The death of James Gandolfini at age 51 was shocking.
Soon after the remembrances of his great acting career came an oddly public inquiry into his estate plan. His will was filed for probate, and it revealed a number of unconventional provisions. Most significantly, his surviving spouse was granted just 20% of the residuary estate, which might sharply limit the marital deduction. Each of two sisters received 30% of the residue. Some press reports speculated that his $70 million estate could owe $30 million in federal and state death taxes. One item even suggested that Gandolfini’s estate planning attorneys might be sued for malpractice by his beneficiaries, given the apparently poor tax planning!
However, cold water was thrown on these fever dreams by a later interview with the estate planner, Roger Haber, reported in The New York Times. Haber could not be specific about Gandolfini’s estate plans, but he did state clearly that the will was but one small part of the picture. The estate includes substantial nonprobate property that will not be governed by the will. This could include retirement plan accounts, life insurance, or irrevocable trusts set up earlier for beneficiaries. Nonprobate property may or may not be hit by death taxes (which may include an estate tax, such as imposed by the IRS, an inheritance tax as some states continue to have, or both). Mr. Haber insisted, “There is no tax problem here.”
Still, one wonders about all the publicity. Did Gandolfini appreciate the feeding frenzy that the publication of his will might generate?
An alternative approach was employed by John Lennon. He created a living trust for the management of his wealth. A “pour-over” will was drafted to send everything in the probate estate into the trust and to nominate his wife, Yoko Ono, to be Lennon’s executor. We don’t know the terms of the living trust; it was never made public. A trust may have dispositive provisions exactly as a will does, or it may continue in further trust after the grantor dies, providing longer-lasting financial protection for beneficiaries.
Living trusts are not just for celebrities.Trust benefits, including financial privacy, may be had by any affluent family.
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