TAX NEWS - June 2010

Texas Tycoon Dies During Estate Tax Moratorium

Houston, TX, United States (AHN) - Texas pipeline tycoon Dan Duncan died during a 1-year exemption in the estate tax, much to the benefit of his heirs' bank accounts and to the chagrin of the taxman.

The philanthropist, who had an estate of $9 billion, was able to leave hundreds of millions of dollars to his wife, children, grandchildren and charities all untaxed. He goes down as the first U.S. billionaire in American history to accomplish such a feat.

For billionaires from John D. Rockefeller onwards, two things were certain: death and taxes. Had Duncan's estate been subject to taxes, his heirs might have had to sign over 45 percent in taxes. However thanks to a law that was part of a package of tax cuts signed by George W. Bush, the 2010 exemption frees them from the tax obligation.

Typically, the tax law in question affects about 5,500 estates a year. When Congress unexpectedly let it lapse at the end of 2009, financial advisers were fearful that end of life decisions in the hands of heirs could lead to a macabre element for wealthy elderly Americans. Specifically, some might have kept an ill relative on life support through the end of 2009 to get the favorable treatment — or forgo life-prolonging measures to hasten a relatives' death before the end of 2010.

Democrats vowed to rescind the exemption, but Congress was unable to reach an agreement in time. The Senate Finance Committee has taken up the task to reinstate the tax, but any effort to retroactively tax Duncan's estate will likely be met with the staunchest of opposition and be dragged through the courts for years.

Duncan, who began his fortune with $10,000 and two propane trucks, amassed a network of natural gas processing plants and pipelines. When he died in late March of a brain hemorrhage at 77, the avid big game hunter was ranked by Forbes as the 74th wealthiest person in the world.