I was very sad when I found out that actor James Gandolfini died this past June. He was brilliant as he brought to life the iconic mob boss Tony Soprano for eight years on HBO’s The Sopranos. In addition to a few Emmy awards along the way, Gandolfini accumulated a considerable amount of wealth. Some reports indicate that the net worth of his estate is around $70 milliion.
The administration of Gandolfini’s estate will surely provide us with yet another example of the dire consequences of poor estate planning. The missed opportunities in planning can be divided into two categories: (1) problems wealthy people should try to minimize, and (2) problems that even the average Joe needs to be concerned about. We will never know if Gandolfini received good legal advice to avoid these problems and chose to ignore it, or if he just received bad legal advice. But either way, we should learn from his mistakes so that our heirs are not saddled with a similar outcome.
First, it is important for people who have accumulated wealth to understand that the U.S. Estate Tax can claim a huge chunk of your net worth. In addition, some states (i.e. Gandolfini’s home state of New York!) also take a bite at the apple. For example, reports indicate that the final U.S. Estate Tax bill for the Gandolfini estate will be upwards of $20 million, with a state tax bill around $10 million! I am certainly not suggesting that there is anything wrong with the wealthy paying taxes, but in this case there are several tax tools that are tried and true and legally available for taxpayers to take advantage of that could have been implemented.
As for the issues that everybody, even the not ridiculously wealthy people, should plan for, how about avoiding probate? Here is a copy of Gandolfini’s Will. The public has access to that document because the estate was required to file it with the probate court. It has an awful lot of private information that would not have been publicly available if he had planned with a revocable trust. Not to mention the additional cost and attorney fees and the months or even years that will be spent jumping through the legal hoops of the probate process.
Furthermore, reading through the will makes it clear that there were young children that are beneficiaries of the estate, but their inheritance will be coming to them outright in full by the time they are 21 or 25, depending on which clause applies. There are rumors that the two children, who have different mothers, are already beginning to fight over their children’s shares. Those rumors may not be true, but if they are it will be an expensive fight for the estate since it will happen as part of the probate process.
These and other problems that the estate will be facing over the next several months could have been anticipated and mitigated with some pretty basic estate planning strategies.
Written by Arizona Gun Trust Attorney Todd Smith