Forbes 400 Get Billion Dollar Tax Break
At the end of last year, I wrote an article about the Forbes 400 possibly getting a billion dollar tax break because Congress had let the Estate Tax and more importantly the Generation Skipping Transfer Tax expire. You may remember that the House of Representatives had passed legislation but the Senate had not in 2009. Early in 2010, there was some indication in the Senate that the issue would be tackled quickly at the start of the year. That did not happen. The Tax Relief Act of 2010 was just passed. The Generation Skipping Transfer Tax is zero for 2010 according to Section 302 of the Tax Relief Act of 2010.
This means that the billionaires on the Forbes list as well as double digit and triple digit millionaires have had all year to consider what sort of dynasty or perpetual trusts they might wish to establish before the end of the 2010. WOW! Congress and President Obama sure are in a giving mood this time of year if you super wealthy. Hey and the regular news media will jump all over the story just like they did last year. They will want to report on such magnificent generosity. Ok, maybe not.
If you take a look at just the members of Walton clan on the Forbes list, you can see that it is big money. If I remember correctly there are about 10 Waltons on the list. They may get billions of dollars in the tax break. I saw about a similar number of Pritzkers although they are much less wealthy. You may remember that the Gates family and Warren Buffett tried to get the super wealthy to sign up indicating their intent to donate their wealth. They managed to get about 60 individuals to sign up the last I heard. That is about 15% of the approximate 400 billionaires on the Forbes list. From this response, I believe that it is reasonable to conclude that many of the super wealthy will be very interested in setting up trusts for future generations while the cost is low. There will only be a gift tax and no generation skipping transfer tax which cuts the cost in half if they get it done in time. In some states there is no longer a ‘rule against perpetuities’ so that may mean that amounts set up in trust could be there forever. In some states the time limit is a 1000 years and in other states less but it may still be for centuries in states that have modified the traditional ‘rule against perpetuities’ rule.