A few weeks ago, the death of New Jersey native and Sopranos actor James Gandolfini stunned his family, friends and fans. Even more shocking was the recent news that Gandolfini’s heirs have to pay $30 million total in estate tax.
51-year-old Gandolfini generously left a $70 million estate to his family and friends, which was a loving gesture on his part. According to his will, each of his two sisters received 30% of his entire estate. His infant daughter received 20%, and his son was left all other assets except clothes and jewelry. Gandolfini’s son also received an insurance policy payout. But unfortunately, his planning of the distribution of his large taxable estate resulted in huge taxes.
If Gandolfini had left his entire estate to his wife, the inheritance by a spouse would have been non-taxable. If people want to avoid large estate penalties, they can take advantage of the spousal exemption.
While Gandolfini was generous in his will, his situation is a lesson to everyone that proper estate planning is necessary in order to avoid heavy estate taxes from the IRS. Family and friends of a deceased person have enough to worry about. The last thing they want is to get hit with inheritance tax, estate tax or an IRS audit because they are an heir to a loved one’s estate. Gandolfini’s case is a prime example of why everyone should protect their assets through gifting, insurance planning and a family limited partnership. An effective strategy for estate planning may ensure better results for one’s heirs.
Source: Atlanta Journal-Constitution, “Wes Moss: Smart Estate Planning – How not to end up like James Gandolfini,” Wes Moss, July 22, 2013
Source: New York Post, “Tony Soprano vs. the IRS“, July 16, 2013