Monday, April 12, 2010

Is it too late for a retroactive estate tax?

That possibility is raised by The Trust Advisor.  Last December, when the clock ran out on the federal estate tax, many expected it to be restored within a month, two at most, so the retroactivity would be relatively trivial.

Now a full calendar quarter has elapsed, and beneficiaries are doubtless starting to chafe.  The Trust Advisor points to the estate of billionaire Dan Duncan as a bulwark against retroactivity.  His estate, estimated at $6 billion, might have produced several billion in estate taxes.   That's enough money at risk to secure the services of the highest priced legal talent available, so there can be no doubt of a protracted legal fight should Congress decide to reset the federal estate tax back to January 1. 

Ironically, the Trust Advisor reports, last year the CBO projected that the year without estate taxes would only "cost" $468 million in lost revenue.  Now it appears that a single billionaire's estate might have avoided a federal tax liability that large.  However, Duncan's estate plan hasn't been made public. It might have included substantial charitable gifts or other strategies to reduce the tax bite.

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