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James Gandolfini estate plan is a ‘tax disaster’

July 6, 2013

James Gandolfini's unexpected death last month in Italy is back in the news, this time because a large portion of the actor's $70 million estate reportedly will be subject to the federal estate tax.


The Sopranos; click image to buy DVD set via an Amazon affiliate linkThe will left by Gandolfini, best known as the complex mob boss Tony Soprano in the HBO television series "The Sopranos," is "a disaster," says a New York estate tax attorney.

William Zabel, who was asked by the Daily News to review Gandolfini's will, says the document is "a nightmare from a tax standpoint."

The 51-year-old actor made a "big mistake" by leaving 80 percent of his estate to his sisters and his 9-month-old daughter, Zabel told the New York City tabloid.

The bottom line per Zabel's calculations is that Gandolfini's estate could owe Uncle Sam as much as $30 million.

Estate taxes at federal and state levels: In 2013, up to $5.25 million of an estate's assets are exempt from federal taxation thanks to the American Taxpayer Relief Act passed earlier this year.

For amounts in excess of the exemption level, which is adjusted annually for inflation, the top federal estate tax rate is 40 percent.

New York also taxes estates and its exemption amount is much lower: $1 million. The top Empire State estate tax rate is 16 percent.

Transfers from one
spouse to the other, however, typically are tax-free. We learned that lesson from Edie Windsor in her successful same-sex estate tax battle that led to the end of the Defense of Marriage Act.

But since Gandolfini left the bulk of his estate to relatives other than his wife Deborah Lin, most of that 80 percent worth of assets is now subject to the federal estate tax.

Plan ahead: Even if you don't think your estate is large enough to trigger the federal estate tax, you still need a will to make sure your property goes where you want it to after you leave this mortal coil.

And it wouldn't hurt to talk with an estate tax expert just in case. Your estate consists of everything you own and as I note (shameless plug alert!) in Future Millionaires' Guidebook, you might have more than you realize.

You'll also want professional estate planning and tax guidance if you live in one of the 16 states* — Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, North Carolina, Oregon, Rhode Island, Tennessee, Vermont and Washington — or the District of Columbia that impose an estate tax.

As the Gandolfini situation illustrates, the state-level estate taxes usually kick in at much lower asset levels.

Possible heir tax issues: And take note potential heirs. In addition to an estate tax that is paid with money left by the dearly departed, some states also impose an inheritance tax.

If you're named as a beneficiary in a will, the inheritance tax is collected from you based on the bequest you receive.

*The original post incorrectly included some states that impose inheritance taxes but not estate taxes, including Indiana. The Hoosier State previously imposed an inheritance tax, but repealed it this year retroactive to Jan. 1 to cover all 2013 bequests. Thanks to Indiana resident and Twitter tax pal @Eligabiff for bringing the error about her state to my attention.

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
  • Ever since I learned about estate taxes being taxed at 35 percent, I still hold my breath for a second. I loved watching James Gandolfino in the Sapranos. However, I don’t like seeing this happen to his estate. How can our country be in a deficit when death and taxes go hand in hand?

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