James Gandolfini, the actor best known for his years as Mob boss, Tony Soprano, on HBO’s The Sopranos, died of a massive heart attack at age 51 in June. The actor’s unexpected death leaves estate planners wondering if Mr. Gandolfini had any legal advice when making his Last Will and Testament, as the largest stakeholder of his estate will be the U.S. Government.
Gandolfini’s Will leaves 80% of his estate to be split equally among his two sisters and his infant daughter. The remaining 20% is payable to his wife. Though a formal inventory is not due to be filed in the New York Courts until later this year, most estimate Gandolfini’s estate to be worth approximately $70 million. That sounds like everyone gets a nice piece of the pie, but the government gets first bite. The New York and U.S. government’s combined share is up to 55%, meaning the IRS could get approximately $25 million. While Gandolfini’s wife’s 20% share is not subject to such taxes, her portion is determined after taxes are paid, leaving her with about $9,000,000.
The IRS’ share is to be paid in cash, and it is due within 9 months of death. Gandolfini, like many wealthy celebrities, has mostly illiquid assets. So, his family will likely be forced to sell certain assets to meet this tax liability.
The lesson here is that tax planning could have saved the Gandolfini family millions. Assets pass tax free to spouses, so there were ample planning opportunities for a marital trust. Gandolfini could have taken advantage of gifting strategies during his lifetime to reduce the size of his taxable estate. A Revocable Trust could have been created to avoid the public knowing these details of his estate plan. And, the property left to his infant daughter could have been placed in trust so she does not receive her entire inheritance in one lump sum upon attaining age 21.
Alas, we are only left to wonder if this estate plan meets Gandolfini’s wishes. With such a disproportionate amount of his estate being distributed to the IRS versus his wife and two children, it leaves an unsettling feeling that he just didn’t get the right plan in place before his untimely death.
In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose. The information contained herein is provided “as is” for general guidance on matters of interest only. Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. Before making any decision or taking any action, you should consult a competent professional advisor.