PA PA - Ray Gricar, 59, Bellefonte, 15 April 2005 - #12

[Trackergd]

Let me revisit the now confirmed (by J.J.) joint bank account(s).

Is there any indication whom they are joint with? LG, RG's domestic partner or both?

Seems to me a no-interest or low interest joint checking account would be a rather nice vehicle to move large sums of money. If the other party were to withdraw most if not all of the money before a ruling of death, would that not avoid inheritance taxes? Since it would not generate and interest, none would be reported as the taxes would have been paid from payroll tax deductions.

It may not have been all the money, but could have been a rather large amount with the rest in an insurance policy.

This has me really wondering about the petition to keep the tax records private.

An idea is forming in the back of my mind....it may take some time for it to find it's way to the front....such a large empty space to traverse..

 

[J. J. in Phila]

Let me revisit the now confirmed (by J.J.) joint bank account(s).

Is there any indication whom they are joint with? LG, RG's domestic partner or both?

In "Missed Leads," it was reported to be around $100 K in joint accounts with his daughter.

Seems to me a no-interest or low interest joint checking account would be a rather nice vehicle to move large sums of money. If the other party were to withdraw most if not all of the money before a ruling of death, would that not avoid inheritance taxes? Since it would not generate and interest, none would be reported as the taxes would have been paid from payroll tax deductions.

The tax would be low, 4.5% on half the money in a joint account. LG had to file an accounting at the time of trusteeship, and LE had checked his accounts, prior to that.

If there was movement prior to 4/15/05, it wouldn't be in the estate, but would be subject to gift tax (above a certain amount, I think $11 k).

It may not have been all the money, but could have been a rather large amount with the rest in an insurance policy.

Insurance is not taxable nor does it show up in probate, when made payable to an heir.

This has me really wondering about the petition to keep the tax records private.

It could be to hide the amount of money LG got. Someone could easily figure out how much she inherited from the tax. For example, if there was $110 K in joint accounts, hypothetically, LG tax bill would be $2,475. I could divide that number by 4.5%, take that result and times it by 100, take that result and multiply it by 2 and say, **There was $110 K in RFG's accounts.** So could anyone wanting to sell her swamp land in Jersey.

An idea is forming in the back of my mind....it may take some time for it to find it's way to the front....such a large empty space to traverse..

I'd be interested in hearing it.

 

[J. J. in Phila]

In 2002-2005, had RFG given more than $11,000/year to LG, it would be taxed. http://www.infoplease.com/ipa/A0005949.html

Not taxable amount: http://wills.about.com/od/understandingestatetaxes/a/historygifttax.htm It was $10 k in 2001, and $11 k in 2002-05.

I don't think there would have been a tax advantage for RFG to give it to LG as opposed to letting her inherit it.

 

[J. J. in Phila]

From research, what I can find about probate/joint accounts/inheritance tax:

A. Probate file (Trackergd's information) would include all assets singularly in RFG's name.

EXAMPLE: RFG has a checking account in his name with a balance of $5,000. No other name is on the account. That would go into RFG's estate file and LG would pay a tax of $225 and collects $4775.

B. Joint accounts not included in file.

EXAMPLE: RFG has a checking account in his name with a balance of $5,000. LG's name is also on the account. This would not go into the file, but LG would pay a tax of $112.50 and collects $4,887.50

C. Estate planning vehicles would not be in the file or taxable.

EXAMPLE #1: RFG buys a single premium life insurance policy at a cost of $5000 (and payout value of $10,000). This would not be in the file and not subject to tax. LG collects $10,000 (plus any interest).

Example #2: RFG puts $5000 in an irrevocable trust. This would not be in the file and not subject to tax. LG collects $5,000 (plus any interest).

We know that A (on a smaller scale) and B did occur. C is possible. Any income from A or B would show up on a financial disclosure form, if above $1300 from the same source.

 

[Saunterer]

As court appointed Trustee Durante Absentia for RG, his daughter was authorized to take charge of all of his property, to execute all documents on his behalf, and to take such steps as she deemed appropriate to complete his estate planning intentions. She was trustee from September 2005 until July 2011 (court order, finding of death). Upon the finding of death, RG's estate fell into administration as for other decedents.

Some links:
http://www.centrelaw.com/page.php?id=40
http://www.legis.state.pa.us/WU01/LI/LI/CT/pdf/20/20.pdf (Chapter 57, pdf page 204, et seq.)

The date of RG's death was established as the date of the court's finding and order. I believe that occurred on July 25, 2011. So RG's daughter had nearly 6 years to maneuver RG's assets in whatever manner she deemed appropriate, provided however that she could not sell or dispose of any asset of his estate without prior court approval.

 

[J. J. in Phila]

As court appointed Trustee Durante Absentia for RG, his daughter was authorized to take charge of all of his property, to execute all documents on his behalf, and to take such steps as she deemed appropriate to complete his estate planning intentions. She was trustee from September 2005 until July 2011 (court order, finding of death). Upon the finding of death, RG's estate fell into administration as for other decedents.

Some links:
http://www.centrelaw.com/page.php?id=40
http://www.legis.state.pa.us/WU01/LI/LI/CT/pdf/20/20.pdf (Chapter 57, pdf page 204, et seq.)

The date of RG's death was established as the date of the court's finding and order. I believe that occurred on July 25, 2011. So RG's daughter had nearly 6 years to maneuver RG's assets in whatever manner she deemed appropriate, provided however that she could not sell or dispose of any asset of his estate without prior court approval.

None of that explains what happened prior to LG becoming the trustee. The 2005 and 2004 numbers are the ones that show nothing generating income above $1300. Even if there was a re-ordering of assets, any capital gain should have been reported. Except for really small or very unprofitable investments, there should have been something there.

 

[Saunterer]

From research, what I can find about probate/joint accounts/inheritance tax:

A. Probate file (Trackergd's information) would include all assets singularly in RFG's name.

EXAMPLE: RFG has a checking account in his name with a balance of $5,000. No other name is on the account. That would go into RFG's estate file and LG would pay a tax of $225 and collects $4775.

B. Joint accounts not included in file.

EXAMPLE: RFG has a checking account in his name with a balance of $5,000. LG's name is also on the account. This would not go into the file, but LG would pay a tax of $112.50 and collects $4,887.50

C. Estate planning vehicles would not be in the file or taxable.

EXAMPLE #1: RFG buys a single premium life insurance policy at a cost of $5000 (and payout value of $10,000). This would not be in the file and not subject to tax. LG collects $10,000 (plus any interest).

Example #2: RFG puts $5000 in an irrevocable trust. This would not be in the file and not subject to tax. LG collects $5,000 (plus any interest).

We know that A (on a smaller scale) and B did occur. C is possible. Any income from A or B would show up on a financial disclosure form, if above $1300 from the same source.

"A" would include RG's personal property...things like his clothing, antique collection, etc. and, I would think, sufficient cash to cover attorney fees, insurance premiums, his daughter's reimbursable expenses (as trustee), etc. Trackergd's info indicates that this was a rather small amount in 2011. "B" reportedly did exist in 2005...but apparently (Trackergd's info) not in 2011, as to RG. "C" appears to cover where the bulk of RG's assets went, and RG's daughter (as trustee) had the lawful authority, a good attorney, and ample time to make it happen.

 

[J. J. in Phila]

"A" would include RG's personal property...things like his clothing, antique collection, etc. and, I would think, sufficient cash to cover attorney fees, insurance premiums, his daughter's reimbursable expenses (as trustee), etc. Trackergd's info indicates that this was a rather small amount in 2011. "B" reportedly did exist in 2005...but apparently (Trackergd's info) not in 2011, as to RG. "C" appears to cover where the bulk of RG's assets went, and RG's daughter (as trustee) had the lawful authority, a good attorney, and ample time to make it happen.

Clothing, unless something like a mink coat has, virtually no probate value. There would some funds that he didn't hold jointly. I would not go so far to hint that it was there to cover premiums and lawyer's fees.

B would not show up in the probate file; I believe that was from Goodall's article.

There is no evidence for C, except that it was unlikely to have been done in 2004-05. Had LG moved assets (which might be problematic), any income generated by them (within the guidelines) would have been captured in the Statement of Financial Interests (SFI) in 2004. Something too low to be captured would likely mean a low investment.

 

[Saunterer]

None of that explains what happened prior to LG becoming the trustee. The 2005 and 2004 numbers are the ones that show nothing generating income above $1300. Even if there was a re-ordering of assets, any capital gain should have been reported. Except for really small or very unprofitable investments, there should have been something there.

But only single-source income, meeting the reporting threshold, attributable to RG as an individual, and not otherwise exempted under the Ethics Act. The only questionable thing I see in regard to filings under the Ethics Act is that there was apparently no filing for the year 2006.

 

[J. J. in Phila]

But only single-source income, meeting the reporting threshhold, attributable to RG as an individual, and not otherwise exempted under the Ethics Act. The only questionable thing I see in regard to filings under the Ethics Act is that there was apparently no filing for the year 2006.

RFG was not required to file one for the year 2006.

Income from joint holding must be reported, with no clause that makes it "attributable to RG as an individual." The threshold would be low, $1300.

That is from the form's instructions.

 

[Saunterer]

"...Any other public employee or public official shall file a statement of financial interests with the governing authority of the political subdivision by which he is employed or within which he is appointed or elected no later than May 1 of each year that he holds such a position and of the year after he leaves such a position."
http://www.ethics.state.pa.us/portal/server.pt/community/ethics/8995/the_ethics_act/539789

If there is no filing for RG for the year 2006, I find that somewhat interesting. Not sure what that would mean. But then, any missed filing under the Ethics Act is unactionable since RG cannot be found.

 

[Saunterer]

""Income." Any money or thing of value received or to be received as a claim on future services or in recognition of services rendered in the past, whether in the form of a payment, fee, salary, expense, allowance, forbearance, forgiveness, interest, dividend, royalty, rent, capital gain, reward, severance payment, proceeds from the sale of a financial interest in a corporation, professional corporation, partnership or other entity resulting from termination or withdrawal therefrom upon assumption of public office or employment or any other form of recompense or any combination thereof. The term refers to gross income and includes prize winnings and tax-exempt income. The term does not include gifts, governmentally mandated payments or benefits, retirement, pension or annuity payments funded totally by contributions of the public official or employee, or miscellaneous, incidental income of minor dependent children."
http://www.ethics.state.pa.us/portal/server.pt/community/ethics/8995/the_ethics_act/539789

Therefore, as I understand it, interest or dividends resulting from retirement, pension or annuity vehicles funded totally by contributions of the public official are not reportable as income under the Ethics Act.

 

[J. J. in Phila]

"...Any other public employee or public official shall file a statement of financial interests with the governing authority of the political subdivision by which he is employed or within which he is appointed or elected no later than May 1 of each year that he holds such a position and of the year after he leaves such a position."
http://www.ethics.state.pa.us/portal/server.pt/community/ethics/8995/the_ethics_act/539789

If there is no filing for RG for the year 2006, I find that somewhat interesting. Not sure what that would mean. But then, any missed filing under the Ethics Act is unactionable since RG cannot be found.

BBM

RFG had to May 1, 2006 to file the form for 2005, which LG did.

 

[J. J. in Phila]

Therefore, as I understand it, interest or dividends resulting from retirement, pension or annuity vehicles funded totally by contributions of the public official are not reportable as income under the Ethics Act.

That is correct, if there was any retirement. RFG would have had to receive payments from a retirement fund, in order for this clause to apply. Further, it would have to be completely funded by the person. RFG was not retired at any point during this.

 

[J. J. in Phila]

Perhaps this will clear it up:

When to File: Public employees and public offi cials,
who are not candidates — by NO later than May 1
of each year a position is held and of the year after
leaving a position.

A PDF of the Guide To The Pa Public Official And Employee Ethics Act (Blue Guide) is here:

http://www.ethics.state.pa.us/portal/server.pt/community/publications/9045

This is from page 5.

The year RFG left office was 2005. The deadline for LG to file was May 1 , "...of the year after leaving a position." That deadline would be May 1, 2006. That deadline was met.

 

[Saunterer]

BBM

RFG had to May 1, 2006 to file the form for 2005, which LG did.

So in light of LG's (let us call it voluntary) filing on her father's behalf for 2005, I am curious as to why she did not (apparently) also file for 2006, under the statute. No biggie. I just thought it was curious.

 

[J. J. in Phila]

So in light of LG's (let us call it voluntary) filing on her father's behalf for 2005, I am curious as to why she did not (apparently) also file for 2006, under the statute. No biggie. I just thought it was curious.

There was no voluntary filing, only the filing required by statute.

Because there was no requirement for RFG or his representative to file in 2007.

The statute, clearly, only requires the form to be filed by May 1 of the year after leaving office. I am sorry if that is not clear.

 

[Saunterer]

That is correct, if there was any retirement. RFG would have had to receive payments from a retirement fund, in order for this clause to apply. Further, it would have to be completely funded by the person. RFG was not retired at any point during this.

I think you are misreading the definition of reportable and non-reportable income under the Ethics Act (link previously provided). But that is just my own opinion.

 

[Saunterer]

There was no voluntary filing, only the filing required by statute. Because there was no requirement for RFG or his representative to file in 2007. The statute, clearly, only requires the form to be filed by May 1 of the year after leaving office. I am sorry if that is not clear.

I do not recall asking about 2007. I was asking about 2006 (the year after RG, a public official, left office), for which you apparently found no filing similar to that for 2005. I am sorry if that was not clear. :floorlaugh:

 

[J. J. in Phila]

I do not recall asking about 2007. I was asking about 2006, for which you apparently found no filing. :floorlaugh:

The form filed in 2006 has been posted.

The forms (much like tax returns) cannot be completed until the year ends.

The was no requirement for a form to be filed in 2007.