bbm
BBM
Yes, every year a person can give tax-free to children or to anyone else a monetary gift within limits. These limits can change year-to-year. As part of some Estate plans, such gifting may be advised and is done for years, with the objective of reducing the overall Estate.
In this case, both of the Harrod parents (when living) could have elected to gift each of their children, grandson, SIL, and great-grands annually. The limit for 2012 remains as it has for the past year at $13k. You can lookup what the limits were for years 2009 and prior (I'm guessing $11k). Assuming such, a married couple could therefore have given $22k to each recipient without tax consequence and by so doing reduce the Estate.
There is as well a Lifetime Gift Tax Allowance, and this also changes in time with new/revised law.
I don't think any of us knows what Estate plans Robert and Georgia Harrod entered into with the advice of their attorney. Theirs was not a large Estate but I feel quite confident that it was properly planned.
I am still not clear on why there is so much interest in their plans since they were originated before Mr. Harrod went missing and haven't been broken since, nor could they easily be, particularly if the Trust was irrevocable.
Following the money in Mr. Harrod's disappearance is an avenue worthy of pursuit; and in that regard, I would be looking to those who were not already named beneficiaries should he not be present. It would not serve well those to whom he may have gifted to make him go missing, just as after his first wife's death, the annual gift allowance would have been reduced by half without her.
Estate and Gift Taxes
~jmo~