In July, actor James Gandolfini died while on vacation in Italy at the young age of 51 years. He was best known for his lead role as the mafia boss in the popular cable TV show The Sopranos. Unfortunately, the other reason his death has gained attention is how his estimated $70 million estate is being distributed. Some experts have deemed the situation a tax “disaster,” because as much as $30 million of his estate will most likely be turned over to the IRS in estate tax.
Sometimes the best way to learn a lesson is to see and examine another’s mistakes. Keeping in mind that each person’s or family’s situation can be unique, there are some valuable lessons that can be taken away from Gandolfini’s premature death. Robert Wood, tax lawyer and Forbes magazine contributor, wrote a helpful article summing up some of the key lessons.
Here are a few examples from that article:
Lesson # 1 – Privacy
The relatively quick and inexpensive process of setting up a Revocable Living Trust (RLT) will allow you and your family to keep the financial matters of your estate private.
Lesson # 2 – Tax Efficiency
There are many products and services designed to help a person gift or transfer property, appreciated assets and cash to heirs/beneficiaries without an outsized tax liability.
Lesson # 3 –Children’s Ages
Parents with young children may think that by age 21 or 25 their kids will be able to manage large sums of money on their own. This decision can be a tough one and should be carefully pondered and perhaps changed over time as you see your children mature (or not).
Without a well-thought-out estate plan, many options are taken from you upon your death, and the government’s plan kicks in through the probate process. Estate planning allows you to be proactive and put together a strategy while you still have options about how you want your estate handled in the event of your death. Such a plan can allow your estate assets to be distributed in a tax-efficient way without it being a public matter.