Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Sunday, May 4, 2014

Sterling May Be Worth More Dead Than Alive

Donald sterling

The inheritance tax is likely to have a major impact on the estate of disgraced Clippers’ owner Donald Sterling.

If Sterling sells the Clippers for an estimated $1 billion, he will pay an estimated $350 in capital gains and state taxes.  Then upon his death, his estate would pay an inheritance tax of about $250 million on the remaining $650 million.  This would leave his estate and heirs a mere $400 million in after tax proceeds.

If the Clippers were sold after his death, the estate would pay only around $400 million in inheritance tax as the tax basis of the Clippers would be stepped up to market value.  The net proceeds to his estate would then be $600 million, $200 million more than if the Clippers were sold while he was alive.  However, there are many legitimate ways the estate could save on inheritance taxes by adjusting the value of the Clippers.

See Jack Humphreville, Donald Sterling: Worth More Dead Than Alive, City Watch, May 2, 2014. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

http://lawprofessors.typepad.com/trusts_estates_prof/2014/05/sterling-may-be-worth-more-dead-than-alive.html

Estate Administration, Estate Tax, Income Tax, Sports | Permalink

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Comments

This article seems to ignore the fact that, at least for now, Sterling is still married. If he leaves his estate to his wife (and she survives), there would be no estate tax paid upon his death.

Posted by: Jeffrey R. Gottlieb | May 4, 2014 7:55:08 PM

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