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Tax planning mistake could cost Gandolfini estate $30 million

NAELA National Academy of Elder Law Attorneys, Inc. MEMBER

The tragic death of James Gandolfini on June 19 stunned his family and shocked people who had grown to love the actor by watching him portray New Jersey Mafia boss Tony Soprano on television. Now Gandolfini's family is being dealt a blow by the IRS. The provisions of the late actor's will leave 80 percent of his $70 million estate unprotected, and a lack of adequate tax planning will allow state and federal estate taxes to consume up to $30 million of it.

Making matters worse for the Gandolfini family is that a large part of this tax liability could have been avoided if well established estate planning strategies had been employed. The late actor left only 20 percent of his estate to his wife, and by doing so failed to take advantage of an estate tax provision that allows for tax-free gifts bequeathed to a surviving spouse.

People are sometimes uncomfortable leaving the bulk of their estate to a surviving spouse that is not the parent of their children, and Gandolfini's wife is not the mother of his son. However, a marital trust would have allowed the marital deduction while still ensuring that the late actor's children benefited. A trust allows a surviving spouse to receive interest from trust property while the remaining assets pass to the children, or other heirs, after the spouse dies.

The Gandolfini estate demonstrates how easily mistakes in tax planning can happen and how severe the cost of those mistakes can be. Few people like to contemplate their death, and this is especially true for those who are still relatively young. However, having documents like a will, a living will or a power of attorney drawn up by an attorney experienced in estate planning may avoid expensive pitfalls and could save grieving families from enduring further distress.

Source: Daily Finance, "James Gandolfini's $30 Million Estate Tax Mistake", Dan Caplinger, July 09, 2013

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