Estate Tax Lapse Created Windfall for Heirs

What if your really, really wealthy parent or close relative were on life support?

Would you decide to pull the plug before the end of next year—that is, by tomorrow night at midnight?

A ghoulish thought certainly, but a practical one, according to financial advisor Charlotte Ito, who suspects that that conversation is making the rounds across the country now to take advantage of a year without estate taxes.

Congress allowed the federal estate tax, or so-called death tax, to lapse in 2010, but the tax has been reinstated starting on Jan. 1.

Return of the Death Tax
Return of the Death Tax   

“I don’t know anyone personally on life support, but I think that’s a critical question. Whoever is going to remove the life support [has to decide whether to] keep the person alive or not,” added Ito, who is with the firm Luce, Forward, Hamilton & Scripps.

Among the rich Americans who died this year, and spared their survivors a bundle in taxes, are gas and oil pipeline magnate Dan Duncan, estimated to be worth $10 billion, and media giant John Kluge, with a worth of about $7.5 billion.

Perhaps the most high-profile American billionaire to die, though, was Yankees owner George Steinbrenner. His heirs were spared paying $380 million on his estimated $1.1 billion estate.

Call the tax and death discussion, whatever you like, in bad taste or downright creepy.

But by any measure, Steinbrenner's heirs pocketed a nice chunk of change.