Even in death, George Steinbrenner went out a winner.
The late New York Yankee owner, who died on Tuesday of a heart attack, left an estate estimated to be worth $1.15 billion, consisting primarily of his share of the Yankees' YES broadcasting network, according to Forbes. But in all likelihood, the tax man will take the collar on this one — and won't get a penny from the Boss' estate.
Indeed, Mr. Steinbrenner's family looks set to inherit his estate practically tax-free, thanks to the expiration of the federal estate tax in 2010 and the light tax regime of the Boss's home state, Florida. By comparison, New York state has a 16% estate tax.
“It is the ultimate home run,” Ronald Aucutt, a partner at law firm McGuireWoods in McLean, Va., told Bloomberg.
If Mr. Steinbrenner had passed away in 2009, when the death tax rate was 45%, he might have left his heirs a tax bill of some $500 million. Next year, the estate tax is slated to return, with a whopping 55% rate.
Of course, it's likely the Steinbrenner family had contingency plans in place to lessen the tax hit if Congress had not allowed the death tax to expire. Such strategies could include passing the full estate to his wife, Joan, or setting up
generation-skipping trusts.
Either way, the loss of tax revenue from Mr. Steinbrenner's death will no doubt have lawmakers in Washington clamoring to make the 2010 death tax retroactive to the '09 rate. Already, three other billionaires have died this year, including Houston oilman Dan L. Duncan, who left behind an estate believed to be worth nearly $10 billion. That's a lot of tax dollars being left on the table.
In June, three U.S. senators sent a letter criticizing the lack of an estate tax, citing the deaths of Mr. Duncan and others. “At a time when we have a record-breaking $13 trillion national debt and an unsustainable federal deficit, people who inherit multimillion- and billion-dollar estates must pay their fair share in estate taxes,” said the letter, which was signed by Sens. Bernard Sanders, I-Vt., Tom Harkin, D-Iowa, and Sheldon Whitehouse, D-R.I.
The three, along with several other Democrats, have introduced legislation that would implement a progressive estate tax and a 10% surtax on estates larger than $500 million. They'd also like to see the 45% rate from 2009 imposed retroactively on all estates probated this year — something Mr. Steinbrenner's heirs (sons Hank and Hal, and daughter Jennifer) might fight in court.
But beyond that, don't expect too much estate nastiness coming from Camp Steinbrenner.
Yankees President Randy Levine said the team won't be sold and there are no succession issues, according to news reports today.
Currently, Hal Steinbrenner, 40, remains in charge of the team, as controlling partner of the Yankees, a job he's had since November 2008. Brother Hank, 53, is in charge of baseball operations.
The two brothers have overseen the day-to-day operations for the team since their sister Jennifer announced in March 2007 that she was divorcing Steve Swindal. Mr. Steinbrenner had originally planned for Mr. Swindal to be his successor.
Michael Cramer, the former president of the Texas Rangers, who is director of the sports and media program at the University of Texas, told Forbes that “it appears that the passing of George will have no impact on the team. It sounds a little cold, but the key was good succession planning here. Are there going to be some things going on, a little infighting? Maybe. But they've done a good job and we'll see how it plays out.
(InvestmentNews reporter Lisa Shidler contributed to this report, which was supplemented with reporting from Bloomberg News)
