In June, actor James Gandolfini died in Italy while on vacation with his family. The actor was best known for his role as Tony Soprano in the HBO show “The Sopranos.” His success as an actor allowed him to leave behind a sizable estate, worth an estimated $70 million or more.
Unfortunately, though Mr. Gandolfini had created an estate plan, he also apparently made some serious estate planning mistakes along the way. Along with other famous celebrities who passed away after having incomplete plans, there is a lot we can learn from actors like missile in the Feeney and others.
Gandolfini may not have considered estate taxes.
Gandolfini divided most of his estate between his wife, children, nieces, and other friends and family members. Though his children were young, Gandolfini directed that their inheritances will be held in trust until they reach 21. This is type of trust, known as a testamentary trust, is a very common elements that people with young children include in their wills.
Unfortunately, when a person creates a will that leaves inheritances, those inheritances can be subject to the federal estate tax. Any estate worth more than $5.25 million is subject to the estate tax. Though the rate of taxation differs depending on the size of the estate, all estates worth this exemption limit will have to pay at least some money in estate taxes.
If Gandolfini left all of his worth as probate assets, it means that his estate will likely have to pay about $30 million in taxes. That’s $30 million that will not go to his children as he intended.
However, it isn’t exactly clear if Gandolfini had any trusts that would have removed his property from his probate estate.
Always consider the practical.
Gandolfini’s will also contains a guardianship provision in which he said that should he die after the mother of his children dies, his sister would become the legal guardian over the children. Though the mother of his minor children is still alive, this guardianship clause is an important one for anyone with minor children creating a will.
Contrast this clause with the guardianship provision that Michael Jackson left. In his will, Mr. Jackson named his mother as the guardian of his minor children, and named singer Diana Ross as her replacement.
Though it appears as if there’s nothing wrong with this clause, it does have some significant practical concerns. For example, if Jackson’s mother were to die before the children become adults, they would then have to be cared for by Ms. Ross. Because Jackson’s mother and Ross live on different sides of the country, this could mean that the children would have to uproot their lives to live with their new guardians. Such practical concerns are something that everyone should consider when selecting a guardian.
If you’d like to learn more about estate planning techniques such as living trusts, attend one of our next free seminars in Vero Beach and Port St. Lucie Florida.