James Gandolfini's Probate and Estate Tax Situation: Why No One Should Just Fuggedaboutit

James Gandolfini's Probate and Estate Tax Situation: Why No One Should Just Fuggedaboutit

by Michelle Kaminsky, Esq., November 2013

In June 2013, the untimely death of 51-year-old James Gandolfini who played Italian-American mobster Tony Soprano in the highly acclaimed TV series, The Sopranos, rocked the entertainment world. A few weeks later, his will and alleged estate planning mistakes made similar waves throughout legal circles. Why? Unfortunately for Gandolfini’s heirs (maybe), there are more than a few reasons.

Will Provisions

Before delving into any perceived problems with Gandolfini’s will, let's first look at what it says and does. Gandolfini allotted $1.6 million and personal property to specified family members and friends. The rest of his estate was left to his two sisters (30 percent each), his wife (20 percent) and his infant daughter (20 percent).

Gandolfini’s teenage son inherited proceeds of a life insurance policy held in an irrevocable trust (which is not subject to estate tax), and the actor left his property and land in Italy to both of his children in a trust.

Going Public

One of the most talked about aspects of Gandolfini’s estate plan was the fact it became public in the first place. Wills are public documents once they are admitted to probate and Gandolfini’s, of course, was no exception. Accordingly, when it was filed in Manhattan's Surrogate Court in New York, it was out in the open for the world to view, analyze and criticize.

Public figures generally prefer such matters to be handled behind closed doors, so many were surprised when the actor’s financial affairs weren’t protected in this way. But even noncelebrities can opt for more privacy when settling their estates. Quite simply, the public discussion of how Gandolfini’s estate was divided could have been avoided with the basic estate planning tool of a living trust.

A living trust (also called an inter vivos or revocable trust) is a written legal document through which assets are placed into a trust for the grantor’s benefit during his lifetime, and then transferred to designated beneficiaries at death by the grantor’s chosen representative (called a successor trustee). The trust has several benefits, including: 1) it avoids probate, which could mean a faster distribution of assets to heirs; 2) it automatically appoints someone to oversee the grantor's affairs; and 3) it could save money, depending on one's financial situation.

Above all, a living trust remains private and its provisions are never publicly revealed.

Estate Taxes

Aside from privacy issues, Gandolfini’s will has been called a disaster by estate lawyer William Zabel in the New York Daily News mainly because he left the bulk of his $70 million estate (about 80 percent to his sisters and young daughter), leaving that entire chunk open to the 55 percent estate tax, or as many call it, the “death tax.” Some estimates say that Gandolfini’s estate could end up paying $30 million in taxes, nearly half of what is believed to be its total value.

A major estate tax bill could have been partially avoided by the use of a marital trust, an estate planning tool that takes advantage of the ability to hold property in trust for a spouse to use during his or her lifetime without taxation. Upon the death of the surviving spouse, the property remaining in the trust passes to the people chosen by the predeceased spouse. The terms of marital trusts can vary in complexity, depending on individual circumstances.

In Gandolfini’s situation, his current wife is not the mother of his son, so the trust would have had to have been written with that in mind in order for his son to eventually receive a larger portion of the estate. But with careful planning, it could have saved millions of dollars in estate taxes and still accomplished the bequests desired by Gandolfini.

Caveat Reader

It’s important to note that Paul Sullivan's interview with Gandolfini’s attorney, Roger S. Haber, discussed in the New York Times, calls into question whether the bulk of Gandolfini’s estate was even covered in his will. In addition, it calls into question whether some assumptions upon which many based their critical comments regarding the shrewdness of Gandolfini’s will are even true.

The fact remains that the publicity surrounding the actor’s will has put estate planning in the spotlight. It’s also made many realize the importance of preparing a comprehensive plan for asset distribution upon one's death—and to not just fuggedaboutit and hope things will work out the way we would have intended on their own.