Anyone here remember the hotel queen Leona Helmsly? She's the lady who was once quoted as saying "Only little people pay taxes". Well, that seems to apply to Sen. Bill "cat-killer" Frist. According to The Hill
, Frist is making sure his (legal?) tax avoidance extends beyond the grave.
Before selling off all holdings in his family's healthcare corporation this summer, Senate Majority Leader Bill Frist (R-Tenn.) placed at least $350,000 of that company stock into a separate qualified blind trust designed to help his children avoid a hit from the estate tax, which he has long worked to repeal.
Frist's second qualified blind trust was created from assets previously held by his late mother. The Senate Ethics Committee approved the new trust in December 2000 after lawyers finished settling her estate. In addition to Frist's primary qualified blind trust, then valued between $5 million and $25 million, the senator declared a generation-skipping-tax-exempt trust then worth between $100,000 and $250,000.
Trust lawyers agreed that Frist's two qualified blind trusts are fairly common holdings for wealthy people seeking to preserve assets for future generations without incurring the burden of the estate tax or the generation-skipping tax (GST).
However, Frist may have made some boo-boos.
The decision of when to declare a trust GST-exempt is sensitive, and the limited blindness of Frist's trust raised some questions among lawyers about whether he might be forced to forfeit his exemption after he leaves office at the end of 2006. At issue is whether Frist will dissolve his blind trusts and shift his mother's assets after he leaves public life.
"One question is, will those assets come back to him? Because, if those assets will only be in this kind of a vehicle while he's holding this kind of position, that's not the kind of thing you would allocate the GST [exemption] to," said Mary Lou Parker, a partner at New Jersey-based Pitney Hardin.
The trust is not so blind.
As the maximum GST exemption allowable by law climbed over the years Frist has served in the Senate, he continued to transfer stock in HCA, the hospital company where his brother serves as chairman, to the GST-exempt trust in his name. By the end of 2003, the trust was worth between $1 million and $5 million and trustee Kirk Scobey Jr. had informed Frist that anywhere from $350,000 to $750,000 of its assets were in the form of HCA stock.
But he may get away scott-free.
The Securities and Exchange Commission (SEC) and Justice Department are both investigating Frist's June 13 instruction to Scobey to sell off all HCA holdings in his qualified blind trusts, including the GST-exempt trust. Two weeks after the sale was completed, HCA released a negative earnings report that sank its share price.
Some trust lawyers wondered whether Frist's communications with his independent trustee, which are under mounting scrutiny from ethics lawyers and the media, would be enough to forfeit his estate-tax and GST exemption.
Democrats are, not surprisingly, a little more above board.
The richest and third-richest senators, John Kerry (D-Mass.) and Rockefeller, have neither qualified blind nor GST-exempt trusts.
Gosh, Bill. That's a lot of handling of "blind trust" funds and you're so determined to not pay taxes. You sure you never took a peek?