James Gandolfini’s lawyer did not talk to the press when the first news story critical of Gandolfini’s will was published. That article, claiming the will represented a tax disaster, touched off an avalanche of similar stories and blog posts on the internet. This blogger did not join the bandwagon. Instead I actually read the whole will and an affidavit filed the same day, and concluded that probate of the will probably represented only part of Gandolfini’s estate plan.
A few days ago a different New York newspaper published an article that took a second look at the situation, and included comments from Gandolfini’s attorney. Thanks to Professor Caron at TaxProf Blog, we found links to that article, and to some recent blog posts that, for the most part, take a more reasoned view of the situation.
James Gandolfini’s lawyer was Roger S. Haber. Haber is now one of the co-executors of the will. Props to New York Times reporter Paul Sullivan for committing an act of real journalism and getting Mr. Haber to comment on the record. Sullivan sensed something was wrong in the common “tax disaster” narrative and actually investigated. In addition to getting information from Haber, he presents us with a link to the Petition for Probate, and provides additional background information, including comments from other estate planning attorneys and professionals. New York Times, A Public Debate Over the Wisdom of Gandolfini’s Will
The Petition for Probate shows that Haber works at the law firm of Kraditor & Haber, LLP. An Affidavit attached at the end of the Petition states that Barry N. Kaplan, another attorney at the firm, was “the attorney draftsman” of Gandolfini’s will. Kaplan is listed in the Notice of Probate and other documents as the attorney of record for the Estate.
What Gandolfini’s lawyer said – and my observations
“I can’t really speak in specifics . . . I can talk in generalities and you can read between the lines.” Of course. Haber has an ethical obligation to preserve the confidential information of his client. An intelligent lawyer with a suitable understanding of the subject matter ought to be able to read between the lines. The bloggers (sadly, including lawyers) wailing about a tax disaster haven’t done that.
“The assumptions that many people are making are totally incorrect. . . Everyone in his life was taken care of.” There’s been speculation from different quarters that Gandolfini’s son wasn’t left much of the estate, that his wife wasn’t really left much of the estate, and that his daughter wasn’t left much. If you read the will, you’ll notice that Gandolfini specifically stated that he had made “other provisions” for his son and his wife.
“Everyone is focusing on some number that someone made up and the will as if it was the entire estate plan.” Any person doing a little research would understand that the $70 million figure was just an estimate by an outside party, and thus is highly speculative. A person who understands probate procedure knows that the exact value of the probate estate is not listed at the time the will is filed. When the will states that Gandolfini made other provisions for his son and wife, and an affidavit shows that “other provisions” include a life insurance trust for his son’s benefit, it is foolish to assume that the will must dispose of the bulk of the estate. Now that the Petition for Probate is easily available, we can see that the probate estate is estimated to have a value between $1 and $10 million. Even if Gandolfini’s total estate had only half the estimated $70 million value, the portion in probate is less than a third of the total.
Mr. Gandolfini knew the difference between a probate asset — which is governed by his will — and a non-probate asset, like a retirement account, life insurance policy or asset held in an irrevocable trust. (Reporter Sullivan comments, “the implication was that perhaps Mr. Gandolfini had assets in other vehicles that would mitigate his tax liability.”) Sullivan gets it mostly right here. Assets that are held in a revocable trust (living trust) at the time of death are also non-probate assets. But keeping wealth in non-probate assets does not necessarily reduce the estate taxes. Given the will’s references to “other provisions” and Haber’s comments here, there is no reason to assume that Gandolfini refused to make use of revocable trusts.
“It was Christmas and he was getting on a plane. . . . People don’t get it. There is no tax problem here. There is no planning problem here. This is a minor piece of the estate planning.” The first part is about the time period when Gandolfini executed his will. Perhaps Haber is suggesting that some of the “deficient” aspects of the will occurred because of Gandolfini’s decision to leave before details he thought were of lesser importance could be worked out. For example, the attorneys might not have had time to determine how Italy’s inheritance law would interact with the trust provisions for the Italian real estate. If the total estate value is near $70 million and the probate estate is less than $10 million, then yes, the will represents a minor part of the estate planning.
Other instructive points
From the blog Altman Speaks: “When it came time to get final approval of the plan, so that it could be drafted and implemented, the client said to me ‘$45 million is enough for my children.’ In other words, it was more important for him to retain full control and access to the assets and the estate, than to save 55 million in estate taxes.” ”To assume that every client’s main goal is to reduce or eliminate estate taxes is wrong. In this case, to criticize James’ attorney or to rile up his sisters is not fair, neither to James nor his attorney.”
From the NYT article, a quote from attorney Lehia Macauley: “All these people who are out there talking about the taxes, they don’t get it. The person who is trying to provide for the children from the first marriage, the second marriage, and a wife who may be the same age as his sisters, he doesn’t care about estate taxes. He wants to provide for them equally.”
The Fox News, Forbes, and US News articles linked at TaxProf Blog all have good insights.
Final thoughts from Gandolfini’s lawyer and from reporter Spencer:
Mr. Haber said that Mr. Gandolfini’s children would be fine because the actor had focused on their guardians and trustees more than the money they might inherit.
“Jim was a very smart guy and he took all of this seriously,” he said. “He did what he wanted to with full awareness of the laws.”
If that is the case, then his estate plan accomplished its purpose, regardless of what others think.
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