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. (

The estate of Stephen M. Dubrul Jr., the former president of the Export-Import Bank of the United States under President Gerald Ford, paid nearly $2 million in taxes on an overall estate of $20 million, according to probate records.

Among the most prominent figures on the list was Joseph E. Brooks of Greenwich, who was described as a "retailing legend'' by the New York Times because he more than doubled the number of stores in the Lord & Taylor retail chain and also served as a corporate leader at Filene's Basement in Boston and Ann Taylor. His assets totaled $5.9 million, including a home in Greenwich's famed backcountry, five cars, and three Super Bowl rings. Another asset of more than $325,000 was described as "Macy's settlement, per confidential settlement agreement and release.''

Despite their wealth, some of those with the largest estates lived such low-key lives that even their local legislators had never heard their names. Any resident immediately gets on the radar screen by contributing to a political campaign or making a substantial contribution to the local public library or the United Way.

In the quiet suburb of Watertown in Litchfield County, a woman named Rhoda C. Becker created little fanfare despite having assets of $10.7 million.

"I never heard of her,'' said Rep. Sean Williams, a Watertown Republican who has represented his hometown of 22,000 residents since 2003.

After asking for Becker's address, Williams said he doubted that any homes in the area were worth $1 million. Becker's four-bedroom, five-bathroom home on one acre near the Taft School is for sale for less than $380,000.

"It is a very nice neighborhood,'' Williams said.

Little Growth In Other Tax Revenue

The inheritance tax-collection numbers have fluctuated widely through the years, hitting $274 million in 1991 with the help of the van Munching payment in Greenwich, but then not surpassing that overall record until hitting $279 million in 1998. The 2005 fiscal year was the best over the next seven years, at $253 million.

The legislature changed the inheritance tax law several times through the years to target only the wealthiest residents, and now the tax is paid only by those who die with more than $2 million in assets.

Overall, more than 500 people died in 2012 with estates of at least $2 million, according to probate records. But since various deductions could reduce that number below the $2 million threshold and because estate tax returns are confidential, officials said there was no immediate way to tell precisely how many individuals actually paid the estate tax. The state probate court administrator's office would not release the names of any estates if the information was based on confidential tax returns.

While some tax categories are showing gains, others are sluggish. State Comptroller Kevin Lembo reported that sales tax collections are "showing almost no growth over last year's receipts'' and are projected at $189 million below the original projections.

In addition to the deaths of wealthy residents, the state's budget situation has been helped by changes in federal tax law and the expiration of tax cuts passed by President George W. Bush.

Since the capital gains tax rate increased on Jan. 1, many wealthy individuals in Fairfield County sold stocks in December in order to avoid the increased taxes. In the same way, some corporations made advance payments on stock dividends in 2012 — meaning that Connecticut residents will not see those gains in 2013. Wealthy people also made taxable gifts in order to avoid the higher rates this year.

"Where there is agreement on all sides is that there was a cash bump because of the fiscal cliff — people making financial decisions based on the concern that the tax structure would change after Jan. 1,'' McKinney said. "That is one-time in nature. It is not revenue we can rely on next year and the year after. We're still staring at budget deficits in the out years of this budget. To suggest we're OK would be a huge mistake.''

Malloy's budget director, Ben Barnes, agreed that inheritance taxes are paid just once and that gift tax payments cannot be duplicated.

"If you gave your fortune to your kids in December,'' Barnes said, "you can't do it again in July.''