ESTATE TAX JACKPOT 2010 - Oil Magnate’s Death Costs U.S. Millions in Foregone Taxes

When rich people pass away, they often get prominent obituaries. This year, they will get special arbituary - compliments of the 2010 estate tax!

As readers of my blog know, the estate tax expired at the end of 2009 and will take the year off before coming back in 2011. That means wealthy people who pass away in 2010 don’t pay any estate tax.

So it is with extra interest that we note the death of Dan Duncan, the gas-pipeline tycoon who Forbes pegged as the 74th richest man in the world. He passed away in March at age 77. His estate was valued at an estimated $9 billion. That made him the first billionaire in this country to die without an estate tax in nearly 100 years.

It also means the U.S. just lost out on millions of dollars in foregone revenue because no estate tax was in place. All because Congress couldn’t agree on a new estate tax.

Nobody in Congress really expected a billionaire of Dan Duncan’s caliber to die this year without significant estate protection already in place. In fact, the Congressional Joint Committee on Taxation estimated last year that restoring the estate tax at 2009 levels would have only added about $468 million to the federal government’s 2010 revenue.

Of course, it is highly unlikely that Mr. Duncan was going to leave his entire $9 billion estate subject to the tax. He was a big philanthropist and most likely had bequests to charity in his will.

I think that if his advisors were up to the job, the bulk of his remaining wealth was probably held in irrevocable trust or tax shelter entities. Still, he did have hundreds of millions of dollars tied up in businesses, so that could have been taxed.

For all my readers out there - do your ESTATE PLANNING now! It doesn't look like you will get a windfall of 2010 and I feel that next year the exemption on Estate Tax will go back to the initial $1 million mark.