Inheritance Windfall: Record-Breaking Year For Estate Taxes Helps Fuel Budget Surplus

Stephen M. DuBrul Jr. died just over a week after his wife, the celebrated abstract painter Helen Frankenthaler. They lived in a home on Contentment Island Road in Darien, pictured, that is for sale for $6.9 million. His estate was valued at $20 million. (

Even if death and taxes are the only things certain in life, state legislators say they can never be certain about death taxes.

With no crystal ball and no idea when spectacularly wealthy Connecticut residents might die, state officials make an educated guess each year about how much they will collect in inheritance taxes.

They were way off this year.

Legislators expecting to collect about $150 million were stunned recently when the projection soared to $428 million — the highest amount, by far, in state history.

With the economy still sluggish, officials had been skittish this year about balancing the state budget. But the unexpectedly huge collection of inheritance taxes — along with a spike in income tax revenue —helped turn the red ink into black. The boost has pushed the state into a surplus, though lawmakers acknowledge that this represents one-time revenue that will be hard to duplicate.

"A lot of wealthy people died this year,'' said House Republican leader Lawrence Cafero of Norwalk. "It's unprecedented. That's just chance. That has nothing to do with fiscal planning. That would be a one-shot.''

The state's inheritance and gift taxes have been combined into one category since 2005, and this year's total is more than double the level of seven years ago. The numbers also increased because wealthy individuals made huge transfers of wealth as gifts in December in order to avoid the higher federal gift tax rate that increased to 40 percent, up from 35 percent, on Jan. 1.

State officials have acknowledged that this year probably is an anomaly. The official, consensus revenue estimates by the legislature's nonpartisan fiscal office and the governor's budget office show that they expect inheritance and estate taxes to drop by more than half in the next fiscal year, back down to $172.9 million.

Fairfield County Deaths

Often kept secret because of the state's tax confidentiality laws, the largest estates are frequently difficult to find. But a review of probate documents show that some spectacularly wealthy residents died in Connecticut in 2012.

The largest estate, of $159 million, belonged to Richard M. Ruzika, a Goldman Sachs investment partner who died unexpectedly last year at the age of 53. After growing his fortune as the head of commodities trading at Goldman and later heading an elite unit that invested the firm's own money, Ruzika retired after 30 years and was planning to open a hedge fund in his hometown of Greenwich. But after surgery on his left knee, Ruzika suffered a stroke three days later and died at Stamford Hospital.

Ruzika had accumulated a stock portfolio of more than $92 million, along with more than $10 million in art and five automobiles that included a 2012 Mercedes convertible worth $150,000 and a 2007 Bentley Continental worth $118,000.

"It's a huge loss,'' said Sen. L. Scott Frantz, a Greenwich Republican. "He was my neighbor. He was literally two houses away. He was a super nice guy, very philanthropic.''

The second largest estate, at $88 million, was held by Lucie Cunningham Warren, the grandmother of Senate Republican leader and expected gubernatorial candidate John McKinney. Warren died at age 104 at her luxury home in Westport after an out-of-the-spotlight life that included volunteering at Norwalk Hospital until she was 96.

An heir to the Standard Oil fortune, Warren owned a huge stock portfolio of $75 million, including $27 million in ExxonMobil, nearly $20 million in Procter & Gamble and more than $10 million in Chevron Corp. Her probate file shows that she set aside more than $30 million to pay federal and state taxes.

"Had she been a boy, she would have been a titan of industry,'' McKinney said of his grandmother. "She was born in 1908, and that wasn't an era where women ran their dad's businesses or took over. She was very smart, very smart.''

Another of the largest estates in 2012 belonged to famed Wall Street investor Barton Biggs, whose televised statements on CNBC often moved markets on Wall Street when he served as chairman of Morgan Stanley's asset management division. While the exact payments of taxes are normally confidential, Biggs' public probate file shows that his estate paid $31 million on Jan. 10 "as payment on account of the estate's Connecticut estate tax liability.''

The payment by Biggs is among the largest individual amounts in state history, coming behind the record-breaking $53 million in 1991 paid by Heineken beer importer Leo van Munching of Greenwich. That payment single-handedly helped close the state's budget deficit that year; state officials were flabbergasted at the size of the check.

Although an attorney for Biggs has made an estimated payment, the exact size of his estate was unavailable because it has not yet been calculated, according to his probate file. Biggs was operating a $1.2 billion hedge fund at the time of his death, and his file says attorneys "do not yet have all of the information necessary to prepare and file a complete return.''

Besides Biggs, other Greenwich residents paid more than $1 million each in estate taxes. Barbara H. Cantwell, whose husband served as general counsel of the Colgate-Palmolive Co. in New York City and left an estate of $27.5 million, paid $4.2 million in a letter dated August 15 to the state tax department. She died at the age of 69 with an estate of nearly $35 million. Born in Buffalo, she attended Vassar College with state Rep. Livvy Floren of Greenwich.