Jim Irsay, the longtime owner and CEO of the Indianapolis Colts, died unexpectedly in May 2025. Irsay leaves behind not only a legacy in the NFL but also a sports franchise valued at approximately $4.4 billion. As Irsay’s family navigates his death they, like millions of other families, may be navigating tax implications resulting from the sports mogul’s passing.
Currently, every United States citizen has a threshold amount (known as the federal exemption) that they can give away either during life or at death without incurring federal gift or estate tax. The federal exemption for 2025 is historically high–currently $13.99 million. Gifts or estate assets that exceed the exemption are taxed at 40%.
Under current tax law, the federal exemption is due to sunset down to $5 million indexed for inflation beginning on January 1, 2026. Absent any change to the current tax law, this will lower the amount individuals can give away during life or at death without tax implications to about $7 million. That being said, each administration and party may have its own tax agenda and the GOP’s recent “One Big Beautiful Bill Act” proposes to permanently extend the historically high exemption.
In addition to the federal exemption, every individual may make gifts of up to $19,000 (in 2025) to as many recipients as they choose. These gifts (known as annual exclusion gifts) do not count against a donor’s federal exemption.
In Irsay’s situation, assuming he owned 100% of the Colts franchise at his death, his family would be facing a federal estate tax of over $1.5 billion. It is possible (and likely) that Irsay availed himself of good tax planning advice, and started transferring ownership of the Colts to his children during his lifetime.
For those few who are in the same situation as the Irsay family, it’s notable that in 2022, the NFL modified its bylaws to make it easier for families to maintain team ownership. Specifically, the rules changed so that for teams under the same ownership for at least 10 years, the controlling owner must now own a minimum of 1% of the team (which was decreased from the prior 5% minimum). That change allows for a significant reduction in potential estate tax at the time of an owner’s death.
One can only speculate as to the estate planning that Irsay may have done during his lifetime in order to transfer as much wealth as possible to his family while at the same time minimizing potential estate tax. And, fortunately, to the extent that his family is facing a significant estate tax bill, the IRS does offer tax elections which can extend the payment of estate tax over a number of years in situations where much of an estate’s value is tied up in illiquid assets.
Federal estate tax is only one component to consider when planning. Some states also impose estate taxes. Fortunately for Irsay, Indiana does not impose its own state estate tax. Other states, however, are not as generous. For example, New York’s estate tax exemption is currently $7.16 million while Massachusetts’s exemption is a much lower $2 million.
Although the future of the federal estate tax exemption remains uncertain, there is an important takeaway from Irsay’s passing that is for certain: proper estate planning is key. Although not all of us will face a $1.5 billion tax bill at death, many of us will face taxes and estate administration costs that can be minimized with proper planning, and the time to plan is now.
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