The recent and tragic death of “Sopranos” actor James Gandolfini illustrates just how important sound estate planning can be when death unexpectedly occurs. Last month, Gandolfini passed away at the age of 51 in Rome, leaving behind an estate with an estimated value of $70 million. Sadly, however, many reports are stating that tens of millions of dollars of his estate may be lost to taxes alone. Importantly, many believe that these taxes could have been diminished with proper estate planning.
Unfortunately, this lesson is not specific to celebrities as many people simply fail to adequately prepare financially for the unthinkable, namely death. Consequently, when people pass away, much of their estates are lost to taxes or fees because of poor estate planning on the part of the deceased. Thankfully, there are several tips that can help ensure a person’s estate is in proper order just in case misfortune occurs without warning.
For instance, proper planning can help ensure estates are not subject to too much in taxes. It is important, and helpful, to anticipate what estate taxes will be and attempt to decrease them by using various estate-planning tools, such as gifts to heirs or trusts.
Additionally, it is important to account for complex family situations. For example, new children, divorces or subsequent marriages can substantially affect a person’s estate if he or she fails to update his or her estate plan following these situations. Thus, it is typically advisable to update one’s estate plan following any significant life change.
However, there are countless other considerations beyond the few listed here that people should review to ensure proper estate planning. This is why many seek the counsel of attorneys when putting together their own estate plans.
Source: U.S. News, “Estate Planning Lessons From James Gandolfini,” Kimberly Palmer, July 16, 2013