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agreements until the current estate and gift tax litigation is
concluded.
We believe that the current buy-sell structure poses a
problem only if the True sons consider tax book value not to
fairly represent market value. Otherwise, it should not be a
problem that their heirs, who did not actively participate in the
True companies, might receive cash equal to the value of the True
sons’ business interests, as determined under the buy-sell
agreements. The True sons were the natural objects of Dave
True’s bounty; they are not the natural objects of each other’s
bounty; their own children and grandchildren are the natural
objects of their respective bounties. These facts lead us to
infer that Dave True used the business arrangements with his
children to fulfill his own testamentary objectives.
2. Adequacy of Consideration Test
The adequacy of consideration paid and received pursuant to
a buy-sell agreement is generally measured at the date the
agreement is executed. See supra p. 75. However, courts have
also evaluated the adequacy of consideration and conduct of
parties after the agreement date when intervening events within
the parties’ control caused a wide disparity between the formula
price and fair market value. The standard for determining
adequacy of consideration requires the formula price (1) to be
comparable to what persons with adverse interests dealing at
arm’s length would accept and (2) to bear a reasonable
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