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several times in November and December 1994. Late in 1994,
Gilliam and Banks devised and helped to implement an estate plan
for petitioners using a family limited partnership and related
trusts.
2. Implementing the Plan
On December 6, 1994, petitioner opened an investment account
at Broadway National Bank in the name of petitioners’ family
limited partnership, the Herbert D. Knight limited partnership
(created on December 28, 1994, as described below), and
transferred Treasury notes to it. On December 12, 1994,
petitioners opened a checking account for their partnership at
Broadway National Bank and transferred $10,000 to it from their
personal account. On December 15, 1994, petitioners transferred
$558,939.43 worth of a USAA municipal bond fund from their
personal investment account to the partnership.
On December 28, 1994, the following occurred:
a. Petitioners signed documents which created the
partnership, consisting of 100 units of ownership. The steps
followed in the creation of the partnership satisfied all
requirements under Texas law to create a limited partnership.
b. Petitioners conveyed the ranch and the real property at
6219 Dilbeck and 14827 Chancey to the partnership.
c. Petitioners created the Knight Management Trust
(management trust). The steps followed in the creation of the
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