The Probate Lawyer Blog

James Gandolfini, who won three Emmy awards portraying mob-boss Tony Soprano for eight years on HBO’s The Sopranos, died on June 19th.  That day, he was touring Rome with his 13-year old son, Michael, when he suffered the sudden and fatal heart attack. 

Gandolfini had parlayed his acting success into a reported net worth of $70 million.  Last December, he had the foresight to sign a new Last Will and Testament.  Gandolfini also had created at least one trust -- and perhaps more -- as referenced in his will.  While it would appear at first blush that Gandolfini did the proper estate planning, the recent revelation of his will (which you can read here) shows otherwise.

To put it bluntly, James Gandolfini's estate is a mess.  Gandolfini failed to do the proper tax planning that would have enabled his estate to avoid -- or at least reduce and delay -- paying estate taxes.  As reported by the New York Daily News, Gandolfini's planning failure subjects 80% of his estate (although, it is actually more than 80%) to the federal estate tax.  At a rate of 40% for all assets over $5.25 million, that totals more than  $20 million in federal estate taxes alone.

Bill Davidson, the late owner of the Detroit Pistons, Tampa Bay Lightning, and Guardian Industries — one of the country’s largest private companies — had a reputation for being aggressive.  The Pistons aggressively built two championship teams under his watch and was inducted into the NBA’s Hall of Fame in 2008.  His businesses thrived through his management.  But the IRS now says Bill Davidson was too aggressive in his tax-reducing estate planning techniques. 

The IRS recently filed a petition in US Tax Court in Washington, D.C., claiming that Bill Davidson Estate owes up to two billion dollars in taxes.  Yes, that’s two Billion — with a capital “B”.  How could any individual rack up such a large tax bill?

Davidson, like many wealthy people who worry about estate taxes, gave away assets through gifts, trusts, and other transfers to his wife and other family members.  The IRS says that he undervalued the worth of these assets.  They feel his reported net worth of around $3 billion was really much higher — perhaps in the neighborhood of the $5.5 billion figure that Forbes reported his new worth to be in 2008.

Al Davis, the long-time principal owner and general manager of the Oakland Raiders, passed away this weekend at age 82. As this article on Forbes points out, estate taxes are a huge concern for NFL football owners, including the Davis family.  Those taxes led to the sale of the St. Louis Rams in 2008 and the Miami Dolphins in the mid-90′s. 

For those who pass away this year, the tax tops out at 35% for those with the highest level of assets, like Davis.  Too bad the Davis family wasn’t as lucky as the Steinbrenner family, which avoided the taxes altogether, since 2010 was the one year there were no estate taxes.

The day after Davis passed away, NBC Sports already reported from “a source with knowledge of the situation” that Davis used thorough estate and succession planning to protect his beloved Oakland Raiders from leaving the family.  Reportedly, his widow, Carol, and his son, Mark Davis, will take over control of the team.  The San Francisco Chronicle wrote a similar report Saturday night, quoting team chief executive, Amy Trask.

Soon after the tragic news broke of the passing of Steve Jobs, Apple co-founder and innovator extraordinaire, people began wondering what would become of his fortune.  Forbes recently estimated Jobs’ wealth at $7 billion.  

ABCNews.com recently interviewed Danielle Mayoras on this very topic.  It reported how Jobs, the largest single shareholder of Disney (which of course owns ABC News), has received $242 million in Disney stock dividends alone, since 2006.  How much is his Disney stock worth?  $4.4 billion, for 138 million shares, good for 7.4 percent of the total Disney stock.

As Danielle pointed out in the interview, usually people with that much wealth do the proper estate planning, including using living trusts, charitable bequests, and more.  Not only does this keep their affairs private, it can help minimize estate taxes.  Topping out at 35%, the current estate tax laws — while much lower than in years past — will obviously take a big bite out of Jobs’ family fortune.  That comes out to almost $2.45 billion in taxes, if Jobs did not do the proper planning.

Danielle Mayoras was recently interviewed by Kim Vatis of NBC Chicago for her Smart Money finance feature:

If you think tax season is over, think again.

The Tax Relief Act of 2010 has changed the rules for estate taxes. And while Congress is giving families a gift, they need to act now and plan.

“2011 to 2013 is critical,” said estate planning attorney Danielle Mayoras. “Take advantage of the laws while we have them.”

 

Most of us know that we have new estate tax laws in 2011, but do you know the "ins" and "outs"?  How does a married couple qualify for the ten-million dollar exemption?  What pitfalls remain?  When does the exemption expire? 

There may be more involved in the new laws than you realize! Watch Danielle Mayoras' video interview with Forbes to make sure that you protect yourself, your family and clients under the new laws.