Much was made about the timing of George Steinbrenner's death -- the longtime owner of the New York Yankees passed away on the eve of baseball's All-Star game, and a fitting tribute ensued. But perhaps more noteworthy for his family, "The Boss" also died in a year when the estate tax has temporarily lapsed, which could save the Steinbrenner kin an estimated $600 million, AOL Small Business reported. It prompts a conversation of those two inevitable parts of life: death and taxes.

The Bush tax cuts passed by Congress in 2001 imposed a federal estate tax lapse for 2010, making this year the "best" year for the wealthy to die. Steinbrenner, who passed away yesterday at the age of 80, will save his family 55 percent of his net worth of $1.1 billion -- or $600 million -- by dying this year.

The bill emerged in 2001 -- when the United States was not facing a budget crisis like it is today --- as part of an effort to slash taxes across the board, according to tax expert and AOL Small Business contributor Barbara Weltman. At the time, the estate tax rate stood at 55 percent with a $675,000 exemption. Starting in 2001, the tax rate dropped to 50 percent, then dropped 1 percent each year until hitting 45 percent in 2007. The tax rate held at 45 percent through 2009, and when the clock struck midnight on January 1, 2010, the estate tax was repealed entirely. While the estate tax rate was phased down, the exemption threshold also increased, hitting $3.5 million in 2009.

In 2009, the government's 45 percent cut of Steinbrenner's assets would have been about $500 million. Had he died one minute after midnight on January 11, 2011, his estate would be subject to a 55 percent tax. But in 2010, there is no federal estate tax, so unless the government decides to claw back, the Steinbrenner family gets to keep the millions that otherwise would have gone to Uncle Sam.

But not all states are tax-free places to die in 2010. Nineteen states and the District of Columbia have their own laws for estate or inheritance taxes. Steinbrenner died in Florida, where the tax lapse remains in effect.

Lawmakers thought about budget considerations, so they opted to "sunset the law" and set an expiration date. The mindset in 2001 was that before 2010, Congress would take action to provide a more permanent solution for the estate tax. But lawmakers are yet to do that, and now halfway through 2010, it is unlikely Congress will take action to retroactively amend the law. So, come January 1, 2011, the estate tax rate is jumping back to 55 percent (it is unclear whether the $675,000 exemption will be adjusted for inflation, kept at the most recent threshold of $3.5 million, or changed to another amount).

So what does this mean for business owners? Weltman says "it could be devastating" to small businesses when the government collects the estate taxes (due nine months after the death). Even if a business owner has no surviving spouse and owns a modest business valued at a $5 million, a $1 million exemption still would leave $4 million of taxable assets. A 55 percent estate tax on that amount would force the business to cough up more than $2 million.

"Assuming people don't have insurance or other liquid assets available, it will force liquidation," Weltman says.

Another point Weltman makes is that there is a modified carryover basis rule this year, in tandem with the estate-tax lapse. For the Steinbrenner family, this could mean huge capital gains if it were to sell the New York Yankees. George Steinbrenner bought the Yankees in 1973 for $10 million, but the club is now worth an estimated $1.6 billion -- the modified carryover rule means the heirs would have to pay taxes only on the original $10 million, not the current $1.6 billion.

But reinstating the estate tax in 2011 won't solve the federal budget shortfall. Weltman says that in the overall scheme of things, estate and gift tax accounts for a very small percentage of federal revenue, which is in part why there were phased out in the first place.

"The thought was that people jump through hoops to try to avoid these laws and it involved cost to engage attorneys," Weltman says.

Nonetheless, people are dubbing this the "best year to die," precisely because of the estate tax, or lack thereof. It's led to conspiracy theories and some bad decision-making in the pursuit of a (tax) break.

"There's talk about pulling the plug on people on life support," Weltman says. "It's grisly to think about and it's just horrible to think that taxes should play any role in life-and-death decisions."