Celebrity estate planning is an interesting thing to look at. Some stars are well-prepared for their death, and in their case years of planning pays off. In other cases, stars seem to have little understanding or concern about what happens to their wealth when they die. There are a variety of reasons why a star would not be financially prepared for his or her death, but the larger-than-life nature of these situations usually provides an opportunity for the rest of us to think about our own estate planning.
The death of James Gandolfini this January provided an opportunity not only for fans to reflect on his acclaimed performance in the Sopranos, but also for estate planners to reflect on the importance of making the most of estate planning, so much so that one estate planning attorney has referred to Gandolfini’s estate situation as a “catastrophe.”
The fact is that while Gandolfini was a gifted actor, he was not gifted with insight about how to put together a great estate plan. As a result, the largest beneficiary of the actor’s estimated $70 million estate will be the Internal Revenue Service. Unfortunately–or perhaps fortunately, depending on how you look at it―Gandolfini’s mistakes could have been corrected with some well-known estate planning techniques.
Gandolifini’s will was fairly simple, leaving 30 percent of his estate each to two of his sisters, 20 percent to his wife, and 20 percent to his daughter. On top of that, he left the proceeds of his life insurance policy to his son.
But because of how his will was set up, Gandolfini missed an opportunity to make use of an unlimited marital deduction for his wife. Setting up a martial trust could have allowed him to make use of the deduction while still ensuring his children would have received most of his estate.
Source: Daily Finance, “James Gandolfini’s $30 Million Estate Tax Mistake,” Dan Caplinger, July 8, 2013.