Estate Tax Matter Involving Former Piston's Owner Resolved
If a deceased person's estate is large, it may end up having to pay a federal estate tax. Under current federal law, estates over $5.43 million in value are subject to the federal estate tax.
The amount of the federal estate tax can be quite large. Thus, federal estate tax matters can involve substantial amounts of money. This can be seen in an estate tax dispute involving the estate of the deceased Michigan-born billionaire and sports team owner William Davidson.
Davidson died in 2009. He owned multiple sports teams during his life, including the Detroit Pistons. His net worth at the time of his death has been estimated to be over $3 billion.
A few years after his death, an estate-tax-related dispute arose regarding his estate. Specifically, in 2013, the Internal Revenue Service alleged that estate taxes, gift taxes and other things had been underpaid. The amount that the IRS claimed that Davidson's estate owed in relation to this alleged underpayment, once penalties and other things were factored in, was 2.8 billion. Among the things the dispute focused on were valuations of certain assets that had been put into trusts.
An agreement was recently reached resolving this dispute. Under the agreement, the IRS will receive an over $300 million payment from Davidson's estate.
As this illustrates, the federal estate tax can have major impacts on an estate. Thus, when a person has a large amount of assets, the federal estate tax can be an important thing for them to think about when it comes to their estate planning. There are strategies (such as certain trust-based strategies) that can be used in estate planning that may be able to help reduce or eliminate the future estate tax exposure of a person's estate.
When doing estate tax planning, it is very important to do it correctly. Improper estate tax planning could leave a person's estate unnecessarily exposed to federal estate taxes or could trigger potential problems with the IRS. Thus, having the help of a skilled estate planning attorney can be very important when one is working on estate tax planning.
Source: Detroit Free Press, "IRS takes more than $300M bite from Davidson estate," John Gallagher, July 8, 2015