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decedent as original trustee and designated his children Michael
A. Harper (Mr. Harper) and Lynn H. Factor (Ms. Factor) as
successor trustees. The assets held by the trust consisted of
marketable securities and mutual funds, plus a note receivable
for a $450,000 loan which the decedent had made to an unrelated
individual (the portfolio). Decedent reserved a life estate in
both the income and corpus of the trust and directed that upon
his death the assets should be distributed 40 percent to Mr.
Harper and 60 percent to Ms. Factor.
On January 1, 1994, decedent, Mr. Harper, and Ms. Factor
entered into an agreement entitled, Agreement for Limited
Partnership for Harper Financial Co., L.P. (partnership
agreement) that created a California limited partnership. Under
the terms of the partnership agreement, Mr. Harper and Ms. Factor
became general partners with interests in the partnership of 0.4
percent and 0.6 percent respectively, and the trust became the
sole limited partner with an interest of 99 percent in the
partnership. The trust made an initial capital contribution of
the portfolio to the partnership.
On July 1, 1994, the parties entered into an amendment to
the partnership agreement that divided the trust's limited
partnership interest into two classes of limited partnership
interests, consisting of: (1) A Class A limited partnership
interest of 39 percent which the trust retained, and (2) a Class
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Last modified: May 25, 2011