Estate of Morton B. Harper, Deceased, Michael A. Harper, Executor - Page 40

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                    Morton’s primary reason for transferring the                      
               Portfolio to the Partnership was to create an                          
               arrangement that would protect from Lynn’s creditors,                  
               the assets that Lynn would receive or inherit from                     
               Morton. * * *                                                          
                         *    *    *    *    *    *    *                              
                    Once Morton learned of the [arbitration] award and                
               its seriousness, he knew that he needed to address his                 
               concerns about Lynn’s handling of her finances in a                    
               different manner than that provided in the Trust.                      
               Pursuant to Article V of the Trust agreement, on                       
               Morton’s death, Lynn’ [sic] share would be distributed                 
               to her outright.  Following such distribution, Lynn                    
               would have the responsibility to manage her assets and                 
               Lynn’s creditors could reach them without restriction                  
               or limitation.  This was unacceptable to Morton.                       
                         *    *    *    *    *    *    *                              
                    Therefore, by placing Michael in charge of the                    
               Partnership and providing by gift and on Morton’s death                
               that all but a fraction of Lynn’s interest would be                    
               held as a limited partner, Morton addressed his                        
               concerns about Lynn.  Lynn’s creditors would be                        
               inhibited due to the legal limitations of collecting a                 
               judgment from a limited partner’s interest.  [Citations                
               The emphasis of this discussion is patently post mortem as             
          opposed to inter vivos.  Hence, not only the objective evidence             
          concerning HFLP’s history but also the subjective motivation                
          underlying the entity’s creation support an inference that the              
          arrangement was primarily testamentary in nature.  The objective            
          record belies any significant predeath change, particularly from            
          the standpoint of economic benefit, in the partners’ relationship           
          to the assets.  Likewise, the subjective impetus prompting                  

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Last modified: May 25, 2011