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F. Spindrift Associates, Ltd. (Decedent’s Family Limited
Partnership)
In December 1994, the trustees of decedent’s trust and
decedent’s three children executed a limited partnership
agreement (the partnership agreement) which formed Spindrift
Associates, Ltd., a California limited partnership (Spindrift or
the partnership). The partnership agreement stated that the
purpose of the partnership was to engage in the business of
owning and operating residential real property, initially the
Padaro Lane property, and it prohibited the partnership from
engaging in any other principal business. The partnership
agreement permitted the partnership to issue units with different
rights and preferences. Each unit represented a contribution of
cash or property of $100. “A units” were issued to limited
partners in exchange for cash or checks. “B units” were issued
to limited partners in exchange for contributions of property.
Decedent’s trust was both the sole general partner and a
limited partner. Decedent’s three children were limited
partners. In December 1994, decedent’s trust contributed $500 to
the partnership in exchange for a 1-percent interest as general
partner, and decedent’s trust and decedent’s three children each
contributed $100 in exchange for one A unit.
On December 22, 1994, decedent’s trust transferred the
Padaro Lane property, then worth $1,450,000, but not the debt
secured by the property, to the partnership in exchange for
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Last modified: May 25, 2011