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Not a Testamentary Device
The second requirement of section 2703(b) is that the
restrictive agreement not be a device to transfer the property
subject to the agreement to members of the decedent's family for
less than full and adequate consideration in money or money's
worth. This requirement existed in pre-section-2703 law, which
provides guidance regarding its meaning. Whether a restrictive
agreement constitutes a testamentary device depends in important
respects on the fairness of the consideration received by the
transferor, judged at the time the agreement is entered. See,
e.g., Estate of True v. Commissioner, T.C. Memo. 2001-167, affd.
390 F.3d 1210 (10th Cir. 2004); Bommer Revocable Trust v.
Commissioner, T.C. Memo. 1997-380.
Respondent contends that decedent received no consideration
or benefit from the 1995 FSA, as she owned stock for which FABG
was willing to pay $118.23 per share before the agreement, and
after the agreement she owned stock that was to be sold for
$118.23 per share to Rod. In respondent's view, only Rod
benefited from the 1995 FSA as it allowed him to purchase
decedent's stock at a price that had been found inadequate by the
district court just a few months before.
We disagree with respondent's theory. As noted above, we
believe decedent received significant consideration under the
1995 FSA; specifically, a fixed price for a minority stock
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