Photo (cc) by Ken_Mayer
Several experts have claimed the poor construction of actor James Gandolfini’s will, which became public after his death, could lead to lawsuits from his heirs, The New York Times says.
Because his will indicated fixed amounts for some people and percentages for others, including roughly 20 percent for his wife, “he created a very complex tax calculation to determine how his wife’s tax-free share influenced the other 80 percent,” the Times says.
The taxes themselves are a bigger issue to some people. Some say Gandolfini, much beloved for his role as Tony Soprano in the “The Sopranos” HBO show, could have shielded his assets better, instead of leaving “close to 80 percent subject to state and federal taxes that together can reach a rate of 55 percent,” CNBC says.
Here’s what CNBC suggests people can do to keep their assets from getting whacked after death:
- Take greater advantage of the marital deduction. Assets that go to a surviving spouse aren’t taxed. That’s one of the issues that brought gay marriage before the U.S. Supreme Court: A woman whose same-sex spouse had died wanted the same tax benefits heterosexual married couples get, which would have saved her $360,000.
- Use trusts to dodge estate taxes. A living trust can be created while the trustor (giver) is still alive, and the held money can be invested and grown. It can then be distributed at some point after death, and assets in trusts avoid estate taxes.
- Pair trusts with life insurance. By creating trusts and having the trustee (money holder) take out life insurance on him, Gandolfini could have made sure money would be available even if the trust assets didn’t have much time to grow. (He was only 51 when he died.)
- Delay inheritance. Gandolfini specified that his infant daughter would get her share when she turned 21. Of course, 21-year-olds often don’t make the greatest financial decisions, so some people make money in trusts available at age 25 or later. Another option is to specify that the person receives a portion at one age and the rest at another.
We have more advice on how to create a will cheaply and how to plan for one in the links below. Cover your assets.