The Godfather Gets Robbed - 8/24/2013

Don't get whacked by the IRS. Is this email not displaying correctly? View it in your browser.

Mob Boss Makes a Small Fortune   James Gandolfini, the Hollywood actor and star of the HBO series The Sopranos recently died at the age of 51 vacationing in Rome.  He leaves behind his children, wife, siblings...and a ton of money to the IRS. At Wiser, it is during times of change we work hardest for our clients.  But we do our best to help our clients prepare before life shifts occur.  Today I present an actionable perspective to consider when it comes to financial preparedness. During his short time with us, Mr. Gandolfini accumulated a sizable fortune estimated to be around $70 million dollars.  Unfortunately it appears that he planned poorly leaving a burdensome tax bill, daunting decisions and irrevocable exposure to his heirs. Teresa Amord of AccountingWeb writes: “The terms of his will made it clear…because of the way the actor left his money, the IRS will be the single largest benefactor, taking almost half of Gandolfini's amassed wealth. The will left 80 percent of the money to his sisters and his nine-month-old daughter. That money will be subject to the 55 percent death tax, which calculates to over $30 million going to the IRS. Only the remaining 20 percent is left to his wife, Deborah Lin. Making it even worse for Lin, the will also states the shares will be paid out after the tax bill is settled. Twenty percent of the pre-tax amount would have been $14 million, but because of the after-tax stipulation, she will get closer to $8 million. Like many wealthy individuals, Gandolfini's assets were mostly non-liquid. This means the family will be scrambling to sell off his properties to pay the tax bill.” Mark Costley, Managing Partner of the local estate planning firm, Walker Lambe, remarks: "The whole thing is a mess, devastating from a tax perspective, but just as bad from the standpoint of taking care of how the property was handled for those he left behind.  The plan wasn’t just poor, it was incomplete. From a standpoint of protecting the family from taxes, court fees, administrative fees, and legal fees, it’s more accurate to say there was no plan.  Tens of millions of dollars were lost. The hardest choice to understand, however, was the choice to plan with a Will rather than a Revocable Living Trust.  With the trust, the probate process could have been avoided and you would not be reading about this now.  The whole estate would have been a private family matter.” Estate Attorney William Zabel told the New York Daily News, "By early next year, a tax bill of roughly $30 million will be due and payable. The government doesn't accept the fact that it's difficult to come up with the money." The above commentary reminds me of the adage: “How do you make a small fortune? First, you start with a large fortune.”  Case in point. The sad irony is that ample estate planning strategies exist to minimize taxes and keep estate details private.  While estate tax is the only voluntary tax, it is also a tacit consent tax: failing to implement a plan while living means your heirs are stuck with the tax bill - and whatever fallout arises from public knowledge of your estate. You can decide for yourself what kind of fallout you'd be dealing with if the world knewyou had to raise 30 million from selling real estate by next February.  If you are thinking this doesn’t apply to you because you’re not a deca-millionaire, think again.  Having a prudent financial and estate plan in place is the only way to go through the ups and downs life presents with confidence and our private matters just that, private. If you have any questions or concerns about your investment portfolio, life insurance, health insurance, tax or estate planning, please let us know.  As Churchill said, “A failure to plan, is a plan for failure.” I welcome your questions and comments. Marc Becker, Accredited Investment Fiduciary Managing Partner, Wiser Financial Coaching, LLC Wiser Financial Coaching, LLC, is a Registered Investment Advisor Firm To read more about this subject, click here.