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which I own, as such shares exist and are valued by independent
appraisal as of my date of death.”
A similar provision in the Will bequeathed the residuary of
the Estate to Andrew and Dinah in equal shares of one-half each,
with Andrew's share to be satisfied first out of the shares of
Johnco, as valued by independent appraisal as of the date of
decedent’s death. Consequently, the amount passing to both
Andrew and Dinah under the Will was dependent on the valuation of
the Johnco stock held by decedent on her date of death.
B. Family Settlement
On December 23, 1993, before respondent had raised any
question regarding the valuation of decedent's Johnco stock,
Andrew and Dinah entered into a family settlement and release
agreement6 (family settlement agreement) whereby Andrew was
allocated the remaining 80,485 shares7 of decedent's Johnco stock
at an agreed-upon date of death value of $4,025,000.8 Dinah was
6 The Texas family settlement doctrine provides that parties
to a will are free to decide among themselves how property should
be distributed, and such settlements are given substantial
deference under Texas law. See Shepherd v. Ledford, 926 S.W.2d
405 (Tex. App. 1996); In re Estate of Hodges, 725 S.W.2d 265
(Tex. App. 1986).
7 Under the valuation assumptions employed by Northern
Trust, 80,485 shares remained in the Estate after transferring
2,380 shares of Johnco stock to Andrew to fund his share of the
unified credit bequest.
8 As noted supra, in December 1992, approximately 1 year
prior to the settlement, Northern Trust had hired RPR to value
the Johnco shares for purposes of decedent's Form 706. In the
Decedent Appraisal, RPR had appraised the liquidation value of
Johnco at $4,200,000 as of decedent’s date of death. The 80,485
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