ABA Journal


Tax Law

Gandolfini’s will is a tax ‘catastrophe,’ estates lawyer says

Jul 8, 2013, 06:38 pm CDT


What's unfortunate is that one has to hire tax accountants to play otherwise-pointless games with the tax laws, thanks mostly to legislators playing an endless game of whack-a-mole with tax loopholes -- loopholes that they themselves keep creating, because there's always a rich "constituent" (a.k.a. "campaign donor") whose pet mole doesn't deserve to be whacked.

By Ham Solo on 2013 07 09, 4:09 pm CDT

The after tax amount will still be much more than most people will ever leave to their family. I'd rather have tax reform for the living, rather than the dead.

By suretylink on 2013 07 09, 4:49 pm CDT

I think the Daily News was unfair to the drafter in question, He may have pointed out to Mr. G. the heavy tax consequence and the client may well have said "I don't care." I have had that experience albeit at a lower dollar amount. The real story here is the ludicrous and byzantine tax code which supports an entire industry devoted to tax avoidance/reduction. I also object to the phrase death tax yet another example of a politically charged and misleading phrase.

By Robert P. Zisgen on 2013 07 12, 10:34 am CDT

I absolutely agree with Mr. Zisgen's comments, and had a similar experience, where the decedent's decisions cost his family millions, the family wanted to chase the estate planning attorney (no, not me), but the attorney had in his file materials which clearly showed the decedent candidly did not care about the estate tax consequences despite being advised. (I was a family in-law, who was "sent" to meet with the attorney.) And that decedent was 94 when he died, not 51 (or whatever Gandolfini was when he passed). Criticism of the attorney in this instance horribly prejudges him or her, and is a disservice.

By John McGowan on 2013 07 12, 11:05 am CDT

Question for New York probate practitioners. Does the application to administer or otherwise to open the estate include an estimate of the estate's value? I ask because the article notes that the inventory had yet to be filed. Do we really know that a QTIP trust, for example, had not been established for the benefit of the widow and at least their daughter together?

By Always Sunny In Cleveland on 2013 07 12, 12:23 pm CDT

Agree with 3 and 4 from experience.

I have also found it difficult or impossible to persuade clients to consider the possibility that a child, especially an only child, will die before they do. Of course it is horrible to think of such a thing, but it could happen and if it does the executors will want to know what to do with the money. Usually the decedent's siblings or their issue will be the obvious choice but that is up to the client to decide.

The question I ask is "Mr/Ms X, do you know who is driving the next car round the corner?" - which sometimes persuades them to think about it. And sometimes not.

By Andrew on 2013 07 12, 12:25 pm CDT

Are those numbers right? Ignoring rate brackets, exemptions, deductions, etc., and applying a 55% rate to everything -- Sis and the 9-month old get $38.9 million, and wife gets $9.7 million, with taxes of $21.4. The $30 million of taxes doesn't sound right. It said wife gets 20% after tax, which means that Sis must get 80% after tax.

38.9 Sis

31.1 wife (pre-tax)
21.4 (tax) (amount to sis, 38.9 x estate tax rate of 0.55)
9.7 Wife (after tax)

70.0 pre-tax estate
21.4 tax
48.6 after tax estate
x 0.8
38.9 proof of Sis' portion

48.6 after tax estate
x 0.2
9.7 proof of wife's portion
38.9 + 2.

By Oort Cloud on 2013 07 12, 12:32 pm CDT

My hat goes off to all you Estate Planning Attorneys! - - yours is an area as complex as anything I've ever seen. I am a tax lawyer practicing (thankfully) Corporate, as opposed to personal/estate tax law. People think the tax code is complex for corporate taxpayers (and it is), but corporations generally have the financial wherewithal to secure the best available tax advice regardless of cost. And while individuals with means to do likewise usually do (not sure what happened in the Gandolfini case), the vast majority of Americans who do have sizable estates (though aren't considered "rich" by any stretch of the imagination), view the cost of top tax advice as not commensurate with the value of their assets, and quite frankly cannot be bothered with anything that happens after they've left our good earth (especially if dealing with that involves any measure of complexity). So estate tax planning takes a back seat to other more pressing matters that affect the here and now.

By Michael M on 2013 07 12, 12:34 pm CDT

Sometimes clients don’t want their money tied up in trusts or other complex tax-avoidance devices. He may have thought “I’ve got 20 more years, I’m not going to stick everything in trusts and other devices until I retire from acting, or make 60, whichever comes first.”

It’s not as if his advisers were unaware of the tax consequences of the way his estate was structured. A teenager with a smart phone could figure that out. Most probably, Mr. Gandolfini simply wanted control of his money and didn’t expect to die.

By Tom on 2013 07 12, 1:30 pm CDT

Where I come from, the type of comments attributed to Mr. Zabel would be unprofessional at best.
While the separate provision for the couple's daughter is unusual, there well may be reasons for it that transcend the important societal factor of "curious minds want[ing] to know."

By Always Sunny In Cleveland on 2013 07 12, 1:48 pm CDT

Why not resort to the California Courts? Here is an opportunity to file a reformation of the Will for the purpose of including a QTIP Trust and obtaining the marital deduction. Therefore, no estate tax. It's worth $30 million to file that petition.

By San Fran on 2013 07 12, 2:32 pm CDT

My guess is that since Gandolfini was such a big liberal, maybe he wanted to pay more taxes. So his last wishes are being realized.

By Hugh Palmer on 2013 07 12, 3:40 pm CDT

Mr. Zabel has a lot of chuztpah to criticize the will without knowing its context. Maybe Mr. Gandolfini wasn't the typical selfish, tax avoiding American and instead felt it was his patriotic duty to skip the loopholes and pay the estate taxes. Who knows? So the will was a disaster in terms of tax avoidance. So what?

By Dan Lauber on 2013 07 12, 3:40 pm CDT

#12 -- Paying taxes means compliance with the law. Evading taxes means disregarding the law.

Your assertion that paying taxes (i.e., complying with the law) is a form of liberalism. Your premise necessarily presupposes the reverse as well -- that evading taxes and disregarding the law is a conservative value.

I couldn't agree more with both.

By AndytheLawyer on 2013 07 12, 4:03 pm CDT

I think the title is little misleading ;-) Far from a catastrophe, the result seems fair and reasonable, as well as truly beneficial for everybody involved. Just like winning the lottery, a very large inheritance does not make one a better person, so the tax actually helps. The catastrophe is what the over-lawyered tax dodgers are doing (even if it's legal).

By Andrew River on 2013 07 12, 4:41 pm CDT

Death is as good a time as any to take the fruits of a person's labor. Probably better, because they aren't here to object! Why should his sister, wife, or child have any greater claim on that money than me? His kid is little, he won't even know until we've spent it all, and then it'll be too late.

By Oort Cloud on 2013 07 12, 4:46 pm CDT

#14, Wow, what an towering intellectual giant you must be! Did you learn to process like that at an all night pot smoking party? Or is it something organic? It's obvious that you do not know the difference among tax planning, tax avoidance and tax evasion. Why don't you go read up on those topics and then come back with something useful.

By Hugh Palmer on 2013 07 12, 5:46 pm CDT

nothing wrong with calling estate taxes 'death' taxes. It is when they are levied. Out here in farm country, that kind of tax burden means the family has to sell the family farm, which may have been in the family for more than a century. Galdofini was an actor, good or bad, I could care less, and his estate is whatever someone thought his skills were worth, and have no reflection on the livelihood of his family. That kind of tax planning he had would destroy a family out here. I am not aware of anyone in farming or ranching that is in favor of estate taxes. We all want to pass along our land to our children, and the value is in the land, so estate taxes are a heavy burden.

By JME on 2013 07 12, 6:37 pm CDT

The biggest factor here is surely one that nobody seems to have considered:

Gandolfini was not an old man, and I'm convinced he did not expect to die anytime soon.

When I was in law school (apologies for showing my age), John Lennon was killed. We studied his "will," which was a perfunctory and utterly stupid document that was worse for him and his family than none at all. Uncle Sam got an enormous percentage (as I recall, it was well over $100 million) more than would have been owed if an average-Joe attorney had drawn an ordinary Will and trust.

The kicker, of course, is that Uncle Sam spent a whole lot of it on war. Millions for the Reagan military buildup, "star wars" defense, scandalous Iran-contra arms, MIRV warheads on our ballistic nukes, a B-1 Bomber budget blitz, and whatever other expensive war toys were in vogue. Lennon woulda plotzed.

Today's NYTimes has an obituary of Toshi Seeger (Pete's wife), who, it says, used to have to cover his tax return with a sheet of paper before presenting it to him to sign. He couldn't stand to see how much in taxes he was giving Uncle Sam to spend on war. And he didn't even have a quarter-billion dollars.

I'm an unrich liberal who favors taxes even though it's a huge burden in this economy to pay my own. And I sure agree that the whack-a-mole system of passing tax laws whacks loopholes into the scene, which needs to be fixed. But I still applaud those who want to do whatever's legal to reduce what they pay. If they ever pass the Peace Fund Tax Bill, which has stalled in every Congress since the early 1970s, taxpayers who are opposed by conscience to war can elect to divert their taxes to the remainder of the federal budget. Then, maybe I'll lose empathy with those who pull out all the stops to pay less than they really deserve to.

We should all be making our plans as if we will indeed die soon. Gandolfini and Lennon are prime exhibits in proving that.

By Avon on 2013 07 12, 6:42 pm CDT

18, I'm glad to see that the Jeffersonian fallacy - that farmers and agriculture are somehow different - survives. It's nonsense, of course, but it's sentimental nonsens and I'd be sorry to see it die.

And farmers have more right to pass on their businesses intact and untaxed to their issue because . . . please complete the sentence.

By Andrew on 2013 07 12, 6:52 pm CDT


The country has an interest in letting owners pass their business on because private ownership has benefits over public ownership. Private owners are more likely to evaluate the longer term consequences of their dealings than are publicly traded concerns (cf. Brown Brothers Harriman in the recent financial debacle with Citibank or Bank of America).

Under the income tax, we tax only realized income because taxing unrealized income forces liquidation of assets. It has been decided that as a matter of tax policy, we should try not to force liquidations solely for tax reasons. The death tax assumption is that death is a realization event and there is no reason to postpone collection. However, it is one thing to confiscate a portion of the value of a painting, cash, or liquid security at death, but it is an entirely different thing to confiscate a portion of a going concern, in which numerous family members are employed principally because they are family members. Despite the nepotism, there is no evidence that forcing companies to go public results in better outcomes. By forcing the partial sale of family businesses (including farms) you undermine the continuation of management philosophy that has successfully preserved the assets for generations. If the ownership of all assets was distributed evenly across the populace, 80 to 90% of the people would dissipate and squander the money in short order. There is a reason wealth is concentrated more than income. It's harder to keep money than to earn it.

You can deride the notion of family as a quaint holdover from the past and laud the liberals who are trying to euthanize it, and you can object to the idea that anyone's children should be more entitled to their parent's patrimony than the poor kid down the street, but inheritance has been an element of human society since the dawn of humanity and your denial of its existence doesn't mean anything.

Another thing that has been around since the dawn of humanity is the tax man-- the king's soldiers -- the person who has more power and thinks he knows better what to do with your money than you. They will always try to take the people's money, and tax lawyers will always try to stop them.

By Oort Cloud on 2013 07 12, 7:50 pm CDT

@#19 Avon: Thank you kindly for your overt liberalism ranting !!!!! Really how do you know the Reagan Administration would have spent 100 million dollars less on defense but for the windfall of John Lenon's estate!?!?!!?! That is what we lawyers call SPECULATION & CONJECUTURE & SURMISE. I am sure you are also gullible enough to believe that your trusted Fed Gov would earmark your Peace Fund and actually distribute monies appropriately based on "designation" from those peace doves who abhor the war hawk approach. That by the way doesn't happen because even lameducks in Congress know of what economics calls the "free rider problem." Everyone benefits from roads, hospitals and believe it or not, nuclear subs. Some should pay for protection and peace of mind while others don't? I own a piece of property connecting lower Manhattan to Brooklyn too. Would you like to buy it ??? Let me guess you don't have a farm or $100 million estate to pass onto family do you ??

By EJF on 2013 07 12, 7:57 pm CDT

@18 - That statement is oldest living fallacy in the transfer tax laws. There are so many ways to preserve the "family farm" where it in fact is the family's lifeblood that it's appalling. Would be in complete agreement with #20 except for the fact that where the family business constitutes the majority of the estate, there are plenty of provisions to preserve that wealth as well.

If your farm or business constitutes the large majority of your estate and your estate is illiquid you WILL NOT HAVE TO SELL THE FARM (or the business), provided it actually is producing income that will allow you to pay your tax liability (at a laughably low interest rate) over many years.

As to the entire premise of this article: What makes anyone think that Gandolfini had not already used most (if not all) of his estate tax exemption amount. I am sure he had plenty of opportunity to preserve substantial wealth for his spouse, descendants, and other family members. If he didn't, well, that likely was his informed decision.

As for Zabel, well, all I have to say is that I am glad my mentors (who all have credentials at least as lofty as his) are smarty than to speak (in this manner) to the press.

By TOG on 2013 07 12, 8:01 pm CDT

EJF (22), you've speculated, conjectured and surmised something about what I think that's so opposite from what I think that I'm almost at a loss for words.

There is not, and never has been any circumstance at all in which I could believe "the Reagan Administration would have spent 100 million dollars less on defense." The Reagan-BushI administration tripled the national debt very deliberately ... and it wasn't spending on the needy, either.

And the fact is that when someone is a conscientious objector to war and the law allows them to contribute alternatively (national service) (tax fund), no one is a "free rider" and there is no problem. Uncle Sam will draft as many people as he needs to get an army, and if some folks serve their country without being in it, so much the better! They don't get GI benefits, and they do jobs the draft board assigns. The Peace Tax Fund Bill would do the same for their money, and money is how war is made these days, anyway ... it's getting closer to just geeks and joysticks in Wyoming. If my taxes build the roads and hospitals while yours builds nuclear subs, all the same stuff gets built anyway. (The one criticism I have of the Peace Tax Fund bill is that it won't impair war at all.)

As for "protection and peace of mind," I don't buy it for a second. The world was edgier when we were at two minutes to midnight with seemingly imminent Mutual Assured Destruction. Nuclear subs that just sit idle make me feel a lot safer than nuclear subs that cruise the world jacking up the mutual paranoia level. People forget that a philosophy of deterrence through threats of the unthinkable are just another way of saying "terrorism," and terrorism never wins a thing in the long run.

By Avon on 2013 07 12, 8:47 pm CDT

The idea of a separate government fund is stupid at the national level. Money is fungible and the fed govt prints money. Funds from separate funds are deposited in the general fund. There would just be a big liability fe the general fund to the peace fund. The general fund spending would for defense would not decrease.

You would need a prohibition on deficit spending in a separate defense fund to make this work. As we know, a prohibition on deficit spending would violate liberal tenets.

By Oort Cloud on 2013 07 12, 10:13 pm CDT

23 is right on the money. With a bare minimum of planning (taking advantage of both spouse's credit amounts with a marital trust), a married couple can pass down a farm worth a bit over $10 million, to their kids (or grandkids) paying no estate taxes. With a bit more sophisticated planning, far more can be sheltered.

By LJB on 2013 07 12, 11:37 pm CDT

As a California lawyer who practices in this area, be assured that (1) the government won't consider it a tax disaster, and (2) the Court is likely to insist that the widow's 5th not bear any estate tax.

By Norm on 2013 07 13, 6:27 am CDT

Giving back to a society that gives anyone such enormous wealth is truly admirable!
James Gandolfini - proof only the good die young!

By Jim Shannon on 2013 07 13, 7:52 pm CDT

King Solomon had 666 talents of gold coming to him each year, a pretty hefty tax yoke. I hear he had a pretty thick waist too. I wonder what King Solomon would say this death penalty. Something wise, I suppose.

By Tom Youngjohn on 2013 07 13, 9:44 pm CDT

@2 (suretylink): How is estate tax reform for the dead? It would help those still-living persons who stand to inherit the dead man's estate. The dead benefit in no way from any estate tax reform.

By Non-Practicing Attorney on 2013 07 16, 7:28 pm CDT

#14 (AndytheLawyer): There is a great deal of difference between evading taxes and avoiding taxes. While evading taxes is not compliant with law, avoiding them (by using the provisions enacted into law) certainly is. Not paying taxes is NOT always evasion.

By Non-Practicing Attorney on 2013 07 16, 7:40 pm CDT

Why is it terrible to pay tax? He obviously didn't want his spouse getting the bulk of his estate.

By AMY STEERMAN on 2013 07 17, 8:24 pm CDT

Honest people pay their taxes. But estate planning is no more "tax evasive" than choosing to form a corporation vs. be sole practitioner. Different tax laws apply to each, as do different rules of business reporting. For example, there are many reasons to incorporate a business to shield personal liablity and certain taxes, but some people don't want to pay the expense or deal with reporting/record-keeping requirements. Whatever the reason for Mr. Gandolfini's estate planning documents, I just hope he sought and received informed advice.

By The REAL Voice of Reason on 2013 07 17, 9:30 pm CDT

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