Fans of “The Sopranos” will remember the actor for his role as a crime boss trying to work family life into his career in the Mafia. Estate planners, however, will remember as well the missed opportunities for better tax planning of Mr. Gandolfini’s estate. Indeed, the planning on Gandolfini’s estate was so poor that it has been called a tax “disaster.”
According to reports, 80 percent of Gandolfini’s estate was left to his sisters and his daughter, leaving that amount of his estate open to death taxes of around 55 percent. This could have been avoided with a little bit of estate planning.
When it comes to tax planning, it is important to see it in the proper perspective. Yes, taxes are a part of estate planning, but only a part. The most important thing is that the assets will eventually be disposed in the way to want them to be disposed, that they go to the right people in the right way at the right time. Working in tax savings is great, but it isn’t the end all be all of estate planning.
It has been suggested along the way that Gandolfini should have used a trust in his estate planning, not only to keep his estate private, but also to avoid probate and open up the opportunity to have managed distribution of his assets over time. Still, a revocable trust would not have helped his tax situation. Only irrevocable trusts can do that.
When using irrevocable trusts in estate planning, it is critical to know how to structure them properly and select the right assets to fund them. In future posts, we’ll pick up on this issue and explore it further.
Source: Forbes, “6 Estate Planning Lessons From James Gandolfini’s Will,” Robert W. Wood, July 20, 2013.