The Will of James Gandolfini, Jr.

BROOKLYN, NEW YORK, NOVEMBER 08, 2013. James Gandolfini, Jr., best known for his portrayal of New Jersey mobster Tony Soprano, died suddenly at age 51 on June 19, 2013, from a heart attack. Gandolfini achieved international fame for his portrayal of the lead character in the crime drama “The Sopranos”. Upon his death, his net worth was estimated at $70 million and he left behind two children. His will, and the resulting tax implications, received a vast amount of publicity, most of it negative. This article will provide some background information about Gandolfini, summarize the bequests made by his will, analyze some of the probable tax implications, and discuss alternative estate planning techniques.

James Gandolfini was from New Jersey, where he was born and raised by parents who spoke Italian at home. His father, an Italian immigrant, worked as a bricklayer and a custodian at Paramus Catholic High School; his mother was a cafeteria “lunch lady”. James was born in 1961 in Westwood, NJ, and later moved to Park Ridge, NJ, where he attended the Park Ridge High School. He then went on to graduate from Rutgers University in 1983 with a degree in Communications. He became interested in acting at the age of 25 and soon began to land roles in movies and plays, including “True Romance” — a 1993 film written by Quentin Tarantino in which he played a hitman, and “Get Shorty” with co-stars John Travolta, Gene Hackman and Danny DeVito. Despite his success in landing these roles, and others, he had achieved little fame and remained largely unknown until, at the age of 37, he auditioned for and won the role of Tony Soprano. The Sopranos premiered on HBO on January 10, 1999 and ran for 86 episodes over six seasons, with the final episode airing on June 10, 2007. The series told the story of a New Jersey-based Italian crime family headed by Tony Soprano, played by James Gandolfini. Gandolfini’s portrayal won him numerous accolades, and turned the character-actor into a full-fledged star. The Sopranos television series received abundant critical praise and was wildly popular. Gandolfini was nominated for six Emmy awards for his work on the Sopranos, winning three times for Outstanding Lead Actor in a Drama Series. His work also received awards from the Golden Globes, American Film Institute, Screen Actors Guild, Television Critics Association, as well as many others. Gandolfini had remained active since the conclusion of The Sopranos, starring in the Broadway play, “God of Carnage”, and in films such as “The Taking of Pelham 123” and “Zero Dark Thirty”. Gandolfini passed away suddenly and unexpectedly from a heart attack on June 19, 2013, at the age of fifty-one in Rome, Italy. Gandolfini was vacationing with his family and was expected to later attend the Taormina Film Festival in Sicily, where he was to receive a special award. He was survived by his wife, Deborah Lin Gandolfini, their 9-month-old daughter, Liliana, and his son, Michael, from a prior marriage that ended in divorce. He was also survived by his sisters, Leta Gandolfini and Johanna Antonacci. Most reports estimated Gandolfini’s net worth, at the time of his death, to be somewhere close to $70 million. Soon after his death the media’s attention turned to the actor’s will, the generosity of the gifts made thereunder, and the potential taxes due from the estate. “Experts” were interviewed regarding the estate plan, which was described as a tax “disaster” by one article and by another as a $30 million mistake. Gandolfini’s own attorney, Roger S. Haber, then responded to these accusations in an interview with the New York Times defending the plan. What can be learned from this controversy? The objective of the remainder of this article is to utilize Gandolfini’s controversial estate plan as an example illuminating the considerations to be weighed when creating such a plan. It will not reach a conclusion as to whether Gandolfini’s plan was “correct” or “incorrect”, given that the actor’s intentions are unknown to the public, the possible existence of confidential planning techniques that may have been utilized, and the uncertainty of the actor’s true net worth, any such conclusion would be largely speculative. Gandolfini signed his will on December 19, 2012, six months prior to his death. The will is straightforward and the relevant portions are summarized below:

• Gandolfini’s clothing and jewelry went to his son, Michael.
• All other personal property, other than currency, went to his wife, Deborah Lin.
• Seven named individuals, consisting of his assistant, three friends, two nieces, and his godson, received bequests of a specific dollar amount. These bequests totaled $1.6 million.
• The residue of the estate is devised as follows:
• 30% to Gandolfini’s sister Leta;
• 30% to Gandolfini’s sister Johanna;
• 20% to Gandolfini’s wife Deborah Lin; and
• 20% to Gandolfini’s daughter Lilliana Ruth.
• A trust previously created by Gandolfini for his son Michael is given the first option to purchase his condominium and parking spot in Greenwich Village, NY.
• His son, Michael, and daughter, Lilliana, each receive a 50% interest in a trust that owns Gandolfini’s home in Italy.
• The will specifically mentions that Gandolfini made “other provisions” for his wife, Deborah Lin, and his son, Michael, presumed to refer to provisions made outside the will.

Other factors relevant to the estate plan, but not part of the will, are as follows:

• Court documents value the property covered by the will to be between $1 million and $10 million.
• It is speculated that the existence of other assets not covered by the will may explain reports that his estate was worth $70 million when he died.
• Gandolfini’s son, Michael, had a nontestamentary life insurance trust put aside for him until he turns 21 (mentioned above). According to an affidavit attached to the will, the trust was part of a 2002 divorce settlement with ex-wife Marcela Wudarski and owns a life insurance policy worth approximately $7 million.

The primary criticism leveled against Gandolfini’s will was that because of the dispositions made, his estate would be subjected to unnecessary and excessive estate taxes. One article asserted that 80% of his estate was unprotected against estate taxes with rates as high as 55% when considering both federal and state taxes. This was based on the fact that the will did not take advantage of the unlimited spousal deduction, which allows a surviving spouse to inherit an unlimited amount from their deceased spouse exempt from taxes. Gandolfini’s will left 80% of his residuary estate to people other than his spouse. The taxes imposed on these dispositions are the basis for this line of criticism. The critics seem to ignore, however, several important considerations that may nullify their comments. First, Gandolfini may have not wanted to leave his surviving wife his entire estate. The critics seem to suggest that taxes are by necessity the primary motivation when drafting a will. However, Gandolfini may have had other motivations. Secondly, the will specifically states that Gandolfini made “other provisions” for his wife and son. This may allude to substantial lifetime transfers of Gandolfini’s assets to trusts, not made public. Finally, the criticism assumes that Gandolfini’s residuary estate was large enough that substantial taxes would be imposed. As Gandolfini’s own lawyer said, “everyone is focusing on some number that someone made up and the will as if it were the entire estate plan”. If, during his lifetime, Gandolfini transferred assets to other individuals or through trusts, he may have diminished the size of his probate estate considerably. These transfers may have utilized techniques that result in tax-advantaged valuation discounts, further reducing the tax burden. Without knowing this critical information, the criticism may be entirely unwarranted. Another line of criticism directed at the will is much more straightforward and hard to disagree with. Unlike most celebrities, who usually keep these sorts of matters private, Gandolfini’s will became a matter of public record when it was filed in Manhattan’s Surrogate Court. Gandolfini should have considered keeping his affairs private. He could have accomplished this by using a “pour-over will” which would simply state that his possessions be placed into a trust, the particulars of which are private. It would have kept the details of the bequests out of the purview of the public, which would have avoided all the negative publicity and critical commentary. THINGS TO CONSIDER:

• Firstly, make sure you have a properly drafted and executed will that accurately reflects your wishes. Consider having the following additional vital documents: living will, health care proxy, durable power of attorney.
• Find an attorney who is competent and appropriate for you to work with in drafting an estate plan.
• If you desire to keep the bequests private, consider using a pour over will with a trust that is private, and which can be changed at anytime.
• Coordinate your will’s provisions with your investments, life insurance and other financial planning to ensure that there is a smooth transition if something does happen to you.
• Consider tax-efficient gifts and transfers, such as irrevocable life insurance trusts like the one left to Gandolfini’s son, Michael.
• Remember that foreign property is different. Inheritance laws may be different in foreign countries and override the decisions stated in your will, so consult with local legal experts.
• Consider treating children equally when it comes to division of assets. It may be tempting to be “fair” but disparate treatment may leave children questioning the love of the deceased parent. It may also create rivalry between the children or cause old rivalries to resurface. However, sometimes it may be reasonable to divide your assets in an attempt to even out financial disparities between descendant children.
• Consider the ages of children carefully and whether they will be mature enough to manage the assets that you have left to them. It may be advisable to wait until they have finished college or that it be kept in a trust long-term to protect it from creditors and predators, or that gradual distributions be made starting at a certain age, allowing the children to learn how to manage money and/or hire experts to do it for them.
• Consider explaining to your children the reasons behind the specifics of your estate planning and clear up any misunderstandings.
• Finally, do think about taxes, but don’t let taxes rule your decisions.

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