Betting on Death and Taxes
December 13, 2005
Want to minimize the loss of possibly dying at the wrong time and leaving a big tax bill for your family? If so, you may want to do what one British man did—place a bet on your own death. From Reuters:
A 91-year-old man who staked a 500-pound bet that he would be dead by the end of the first week in December lost his stake by staying alive, a bookmaker said on Saturday.
Arthur King-Robinson said he put the bet on at odds of 6/1 at the start of the year because his wife would have faced an inheritance tax bill of 3000 pounds had he died in the intervening period.
“I thought I’d heard most things that people want to bet on after 30 years in the business,” said Graham Sharpe, spokesman for bookmaker William Hill. “But one asking literally to place a dead cert was unique. I’m glad Arthur has lost.” (Full Story)
Mr. King-Robinson is obviously a risk averse person who sees little difference between losing money to the government or a bookmaker. However, you can be sure that the British government will not go without cashing in on its share of Mr. King-Robinson’s “winnings.”
Assuming this type of gambling is legal in the United States, this same scenario could prompt some individuals in the U.S. to consider similar risk-limiting, quasi-insurance gambles as the phase-outs and phase-ins of the federal estate tax continue to take place over the next five years.
The U.S. estate tax will be gradually phased out over the next five years until it is fully eliminated for tax year 2010, only to be fully reinstated at a rate of 50 percent in 2011. In the meantime, Las Vegas may want to cash in on the federal tax code’s continual instability.
For more on the federal estate tax, click here.