There are those who observed James Gandolfini’s passing in the context of his acting career, particularly his iconic role as Tony Soprano. They are called fans. Then there are those who saw it as a chance to peak into his estate planning and critique it. They are called estate planners.
It has been reported in various news reports, the first being the New York Daily News, that Gandolfini’s estate was worth $70 million and that those who come out with the largest shares will be the government, his sisters and his infant daughter. Bemoaning this as an estate planning fiasco these observers claim that the big loser will be the estate generally, his current wife and his son from his first marriage. While that may be true at some level this also may be simplistic, ignoring the possibility that this may be just what Gandolfini intended or that he may have left many millions to family members outside of his estate. The truth is he probably could have achieved the same result and left more to those family members he intended to benefit and less to the government if he wanted, but the magnitude of the mistake or whether it was a mistake at all is currently unknown. Whatever else it is this is an object lesson in being thoughtful and careful in one’s estate planning regardless of level of wealth and being explicit in one’s intent. For the sake of his attorneys, I hope he was and I hope they have that proof in their files.
Here’s what we are being told and how it seems to plays out (I have not seen any document or anything other than news reports which lack detail and require much speculation):
1. 80% of his assumed $70 million estate, or $56 million, is left to his sisters and 9 month old daughter, the latter in a trust that distributes at 21. The other 20% goes to his wife, yielding a marital deduction of $14 million. (I am assuming away the $5.25 million exclusion as either utilized for lifetime gifts or based on the fact that we are
assuming round numbers anyway.) At a combined federal and state tax rate of about 55% on the taxable $56 million, this means that the government gets $31 million and the entire family shares what’s left, $39
million. With more careful planning the government’s share could have been reduced, but given that he died at 51 it is not unusual that even wealthy people put off the necessary planning when death seems so remote.
If there were a mistake here it was not foreseeing the inevitability of death if not the timing of it.