Quirk in Law
Death calls but tax man doesn't: Billionaire Dan Duncan's family likely to avoidall inheritance taxes
Dan DuncanCourtesy photo
Jan and Dan DuncanPhoto by Fulton Davenport: PWL Studio
UPDATE: A spokesman for the Dan Duncan family says they will not benefit from the quirk in the federal estate law. Read CultureMap update 10/18/2010
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Because of a quirk in federal estate laws, the heirs of Houston billionaire Dan Duncan may not be required to pay a cent in taxes, according to a report in The New York Times.
The 77-year-old Duncan died unexpectedly in late March of a brain hemorrhage at his River Oaks home. Forbes magazine ranked him the 74th wealthiest person in the world, with an estimated net worth of $9 billion.
If his life had ended three months earlier, the Times reports, his heirs would have been required to pay a federal tax of a least 45 percent. If he had lived past Jan. 1, 2011, the rate would have risen to 55 percent.
But Congress allowed the tax to lapse for a year, so Duncan's four children and four grandchildren may save billions in estate taxes.
In 2001, then-President George W. Bush signed a package of tax cuts that included the inexplicable one-year lapse. Democrats pledged to close the gap when they took control of Congress in 2007 but they never reached agreement. Even if Congress reinstates the tax retroactively, Duncan's heirs are expected to challenge its constitutionality in the courts.
Duncan's representatives did not return calls from the Times. Duncan left his home, ranch and considerable stock to his wife, Jan, which is not taxable since she is a surviving spouse. But the rest of his estate was left to his children and grandchildren and, under current law, is also not taxable. Duncan’s eldest daughter, Randa Duncan Williams, is executor of the estate and it is believed she will continue the family's tradition of charitable gift giving. Duncan and his wife had donated more than $250 million to Baylor College of Medicine, M.D. Anderson Cancer Center, Texas Children's Hospital and other Houston institutions.
Even so, the controversy is sure to ignite a fierce debate between those who believe the richest Americans don't deserve a huge tax break, particularly during a recession, and those who believe the estate tax is unfair because it taxes income twice — at the time it is earned and at death.
What do you think?
