Back in late March, Dan L. Duncan, a Texas billionaire, his net worth estimated by Forbes magazine at $9 billion and ranked as the 74^th wealthiest individual in the world, died in his home in Houston at the age of 77.  He leaves behind what is considered the first extremely large estate to pass free of Federal estate tax in the 2010 year, a result of Congress allowing the estate tax to lapse for the 2010 year.

As I have blogged in the past and continue to monitor Capitol Hill on this issue, Dan Duncan’s death was a big loss in collection of revenues that our country can ill afford at this time.   The one year estate tax lapse was signed into law back in 2001 when President Bush signed the 2001 EGTRA.  Every authority on estate taxes thought the gap would be closed with the 2009 new Democratic Congress.  The current Senate Finance Committee is continuing to work hard towards compromise and reinstating the tax, however it remains unclear whether compromise will be reached and/or a retroactive tax will be instituted.  (Should the issue not make it through the halls of Congress, the estate tax will revert to pre-2001 laws and estates of individuals dying in 2011 and after will be taxed at the $1million level).  The argument exists that President Obama would like to reinstate at that level for wealthy Americans, negating the progress and compromises of the past. 

Mr. Duncan’s surviving wife and descendants will most likely inherit billions that in any other year would have gone to the coffers of the US Treasury.  If he had died in 2009, 45% of the value of his assets in excess of $3.5 million (and not otherwise going to his surviving spouse or charity) would have paid in Federal estate taxes.  While Federal estate tax law has long allowed that assets can be passed untaxed to a surviving spouse (who is a US citizen), Mr. Duncan apparently left a very large part of his estate to his children and grandchildren including his two business entities EPCO and Dan Duncan LLP, the natural gas and pipeline companies he built.  Should his inheritors decide to sell the shares in these entities, they would have to pay capital gain taxes calculated on the difference between the shares original cost and their market value at time of sale.  However, capital gains are capped at 15 percent.  Should Congress decide to pass a retroactive estate tax, many attorneys believe this estate and inheritors have the means and motivation to take their court battle all the way to the Supreme Court to determine constitutionality.

Whether you agree or disagree that the wealthy should pay tax upon death is not the purpose of this blog, but rather I want to point out how the congressional leadership of this country has practiced what I consider to be ‘‘malpractice” and or lack of stewardship at a time when our country’s deficits and spending are soaring.  Furthermore, it is morally unacceptable that our leadership has allowed this issue to persist 6 months into the 2010 year leaving in limbo the planning needs of many wealthy citizens. Also, it would be a safe assumption that Mr. Duncan, whom was known in Texas as one of the greatest philanthropists giving millions away to charity, would want his lasting legacy to be associated with this congressional debacle.

Tags: billionaire, Dan L. Duncan, EGTRA, estate tax, reinstate estate tax

This entry was posted on Wednesday, June 30th, 2010 at 1:20 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.