When it comes to planning an estate, it’s important to look at the whole picture. There was recently a lot of buzz surrounding the will of James Gandolfini, the actor from the Sopranos. The media was quick to point out that Mr. Gandolfini‘s last will and testament exposed most of his $70M to estate taxes. The general reaction was one of criticism at clumsy and ill-advised estate planning. We at Urbach and Avraham don’t believe such a reaction is fair.
The goal of estate planning is not just to save taxes; the goal is to provide for your loved ones in the proper manner. Mr. Gandolfini left 20% of his estate to his wife, who was not the mother of his son. Only her portion was protected from estate tax, the other 80%, of which 30% went to each of his sisters and 20% went to his daughter, was exposed. Often in situations involving stepparents and children of previous marriages, parents are reluctant to leave all their money to a surviving spouse, as they want to ensure that their children won’t have to rely on their stepparent to provide for them. What critics fail to mention is that Mr. Gandolfini utilized an excellent estate planning strategy by setting up an irrevocable life insurance trust for his son. By placing his life insurance into the irrevocable trust, he avoided its exposure to estate taxes. Mr. Gandolfini also wanted to provide for his sisters. The portion passing to his sisters does not qualify for the marital deduction and therefore it is subject to estate taxes.
Urbach & Avraham, CPAs, has over two decades of experience working in conjunction with estate attorneys to guide individuals with their estate planning needs. We always take into careful consideration each family’s unique dynamics and needs. Contact us today for a free consultation and for a recommendation for a suitable estate attorney.