During Steinbrenner’s tenure as owner, the Yankees won something like 7 World Series titles and 11 pennants. No matter whether you like/dislike the Yankee’s, you have to admit that’s a lot of winning. And by dying in 2010, “The Boss” wins again.
Here’s a little quiz for you… if I showed you the following numbers and asked you to guess what’s next in the pattern, what would you say?
Year - Exclusion - Max. Tax
2001 - $675,000 - 55%
2002 - $1,000,000 - 50%
2003 - $1,000,000 - 49%
2004 - $1,500,000 - 48%
2005 - $1,500,000 - 47%
2006 - $2,000,000 - 46%
2007 - $2,000,000 - 45%
2008 - $2,000,000 - 45%
2009 - $3,500,000 - 45%
2010 - ??????????????
I admit it’s not a perfectly smooth change from year to year, but I bet you wouldn’t guess that it looks like this:
2010 - Estate Tax Repealed - 0%
That’s correct. Zip. Zilch. Zero. Not-a-dang-thing. You pay nothing in federal estate taxes if you die this year. If you died last year and had an estate worth more than $3,500,000, you would have paid a maximum estate tax rate of 45%. And if Washington doesn’t do anything this year to change it, next year if you have an estate worth more than just $1,000,000, you will pay a maximum estate tax rate of 55%. The heck?
So just because Steinbrenner happened to die in 2010, his bazillion dollar estate will not be subject to federal estate tax. Granted, he (like other very wealthy people) likely had some very sophisticated estate planning work done by a number of estate planning attorneys that would have provided him a great deal of flexibility in regards to (not paying as much) federal estate tax, no matter what year he died. But, his estimated net worth was something like $1,150,000,000 (<--that’s $1.15 billion, with a “b”), so the timing of his death could save his heirs up to $500,000,000 in federal estate taxes. That’s a whole lot of Derek Jeters!
The point is that this whole scenario is just silly. You die in 2009, you pay a lot. You die in 2011, you pay even more. But, you die in 2010, ding-ding-ding… it’s like you (your heirs, really) just landed on Free Parking in Monopoly. Wahoo!
Next musing I’ll talk about how/why this 2010 estate tax craziness happened.