Estate Planning Lessons from a Mob Boss
Estate planning is not a favorite subject for most. Who wants to think about what happens if I die? But, when the rich and famous die, such as Soprano’s actor, James Gandolfini did earlier this summer, it becomes a hot topic, at least for a short while.
Gandolfini’s estate is estimated to be worth $70 million. His attorney says it’s much less than that. Whatever the size, it is likely bigger than the average American’s estate, however there are still some dos and don’ts the average person can take note of. The last will, once admitted to probate, is a matter of public record and in today’s internet world it is easy to view.
Gandolfini left specific monetary amounts to several relatives and friends. He left his Italian villa to his son from his first marriage and daughter from his second marriage, but to be held in trust for them. The rest of his estate, what is known in the will as “the residuary”, he left to his two sisters, his second wife and his daughter. The assets for his infant daughter he directed be held in trust until she reaches age 21. Gandolfini chose not to leave anything to his son, making reference to other provisions. It is reported that he left $7 million of life insurance in a trust for his 14 year old son.
Those are the highlights of his will and many have written about the tax disaster it has created, subjecting his assets to what will be about a 55% tax hit between federal and estate taxes. That is in large part because he left only 20% of his estate to his wife, who doesn’t pay estate taxes under what is known as the marital deduction. Spouses can transfer unlimited amounts to each other without paying estate tax.
But, much that has been written about Gandolfini’s estate tax problems is speculation. The will only covers probate property, but it’s possible that he may have had significant non-probate assets, such as retirement accounts or jointly held assets with his wife. People assume that 80% of his reported $70million estate passes to his sisters and daughter but that might not be true. Only his family and legal representatives know for sure. The non-probate assets won’t become a matter of public record. Gandolfini certainly could have left his daughter’s 30% to his wife, her mother, but he chose not to. That may cause more estate tax but that won’t be known until an inventory of the estate assets is filed.
Next week we’ll discuss what he could – and in fact may have – done to reduce his estate tax bite.