Florida residents who have significant assets should avoid making the same estate planning mistakes that late actor James Gandolfini did with his own. When Mr. Gandolfini died in 2013 at age 51, he did so without having adequately planned for how his assets would pass to his heirs.
Mr. Gandolfini’s estate was worth $70 million at the time of his death. He failed to conduct good estate planning, making 80 percent of his estate subject to taxes and unprotected from them. This meant that, with a combination of federal and state estate taxes, Mr. Gandolfini’s estate lost about 55 percent of its value instead of that amount going to his heirs.
People may protect their estates from such taxation by setting up different types of trusts. One such trust, called the charitable lead trust, designates a charity that will receive profits from the trust for a specified number of years. When that time has passed, the remainder passes back to the donor or their heirs. When a donor makes a gift to fund a charitable lead trust during their lifetime, they receive a federal income tax deduction at the time the gift is made. If the trust is established through their will, the estate can claim an estate tax deduction for the amount going into the trust.
There are other types of trusts that can also help to reduce the value of the estate and thus reduce estate taxes. A person who wants to establish a trust for this purpose may want to get the help of an estate planning attorney. Making certain a trust is established in a legally valid manner can help to avoid later trust contests.