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for the benefit of Cyril. One-sixth of the stock was to be
placed in each of the three remaining trusts, one trust for the
benefit of each of Joseph’s three grandchildren. As the trustee
of the four trusts, Cyril had the power to vote the stock. These
provisions were as promised by Joseph to Cyril under the October
31, 1951, agreement. Additionally, Cyril received a life
interest in the income from the Cyril Magnin Trust.
On May 25, 1971, Cyril created three trusts, one for each of
his three children. He transferred, inter alia, the proceeds of
his JM stock that had been sold in a 1969 buyout of all JM stock
by Amfac, Inc. Under the terms of each trust, Cyril retained an
income interest for his life, and upon Cyril’s death, the trust
was to terminate, and the principal and undistributed income were
to be distributed to the beneficiary. This transfer to the 1971
trusts was made in fulfillment of Cyril’s obligations under the
October 31, 1951, agreement with Joseph.
Facts Related to Value of JM and Specialty
JM originally operated one location in downtown San
Francisco. In 1928, a second store was opened in Palo Alto,
California, and three other stores were opened between 1943 and
1950--one in San Mateo and two in Sacramento, California. JM did
not begin to expand considerably until the mid-1950's, eventually
operating 32 stores by the end of 1969. JM was primarily engaged
in the sale of women’s clothing and accessories, and it also
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