When beloved actor James Gandolfini died unexpectedly at age 51 while on vacation this summer, it spurred a number of relevant discussions about estate planning.
Our Mesa estate planning attorneys know that estate planning as a whole is treated as rather dull, dry material. However, in the down-to-earth Gandolfini, many of us saw a part of ourselves. His will, overseeing a $70 million estate, was called a “tax disaster,” and other issues have been cited as well.
Many of us believe we have plenty of time to handle estate planning matters. Cases like Gandolfini’s force us all to confront the fact that we aren’t guaranteed that opportunity.
While it’s important to note that despite the fact that many of the documents in the case have been made public, there is probably a fair amount in this case that we don’t know. With that in mind, there are still some important lessons we may be able to glean from the public record.
Much of it comes down to the way in which the documents were drafted, underscoring the importance of choosing a law firm that has extensive experience in this field.
For example, take the benefits bequeathed to Gandolfini’s sisters. He was a generous man, and he wanted to make sure they were taken care of. They were to be given 30 percent of his “residuary estate,” or the portion of his estate not specifically devised to someone in the will. (In this case, the residuary estate was whatever wasn’t specifically given to his son and nieces.)
The sisters’ portion of benefits is subject to a 40 percent estate tax. This is a substantial fee, and it’s exacerbated by the fact that there will be an additional tax when the sisters die. It’s probable this scenario could have been avoided had he left each sister’s share of benefits in a trust. In this way, the assets would have been in each sister’s estate so that when she dies, it wouldn’t be subject to another estate tax. Each sister could have been named trustee of their individual trust, meaning each would have had general powers of appointment and also authority to name her own trustee for those assets. Additionally, this could have shielded the assets from creditors and other claimants, such as ex-spouses in a divorce.
Certain tax issues could have been averted had Gandolfini chosen to cover a portion of the tax bill with a second life insurance policy, which could have been purchased specifically for this purpose, and placedinto an irrevocble life insurance trust. It could have literally saved millions.
Another issue of concern in Gandolfini’s case was that of the assets left to his two children. He had a 13-year-old son from his first marriage and a 9-month-old daughter from his second. Each child will get total control over millions of dollars as soon as they turn 21 years-old. That can be dangerous for someone so young. Some can handle it, but others might not handle it so well. Typically, we would advise choosing good trustees and making the release of the funds fully discretionary, until the children are older and a possibly a little wiser.
A glaring omission involves the absence of a stipulation for how the money should be handled if one of the children dies before the age of 25. There is no instruction regarding whether the remaining sibling would become 100 percent owner or whether the deceased sibling’s share would go to someone else.
Leaving questions like these to be sorted by grieving relatives is a heavy burden to bear. A skilled estate planning firm can help to avoid many of the potential pitfalls.
Contact our Mesa estate planning attorneys at (480) 833-1113.
Lessons Learned from James Gandolfini’s Will, July 15, 2013, By Gail Buckner, FOXBusiness
More Blog Entries:
Should Avoiding Probate Be Your First Priority in Arizona Estate Planning? July 28, 2013, Mesa Estate Planning Lawyer Blog