Texas Billionaire's Heirs Will Inherit Fortune Tax-Free
When Houston oil tycoon Dan L. Duncan, 77, died in March of a brain hemorrhage, the man Forbes magazine ranked as the 74th wealthiest man in the world left an estimated $9 billion fortune to his children and grandchildren.
In years past, Duncan's estate would have been subject to a federal estate tax of at least 45 percent. But thanks to Congress' one-year repeal of the estate tax for 2010 only, Duncan's four children and four grandchildren will keep an estimated $4 billion that normally would have gone to the U.S. Treasury, The New York Times reports.
Duncan's heirs stand to be the first of any American billionaire to collect a tax-free fortune.
The estate of America's first billionaire, John D. Rockefeller, was taxed at a whopping 70 percent rate when he died in 1937.
Had Duncan died next year, when the estate tax makes a comeback, his descendants would have had to pay a 55 percent rate on his estate.
The tax break will not affect the various charitable organizations -- many related to wildlife and cancer treatment -- named in Duncan's will; those contributions would have been exempt even when the estate tax was alive and well.
Signed into law by former President George W. Bush in 2001 as part of a package of tax cuts, the perfectly legal free pass is sure to anger rich Americans who, before Jan. 1 of this year, paid taxes on estate monies exceeding $3.5 million. The 2010 lapse has sparked debate between advocates of the tax, who protest the notion of America's wealthiest enjoying a tax break during economic hard times. and opponents who label it a "death tax" that unfairly penalizes earnings that were already subject to income taxes.
"The ultrawealthy in this country will still be able to pass on enormous wealth to the next generation," Chuck Collins, who has worked with billionaires Warren Buffett and Bill Gates to promote an estate tax, told the Times.
Other families are reaping the benefits of the tax-free year without protest.
"We have a client worth about $17 million who died in mid-January," Michael Umphrey, a Detroit attorney, told The Detroit News. "His beneficiaries are sorry to see the old boy go, but very happy to get the money."
Congress had vowed to reinstate the estate tax in 2010, but lawmakers have yet to follow through. Even if the Senate Finance Committee's efforts to revive the tax are successful, Duncan's descendants could wage a legal battle against retroactive taxes that would apply to their inheritance.
Duncan's fortune includes boats, jewelry, automobiles, a 5,500-acre Texas hunting ranch filled with wild game, and holdings in his natural gas and pipeline empire, according to the Times. His assets in one of those entities, Enterprise GP Holdings, could have alone yielded a $2 billion estate tax.