Actor James Gandolfini was only 51 when he died in June, and that’s tragically young. “The Sopranos” star’s premature death, however, can serve as a reminder that estate planning is not something you should put off. According to a recent article in The Record, Gandolfini had signed a will just six months before he died, which is positive.
If his estate plan had included one or more irrevocable trusts in his will or estate plan, however, he could have saved his beneficiaries any number of headaches — as well as estate taxes that might now claim as much as 40 percent of his estate.
The actor’s will divided his estimated $70-million estate among his wife (20 percent), his infant daughter (20 percent), and two sisters (30 percent each). The federal estate tax exclusion is currently $5.25 million, but 20 percent of $70 million amounts to $14 million, so much of the estate remains taxable.
The Record’s reporter says that his widow shouldn’t owe any estate taxes to the federal government or to New York, where they lived. It does appear, however, that his other beneficiaries could end up with a hefty tax bill from both.
If Gandolfini had set up testamentary trusts — trusts typically created by the will which go into effect upon death, he might have cut those tax bills substantially. That is because irrevocable trusts, whether set up through the will or as part of a larger estate plan, are excluded from the taxable estate. There are a wide variety of such trusts available to meet various estate planning goals, and they don’t take long to set up.
The key is to take the time to set them up, and the first step is to steel yourself against taboos about money and mortality so you can discuss these issues openly with your family. An estate planning attorney can help you meet your goals, but only you and your family can decide what those goals are.
Limiting estate taxes is important, but just as crucial are ensuring your loved ones are cared for and comforted — not embroiled in a probate dispute. Won’t you do it now?
Source: NorthJersey.com, “Opinion: The topics families too often ignore: Money and trusts,” Lori R. Sackler, Aug. 12, 2013