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IN CHOOSING BETWEEN A FAMILY LIMITED PARTNERSHIP, A LIMITED
LIABILITY COMPANY, AND A DELAWARE BUSINESS TRUST”.8 The
memorandum first summarized characteristics, benefits, and
problems associated with each entity, including potential
transfer tax savings and the problem of being classified as an
“investment company” within the meaning of section 721(b). The
second half of the memorandum was then devoted to a more extended
discussion of valuation discounts for estate planning purposes.
In the cover letter, Mr. Sweeney recommended use of “a Delaware
business trust because this would avoid the implications of an
investment company since what is to be transferred is a
diversified portfolio of marketable securities being transferred
by one person.” He also expressed general observations regarding
the types of discounts that could be available “If Porter died
owning a substantial portion of the interest” in the entity and
noted the need for a qualified appraiser to determine the precise
amount of the discount.
On February 3, 1997, Mr. Sweeney met with decedent and
Mr. Dinneen to further discuss entity formation issues raised in
the January 27 letter. Upon reviewing the memorandum, Mr.
8 During the 1997 to early 1998 period, a Delaware business
trust was formed pursuant to the Delaware Business Trust Act,
Del. Code Ann. tit. 12, secs. 3801-3822 (Supp. 2004). Effective
September 1, 2002, the Delaware Business Trust Act was replaced
by the Delaware Statutory Trust Act, Del. Code Ann. tit. 12,
secs. 3801-3826 (Supp. 2004).
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