Federal Estate Tax May Decide the Fate of the Buffalo Bills After Passing of Owner Ralph Wilson
Ralph Wilson, owner of the National Football League’s Buffalo Bills, passed away earlier this week. Wilson leaves behind a massive fortune that includes the Bill’s franchise which, according to an August 2013 article in Forbes, is worth $870 million.
It is currently unknown whether the team will transfer to family or if it will be put up for sale. The outcome may depend on what provisions, if any, Wilson made for dealing with federal estate taxes before he passed away.
This year, the federal estate tax rate is 40% for estates over $5.34 million. That means if Wilson did nothing, his estate would need to pay hundreds of millions of dollars in state and federal estate taxes. The federal estate taxes due for his ownership of the Bills franchise alone could be nearly $334 million.
Here are a few options Wilson had available to minimize taxes on his estate:
Leave the Bills to his wife. Under current law, spouses can leave an unlimited amount estate tax free to a surviving spouse. So, if Wilson left the franchise to his wife, there would be no federal estate taxes due now. However, that merely postpones the taxes. Under current law, Wilson’s wife’s estate would be responsible for paying estate taxes due upon her passing.
Set up a payment plan. The estate could set up a payment plan to pay the taxes over a period of time.
Life insurance and an irrevocable trust. Wilson could have set up an irrevocable trust, funded with life insurance, to cover the estate taxes.
We do not yet know what steps Wilson took. However, given the size of his estate, it is likely that Wilson had a plan in place for protecting his family and protecting his assets.
The lesson here is that if you have a taxable estate, particularly if you own a business or other assets that you would not want broken up or sold just to pay estate taxes, then you need to plan in advance.
If your estate is taxable at either the state or federal level, what steps have you taken to ensure the protection of your family and your assets?