I've been asked questions recently about how Tom Benson's passing will affect ownership of the New Orleans Saints. Here's what I know:
When someone dies in 2018, the first $11.2 million of assets is exempt from federal estate tax. The rest is taxed at 40%. The federal estate tax is a serious problem for NFL franchise owners due to the enormous value of their teams.
Joe Robbie's estate sold the Dolphins to pay estate tax. Lamar Hunt planned ahead by donating 80% of the Chiefs to his daughter and three sons prior to huge appreciation of the Chiefs franchise. The donation likely cost Mr. Hunt $100 million, but that was a pittance compared to the potential estate tax had he kept the NFL franchise in his estate until his death.
Mr. Benson's estate likely took advantage of the federal estate tax marital deduction, which allows a married person to leave their estate to or for their surviving spouse in order to avoid or defer taxes at the first death. However, these assets are typically subject to the estate tax when the surviving spouse dies.
In order to qualify for the marital deduction treatment, Mr. Benson likely left his estate to a trust, and provided that his suriviving wife would receive the income from that trust for the rest of her life.
Even though Mr. Benson named two co-trustees of that trust, he stated that Gayle would have the sole right to exercise all voting power over Benson Football, LLC. Giving Gayle this power may have been necessary due to the National Football League Constitution and Bylaws which allows owners to transfer their membership to a member of the immediate family of the deceased without requiring the consent or approval of the members of the League or the Commissioner.
Now, it perhaps gets tricky when Gayle dies. It appears that Mr. Benson was attempting to take advantage of the federal estate tax charitable deduction which allows people to leave their estate to charity in order to avoid estate tax. It appears he left assets to a trust that provides that at Gayle's death, 50% of the assets will be in Gayle's estate, and 50% will go to the Gayle and Tom Benson Charitable Foundation. So it appears he was attempting to take advantage of the estate tax charitable deduction by naming his charity as the principal beneficiary of his trust.
However, the National Football League Constitution and Bylaws provides that no nonprofit organization nor any charitable organization shall be eligible for Membership in the National Football League.
So it appears that, while Mr. Benson left a significant part of his teams and his estate to charity after he and Gayle pass, the NFL rules prohibiting a charitable organization from being an owner will require that the Saints be sold after Gayle passes away.
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Louisiana Estate Planning Attorney
Phone: (225) 329-2450