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STL’s place of business. Mr. Sowards went to his STL office on a
regular basis.
Mr. Sowards, STL, and Mr. Strong had a close business
relationship.4 Mr. Sowards, Mr. Strong, and STL referred clients
among themselves. Mr. Sowards performed legal services for STL
and advised many of STL’s clients.5 Mr. Sowards traveled and
assisted Mr. Strong with seminars promoting STL’s services
conducted in Ohio, Hawaii,6 Alaska, and Texas. STL reimbursed
Mr. Sowards for business and travel expenses. STL also provided
Mr. Sowards with an American Express credit card.
On or about June 1, 1994, Mr. Sowards, with the assistance
of Mr. Strong, purportedly created an intervivos trust named
Wealth Preservation Assistance (WPA). Mr. Sowards was the sole
grantor of WPA.7 The trust document states that WPA’s business
purpose is “diversification of business activities and business
assets for planned constructive growth.”
4Petitioner Marilyn Sowards (Ms. Sowards) testified that Mr.
Strong and her husband had a contract relationship.
5Mr. Sowards testified that he performed these legal
services as a courtesy and on a pro bono basis.
6In one of the years at issue, Mr. Sowards traveled to
Hawaii as many as nine times to assist Mr. Strong with the STL
seminars.
7Mr. Sowards testified that there were three main reasons
for establishing WPA: (1) For use in doing charitable, pro bono
legal work; (2) for use on some minor business transactions; and
(3) for use in estate planning. WPA was never used for
charitable purposes or as a business entity.
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Last modified: May 25, 2011