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The Heritage Law Center, LLC Blog

Sopranos Star Loses Millions to Estate Taxes

POSTED ON: July 10, 2013

Chances are good that Mob boss Tony Soprano never paid his fair share of taxes. Unfortunately, actor James Gandolfini, who portrayed the crime kingpin on “The Sopranos,” will more than make up for it thanks to some costly estate planning blunders. Once again the celebrity tabloids offer a great example of what not to do—this time in your own estate planning.

Gandolfini, who recently passed away, left an estate worth an estimated $70 million. However, thanks to poor planning, the IRS stands to be the biggest beneficiary of estate. According to media reports, Gandolfini’s will left about 80 percent of his estate unprotected against estate taxes, with rates that will add up to about 55 percent when you consider both the federal and state portions.

Although married, Gandolfini had only a simple will that divided his estate between two sisters, two kids and his wife. Had he utilized a marital trust, he could have sheltered his estate tax exemption and taken advantage of the unlimited martial deduction for estate tax purposes for gifts made to a surviving spouse.

Gandolfini had a child from a previous marriage, which may have been part of the reason he chose not to leave the bulk of his estate to his current wife. However, even in cases involving children of previous marriages, the use of marital trusts can take advantage of the marital deduction while still ensuring that children will eventually receive the bulk of the estate by providing for income from trust property to be paid to the surviving spouse, and for the assets that remain after that spouse dies to go to the children or other desired heirs. Using this fairly simple technique could have cut tens of millions of dollars off Gandolfini’s estate-tax bill and can greatly benefit any couple with a taxable estate (that’s $1 million or more in Massachusetts).

Don’t Make a Costly Mistake
On the bright side, at least Gandolfini had a will. Many celebs (and us regular folks) who died unexpectedly, including Jimi Hendrix, Amy Winehouse, and Barry White, didn’t have valid wills at all, an issue which can raise a host of other complications and unintended results.

In reviewing your own estate-planning situation, be sure you’ve covered all the bases with a professional estate planning attorney so that you don’t end up costing your loved ones and filling Uncle Sam’s pockets. You don’t have to learn the hard way, planning now can avoid a big headache later.