An interesting twist. With my recent experiences with trusts, RFG could have left quite a nice nest egg for his daughter in a trust fund. She could hold the stock for quite a time before cashing them in during a market upswing. The taxes (correct me if I am wrong J.J.) would be paid out of the trust fund and his daughter would only have to pay taxes on the capital gains and what ever other state and federal taxes would apply, and would only show on her tax returns, not RFG's.
I think the value that RFG could contribute to an
irrevocable trust, which I think is not subject to PA estate taxes is $13,000/year, and that was raised in the early 2000's from $11 K.
Here is some general information:
http://www.willandtrustcenter.com/irrevocable_trusts.asp
If I understand correctly, any money the trust earns is taxable as regular income or capital gains, as applicable.
http://www.heritagewealthmgrs.com/wp/Income Taxation of Trusts & Estates.pdf
Using a irrevocable trust would yield a minor inheritance tax advantage.
For example, G leaves his daughter, L, $100 K in an irrevocable trust and $100 K in a bank account.
L would pay zero inheritance taxes on the money from the trust, and get $100 K. L would pay $4,500 on the money in the bank, and collect $95,500.
The problem is that, unless G knows that he's not going to be around, he can't get that $100 K from the trust.
http://www.portal.state.pa.us/portal/server.pt/community/inheritance_tax/11414
To the actual case, RFG was planning, purportedly, to retire; he said he was. He
would be getting a good pension, but he still might need additional funds. There was
not a huge nest egg for him to retire on at the start of 2006. Any estate planning of this type would point to him not planning to be there
to retire.
There were actually better ways to provide for his daughter if he wished to tie up a large sum of money, e.g. paid up life insurance. The value face value might be 45% to 55% higher of the cost, i.e. RFG might spend $105 K to get a policy that would have a face value of $200 K and might earn a few thousand in interest (or additional insurance).