Well the George S. that I am referring to is none other than George Steinbrenner who, as we know, passed away on July 13. It is hard to imagine that many people do not know who he was, but just in the event there is uncertainty, he is known for being the principal owner of the New York Yankees. That ownership, along with other business interests, places Mr. Steinbrenner among the elite wealthy in the country. Public estimates of the size of his estate appear to suggest a figure in the $1.1 billion range. Most notably, he was known for his absolute obsession with winning and he constantly pushed his beloved Yankees for the ultimate achievement in their sport, the World Series championship of baseball. He was known both affectionately, and not so affectionately, as The Boss.
So what’s the test you ask? Well back on February 17, 2010 I posted a blog entitled “My Mea Culpa on Estate taxes.” In it I spoke to the fact that I never would have thought that Congress could have allowed us to move into the year 2010 without some form of estate tax on the record. However, they did, apparently because they were so tied up in other matters such as healthcare reform. I went on to say that their intent was going to be that whatever eventually got passed would be implemented retroactively to the first of the year. Even my most recent tax newsletters that I receive give every indication of that intention still being on the table. I also said that it could prove quite interesting for the estate of some highly wealthy individual, who passed away before an amended law was put in place, to challenge the constitutionality of imposing a retroactive tax to January 1. Enter the estate of George Steinbrenner!
It is impossible to imagine that the conscience of The Boss, even from the grave, will not be inspiring his estate team, should there be a Federal tax challenge, to fight any attempt at collection all the way to the Supreme Court. With all due respect to the man and his passing, it is nevertheless so ironic that he, of all people, could be the test case should it be necessary.
Certainly it behooves the fiduciary and beneficiaries to test the unplanned gap in the estate tax, the first since it was enacted in 1916. At the estimated estate value mentioned above and based on the last set of tax rules in effect for 2009, there could have been a possibility of tax due of approximately $500 million. Obviously this is not precise as much depends on how his estate had been structured over the years, but nevertheless it provides a good indication of the dollar magnitude that could be involved. All of this would not be saved, however, as beneficiaries would eventually have to pay capital gains taxes when assets, such as the Yankees, are sold based on original acquisition cost. But the net savings in total would indeed be substantial.
So George’s death may just be the catalyst in Washington to get movement on the estate tax issue and then let’s see how it all plays out. Meanwhile Mr. Steinbrenner…R.I.P.
