steinbrenner’s fortune is estimated at over $1 billion. May people would say that Steinbrenner choose a good year to die as there is no Federal Estate Tax in the year 2010.
Had he died in 2011, when the estate tax exemption is scheduled be $1 million and the estate tax rate is set to be 55%, his estate would have paid around $550 million in estate tax. This could have caused a huge problem for the Steinbrenner family and for the Yankees. After all he is probably “land rich and cash poor”; meaning his estate would have had to sell major assets, such as the Yankees, to pay the tax bill, which is generally due 9 months after death.
One down fall for the Steinbrenner family is that in 2010 the typical “step-up” in basis is not available (for people above a certain dollar level), which means that if assets are sold they would have to pay a capital gains tax on the gain from when the asset was purchased to the time it was sold. The long term capital gains rate is 15% through 2010 and scheduled to go up to 20% in 2011. So if the Steinbrenner’s wanted to sell their 55% ownership in the Yankees this year they would have to pay around $15 million in capital gains and even more in years to follow.
Other sports teams have not been so lucky in the recent past. For example the Detroit Pistons owner Bill Davidson died in 2009 when the estate tax exemption was a mere $3.5 million and it is rumored that the Pistons are up for sale to pay the huge tax bill.
Now, since you are reading this, you probably are not going to die in 2010, so, as I said above, the estate tax exemption is scheduled to go to $1 million in 2011 and after. You may not have billions, but if you have an estate that may exceed $1 million (this includes life insurance, real estate IRA’s, etc), then you should contact the Law Offices of Daniel H. Alexander, PLC (800) 530-4529 for a free consultation to discuss how a properly drafted and funded living trust can save you a bundle in estate taxes.