The Boss Has the Last Laugh

Back in 1980, while waiting for a plane at JFK airport, I met George Steinbrenner. Sadly he just passed away on July 13. What I remember from that brief encounter is that he took the time out of his busy schedule to give a 10 year old an autograph–“To Michael, a future Yankee, George Steinbrenner”.

The irony of his passing in 2010 is that due to Congressional inaction, his estimated net worth of $1.15 billion may escape the federal estate tax. This could save his heirs up to $500 million alone in taxes. There is a part of me that thinks “Uncle George” (that’s what I called him after our meeting as a young kid), as a great businessman, is laughing at the IRS from heaven; one last home run you could say.

But future individuals may not be as fortunate, since this is only a one-year reprieve from the dreaded federal estate tax. It comes roaring back on January 1, 2011 with not only a higher tax rate of 55% (yep, that’s right), but also a lower exemption amount of only $1 million.

As Congress continues to discuss the matter, the estate planning community is becoming even more skeptical that any true federal estate tax reform will occur. It’s doubtful that there will be any action on the issue until after the mid-term elections in November. Even then with a lame duck Congress, real reform will once again elude the American tax system.

However, there are strategies that tax and estate planning attorneys can use to minimize not only your tax exposure while you’re alive, but to assure a more efficient tax strategy for passing wealth to your heirs and preserving your legacy. With interest rates as low as they are, and the 7520 rate at an amazing low rate (2.6%), it’s an ideal time to do some proactive planning. Also remember to use your annual gifting exclusion of $13,000 and the gifting of appreciated assets to charity.

Take the time now to save you and your heirs time and money in the future.

Sorry, comments are closed for this post.