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Tony Soprano's Run In With the Tax Man


by Robert A. Hull


Many of us who were fans of the HBO show about a fictional New Jersey mafia family, The Sopranos, and actor James Gandolfini in particular (who played mob boss Tony Soprano), were shocked and saddened to learn of the actor's untimely death.  

Now, the media reports that substantial taxes will be due on Mr. Gandolfini's estate due to poor estate planning. Could some of these taxes have been avoided or, at the very least, delayed with different estate planning strategies?  

Based on the latest information about his estate, it is very likely. While many of the specifics are unclear, it appears Mr. Gandolfini could have benefitted from using estate planning strategies to leave more of his assets to his family.

As one example, if the $7 million life insurance payout to James' son was not held in a life insurance trust, the full value of this payout would be included in the value of his estate for taxation purposes. If such insurance were held in a life insurance trust, then this payout would not be included in his taxable estate, and could result in savings of several millions of dollars in estate tax.

Also, Mr. Gandolfini could have potentially reduced the size of his estate subject to estate taxes also by using revocable and irrevocable trusts, perhaps creating certain business entities and employing gifting strategies. But, without additional specific information about his assets, it is difficult to tell which combination would have been most effective.

Though the value of most of our estates does not approach Mr. Gandolfini's, estimated at over $70 million, we all have an interest in maximizing the assets which are ultimately distributed to our beneficiaries and minimizing those to the Tax Man.

The government's take from Mr. Gandolfini's estate will likely be over $30 million, and that's a lotta "scharole".

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