David Kocieniewski reports for The New York Times: (click here for full article)

"A Texas pipeline tycoon who died two months ago may become the first American billionaire allowed to pass his fortune to his children and grandchildren tax-free, The New York Times’s David Kocieniewski reports.

Dan L. Duncan, a soft-spoken farm boy who started with $10,000 and two propane trucks, and built a network of natural gas processing plants and pipelines that made him the richest person in Houston, died in late March of a brain hemorrhage at 77.

Had his life ended three months earlier, Mr. Duncan’s riches — Forbes magazine estimated his worth at $9 billion, ranking him as the 74th wealthiest in the world — would have been subject to a federal tax of at least 45 percent. If he had lived past Jan. 1, 2011, the rate would be even higher — 55 percent.

Instead, because Congress allowed the tax to lapse for one year and gave all estates a free pass in 2010, Mr. Duncan’s four children and four grandchildren stand to collect billions that in any other year would have gone to the Treasury."

BUT DON’T FORGET ABOUT CARRY-OVER BASISNew Carry-Over Basis Rules for 2010

The fact that there is no estate tax is only half of the story.  The heirs will have to take over the decedent’s basis in all assets and income tax liabilities will be huge on liquidation of assets.  Its not the free pass it appears to be at first blush.