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expenses, and other various expenses. The amounts were used
entirely by Austin and Edna and not by Dennis, who was cotrustee
of the general partner and was entitled to half of any management
fees. While the living trust received management fees totaling
over $120,000 during the years at issue, the limited partners
(who owned 98 percent of KPLP) received only one distribution
totaling $12,061, for taxes in 1998.
Further, no management contract was executed, and the fees
were paid at varying times and amounts, as Austin requested them.
The purported fees were not based on any regular or prescribed
method of payment or computation. Dennis testified that he
caused KPLP to make payments to the living trust whenever Austin
requested them because he was raised not to say no to his father.
He stated that he and his father discussed the amounts of the
management fees in 1995, and they wrote down the amounts on
“pieces of paper” at the kitchen table. These notes regarding
the purported fees were not produced by the estate at trial.
The estate submitted an expert report by Paul R. Kenworthy,
C.F.P., in which he opined that money managers generally receive
fees of 1 to 1.5 percent of the asset values in the portfolios
they manage. Mr. Kenworthy testified that fees are generally not
determined by the income of the portfolio because income amounts
vary with different types of investments.
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