Who Really Whacked Tony Soprano

Tony Soprano, the troubled mob boss who struggled to balance his crime family and his personal life, was possibly the greatest TV character of all time.

James Gandolfini, the 51-year-old actor who played Tony in the HBO series The Sopranos and won three Emmy Awards for his portrayal, died suddenly on June 19.

While his official cause of death was a massive heart attack … when it comes to his estate, it seems that Tony Soprano got whacked by the biggest crime family in the business – the U.S. government.

Mr. Gandolfini’s estate is estimated to be about $70 million. Due to poor legal advice and estate planning, more than $30 million of his estate could go to the government thanks to a “death tax,” or an estate tax of 55%. Unless Gandolfini was sitting on large sums of cash, his family will now be forced to sell off property and liquidate assets quickly in order to pay the tax bill.

There are a few simple techniques that could have saved Tony millions, and they can work for you too …

The key mistake Gandolfini made was leaving the bulk of his estate to his sister and his young 9-month-old daughter.

Yesterday, I chatted with Josh Bennett, a friend and estate planning and asset protection attorney, about what could have been done to considerably lower the death tax bill, so that the bulk of the estate could have gone to his family.

These Are the Ways to Protect Your Wealth

For the very wealthy, like Gandolfini, the first $5.25 million of an estate is exempt from death taxes. That amount doubles to $10.5 million for a married couple. But if you are fortunate enough to be worth more, then the federal estate tax of 40% is applied to anything over that threshold. Many states also charge their own estate tax of 5% to 16%.

Since Gandolfini was married, a simple strategy would have been for him to create a marital testamentary trust while he was alive. Depending on the type of assets he included in the trust, his estate may have qualified for a marital contribution deduction.

In this case, Gandolfini’s estate would receive huge savings since the portion of his estate that was placed in the martial trust would not have been subject to estate tax until the death of his spouse — saving the 55% of his estate from the Tax Man.

It is very easy to define the terms of a marital trust. Gandolfini could have specified how much access his wife could have to the money and how the money would be paid out to her. Upon the death of his wife, the remainder of the estate would have passed to his children. While taxes would be due at that point, Gandolfini’s second wife is quite young so the assets would have time to grow over the years thanks to the deferral of the estate tax … leaving his children a larger payout.

The estate tax is deferred (subject to limitations, since not all assets qualify until the death of the second spouse) and because Gandolfini’s wife is so young, the time value of money adds up with the deferral of the estate tax on the marital trust portion.

Another option would be to set up an irrevocable life insurance trust. Here, the key is to take out enough life insurance so that upon your death the policy payout will cover any estate tax burden your family might have. But again, for the very wealthy, life insurance payouts are added into to the value of the estate when the government is assessing your total net worth. That’s why it’s critical to have the policy in a trust.

The life insurance policy should be owned by the trust. Upon death, the policy payout remains income tax free and it will not be added into the value of the total estate.

Legal Confiscation at its Finest …

Once you’re gone, it’s nearly impossible to correct estate planning mistakes. I doubt that any of us expect a sudden end, but when it comes to proper legal planning we must do it, regardless of our net worth. There is nothing more tragic than losing a spouse or parent and then having to deal with money issues at the same time.

I highly encourage you to review your estate plan once a year – including your will, trusts, powers of attorney, etc. It should have the same priority to you as your annual physical exam.

Be sure to account for any changes in your family structure – new grandchildren, the loss of a sibling or any increase in your net worth. Josh Bennett, Esq. ([email protected]) is a great resource regardless of where you live, if you are in need of a good family estate plan or even if you want to have your current plan reviewed and updated.

Let’s face it … our government is “legally” confiscating wealth through the gift tax and estate tax. We are taxed when the money is earned, which should be more than enough – but it’s not.

Giving your post-tax wealth to loved ones, either during your life or after your death, can cost dearly. So, plan early and plan well to avoid being the next target of U.S. government mafia.

In Wealth & Prosperity,

Erika Nolan
Executive Publisher, The Sovereign Society