Ever since the inheritance tax was temporarily repealed on January 1, 2010 (for only one year), there have been many that have called for its reinstatement. Regardless of how you feel about taxing estates, it can be argued that it is inherently unfair for a wealthy person’s estate to completely escape tax simply because that person happened to die in 2010 rather than 2009 or 2011, while other heirs of estates not so fortunate pay such a stiff tax.
While Congress has been promising to fix this leak since last year, like the reaction to the BP disaster in the Gulf, it just goes longer and longer without a solution. There were many assurances early on that even though Congress did not get to it before 12/31/2009, not to worry because they would pass a “fix” that would be retroactive to January 1.
Enter Dan Duncan, a soft spoken farm boy who died unexpectedly in March 2010 at age 77. Dan owned two companies he built in the natural gas business, a 5500 acre Texas ranch stocked with wild game, a gun collection ( I like this guy!), and various boats, cars, jewelry, etc. Dan’s estimated net worth was somewhere around $9 BILLION. Because he died in 2010 Dan’s heirs stand to reap a savings of anywhere between 4-5 Billion dollars if the tax law stays in effect.
If Congress continues to do nothing, the system will benefit a very few wealthy people like Dan’s heirs with a windfall. If Congress tries to pass a law reinstating the “Death Tax” to cover guys like Dan, it has been argued that it would be unconstitutional if it was made retroactive, and although the average small estate may not have the resources to take up a challenge like this in court, a very wealthy one might.
With a few billion dollars at stake I’d bet Dan’s heirs would be willing to do that.