Many families, planning for a transfer of wealth is something they may think about, but never take the time to act upon. Unfortunately, this failure to establish a proper estate plan can significantly affect a family’s long term financial stability and can lead to the payment of substantial estate taxes. Although this can be difficult for many families to understand – indeed, it can be a challenge to set plans for events that may not occur for many years. The following article written by Law Offices of Connie Yi, PC (an estate planning law firm in Alameda county) -illustrates with the example of the recent death of a celebrity – just how important it is to work with a professional to craft an estate plan.
When actor James Gandolfini, best known for his role as Tony Soprano in The Sopranos, died in Italy earlier this year, it took many people by surprise. While his family and his fans mourned, reports arose indicating that nearly half of Gandolfini’s estate, worth approximately $70 million, was set to be paid in estate taxes. Unfortunately, it appeared that Gandolfini, who was survived by his wife and two young children, had not taken steps to draft an estate plan that would have ensured the maximum transfer of his wealth to his family.
As further reports surfaced, experts determined that their initial assessment of Gandolfini’s estate had been based on incomplete information. In fact, many people had estimated the actor’s estate tax bill based solely on assets listed in his will. Fortunately, Gandolfini had taken the time to work with professionals to set up other estate planning vehicles. Although specifics have not been made public, many believe that Gandolfini had made arrangements for members of his family to have access to funds held in irrevocable trusts, life insurance policies and other accounts. At the end of 2012, Gandolfini had even drafted a new will designed to take advantage of the federal gift tax exemption, worth $5.12 million, that expired at the end of that year. It appears that early estimates that the actor owed approximately $30 million in estate taxes were significantly overstated.
Gandolfini’s estate was larger than most families in the U.S., but case illustrates an important point for everyone. It is not enough to hope that everything turns out for the best when it comes to transfers of wealth. No matter the size of the estate, planning is essential. This may involve not only drafting a will, but also trusts, retirement accounts and other vehicles, as well.
For more information, contact an attorney like myself who specializes in estate planning, who can explain your options and help you achieve your goals.