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retained Henry Clay (Mr. Clay), the family accountant and attorney,
to advise her and to prepare legal and tax documents for the
estate.
The Trust
On November 11, 1986, 8 days after her 18th birthday,
petitioner executed a trust indenture2 pursuant to which an
irrevocable trust was established. The trust was to exist until
November 3, 2003 (the date petitioner would turn 35 years old);
however, the terms of the trust indenture could be modified or
amended (and the trust could be terminated) at the end of each 5-
year period during the term of the trust provided the change (or
termination) was agreed to by all of the trustees and petitioner.
Ultimately, all of the assets petitioner inherited from the
decedent were placed into the trust.
The trust had three cotrustees: T. William Dowdy (Mr. Dowdy),
Mrs. Hunter, and Mr. Clay. Mr. Dowdy, an attorney, dealt with real
estate issues (particularly condemnation proceedings and other
matters requiring court appearances). Mrs. Hunter acted as a
liaison between petitioner and Mr. Clay. Pursuant to the
provisions of the indenture, two trustees could act on any matter
within their collective authority; in reality, Mr. Clay alone
determined the amount of the trust distributions.
2 The trust was established at the recommendation of Mr.
Clay. At the time petitioner signed the trust indenture, Mr.
Clay did not explain to her how the trust would operate.
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