After “Sopranos” actor James Gandolfini’s unexpected death at the age of 51, a recent article has described his estate plan as disastrous. Americans should take this opportunity to learn from the mistakes in Gandolfini’s estate plan in order to avoid making the same mistakes themselves.
According to the report, an estimated $30 million of Gandolfini’s $70 million estate will be paid out in taxes. There are many methods through which Americans can avoid a similar fate. These methods are all rooted in proper estate planning, which can dramatically reduce, or even eliminate, the tax burden on your estate.
One way to avoid a large tax bill is through the establishment of trust vehicles. Current federal law allows individuals to transfer $5.25 million into an irrevocable trust without having to pay gift tax on that amount. Married couples can combine their tax-free amounts to make a total of $10.5 million. The different types of trust accounts you may choose include marital trusts, life insurance trusts, and special needs trusts.
It is also important to update your estate plan as the size and characteristics of your estate and family change. Constant updates will also allow your estate to stay current with tax laws.