San Diego Estate Planning Lawyer Blog
K.S. “Bud” Adams, Jr., built his fortune in the Texas oil business during the 1950s. In 1959, Adams tried twice to get a National Football League team for his hometown of Houston. When those efforts failed, Adams and fellow Texas oilman Lamar Hunt joined forces to create the American Football League. Adams ran the new Houston Oilers franchise. The AFL and NFL fiercely competed for players and fans during the 1960s, only to merge in 1970, with Hunt’s Oilers entering the new NFL.
By the 1990s, Adams had become dissatisfied with his team’s stadium, the Houston Astrodome. When Houston officials refused to fund a new venue, Adams moved the team to Nashville, Tennessee, where state and city leaders were all too happy to provide a state-of-the-art facility. Now known as the Tennessee Titans, Adams turned his original investment of $25,000 back in 1959 into a franchise valued at over $1 billion.
A Costly Move from Texas to Tennessee Adams died on October 21 at the age of 90. He was survived by two children and seven grandchildren. According to David Klimer of The Tennesseean, “Adams had the foresight – and wealth – to establish a succession plan that keeps the NFL team in the family.” Klimer said Adams set aside sufficient funds to pay what will likely be an enormous federal and Tennessee estate tax bill on the appraised value of the Titans franchise.
For persons dying in 2013, the top federal estate tax rate is 40%. The federal estate tax only applies to gross estates valued at over $5.25 million as of the date of the deceased person’s death. Seventeen states and the District of Columbia impose additional estate or inheritance taxes. (An inheritance tax is charged to their person receiving an inheritance, as opposed to an estate tax, which is paid by the deceased’s estate.) In 2001, California eliminated its estate tax for all persons dying on or after January 1, 2005.
Unfortunately for Bud Adams, by relocating from Texas-which currently has no state estate or inheritance tax-to Tennessee, his estate will be responsible for both federal and state estate taxes. Tennessee has abolished its estate tax, but it won’t take effect until 2016. By dying in 2013, Adams’ estate is liable for a 9.5% estate tax.
Protecting Your Assets, Regardless of Location Most of us won’t leave estates large enough to qualify for the federal estate tax, which exempts all estates up to $5.25 million. But states that impose their own estate tax often have a lower threshold. In Tennessee, for example, the exemption for 2013 is only $1.25 million. That’s why it’s important you consult with an experienced San Diego estate planning attorney who can advise you on the ever-changing nature of federal and state estate tax laws. Contact the Law Office of Scott C. Soady today if you have any questions.