When beloved actor and New Jersey native James Gandolfini died unexpectedly in June, fans mourned him and memorialized his many talents. Shortly after the dust settled, though, experts in estate and tax planning piled on to criticize his will—which apparently left much of his known estate subject to federal and state estate taxes.
If there was a fatal flaw in the planning of Gandonfini’s will, it could be that it was simply too public. Estate planners tend to prefer using trusts and other vehicles to shift probate assets (those distributed by the will and made publically available through the courts) to non-probate assets—particularly for public figures. Given that Gandolfini elected to distribute much of his estate through his will, many aspects of his plan became public—thereby opening up his last wishes to critics, fans, friends, and family alike.
Along with some relevant quotes from his iconic character Tony Soprano, here are some lessons to take from Gandolfini’s estate planning:
“I’m like King Midas in reverse. Everything I touch turns to s–t.”
One of the primary goals of estate planning (in addition to minimizing estate taxes) for some may be giving the surviving family members and beneficiaries a bit of privacy. This can be particularly true for high-net-worth individuals and celebrities. In many states, if Gandolfini had used his will strictly to “pour over” assets in his estate to an already established revocable trust, this would allow his ultimate estate plan which is laid out in the revocable trust to be shielded from public view. However, because Gandolfini was a New York resident, if he used a pour over will to fund his revocable trust upon death, as opposed to funding it during life, the New York state courts could probate the revocable trust, making its provisions available for the entire world to see. Therefore, for Gandolfini, it would have been critical for him to fund his revocable trust during life to afford privacy upon death. There can also be some administrative cost savings to using a revocable trust, as it may minimize probate costs in some states.
One example of good intentions but perhaps an incorrect approach relates to property Gandolfini owned in Italy. The will calls for the land to be transferred into trust for the benefit of his son and daughter. Foreign property transfers, however, may not be dictated by what the will instructs. The plan would have to be acceptable based on the laws of where the property resides.
“A wrong decision is better than indecision.”
While many have been critical of the drafting of Gandolfini’s will, to his credit, he at least had a current will in place prior to his death. Unlike many who avoid the estate planning process altogether, Gandolfini did work with advisors at the end of 2012 to draft a new will that took into account his new baby daughter. He also identified family members and close friends he wanted to provide for at his death. The way in which he left assets to his beneficiaries may be questionable from a tax planning standpoint, but at least he did document his wishes. Had he not taken this step, an older will may have prevailed, or worse, the courts might have taken a larger role in deciding how his assets would be divided.
While directing assets to specified individuals is important, it is also key to determine the individual’s capacity to manage wealth. For instance, most estate planners would agree that leaving considerable wealth to a young adult may be overwhelming. Gandolfini’s will calls for a portion of his residuary estate to be distributed to his daughter at 21.
“Even a broken clock is right twice a day.”
It’s apparent that Gandolfini did provide for family members with assets outside of his taxable estate. Specifically, it was reported that a $7 million life insurance policy was owned by an irrevocable trust for the benefit of his son. This suggests that he may have set up other entities to pass assets to beneficiaries outside of his estate, or might have taken advantage of the high lifetime-gifting exemption, which was set to decrease at the end of 2012.
The lesson for the rest of us: Regardless of whether you’re a celebrity or simply an individual who wants to balance the goals of providing for loved ones, seeking to minimize taxes, and maintaining privacy at your death, it’s important to consult with your Wealth Advisor and a qualified estate planning attorney to draft documents in accordance with your wishes.
And when it comes to Gandolfini, don’t be too quick to judge. While it appears on the surface that his will may have been a case study in “what not to do,” there are probably many aspects of his plan that were not made public. Only his beneficiaries know the whole truth. As Tony Soprano would say, “End of story.”
Important Disclosure Information
Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This article is not a substitute for personalized advice from RegentAtlantic. This information is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.
Please remember that RegentAtlantic does not provide legal or estate planning advice. Please consult with a estate planning professional of your choosing prior to implementing any estate planning strategy and any strategy mentioned in this article.
Important disclosure information
Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.
Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.
This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.
RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.