Larry J. and Anita L. Lundgren - Page 15

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               D.   Respect for Trust Restrictions                                    
               Petitioners did not demonstrate that they respected the                
          restrictions of the trust or the law of trusts as they did not              
          show they felt bound by restrictions or trust law.  Further, they           
          did not show that the trust imposed any substantial restrictions            
          on petitioners’ use of the trusts’ property or the Legg Mason               
          bank account.                                                               
               As an example of petitioners’ disregard for trust                      
          restrictions, Lucky Kirt Trust’s $195,000 loan to Mr. Lundgren in           
          2001, which was purportedly made for “good will”, lacked any                
          documentation.  The loan agreement, if one existed, was not in              
          writing, and the loan did not provide for a repayment schedule, a           
          payoff date, or an interest rate.  Although Mr. Chisum testified            
          that the payments on the loan were being made, petitioners did              
          not provide any evidence to corroborate Mr. Chisum’s statement.             
               Similarly, the Lucky Kirt Trust loan to petitioners’                   
          daughter shows that petitioners were not bound by any trust                 
          restrictions.  The loan was for the personal purchase of a car              
          merely because petitioners’ daughter desired a car.  As before,             
          there was no written loan agreement, no interest rate, and no               
          proof of any loan payments.  Mr. Chisum’s statement that he                 
          preferred never to charge interest is inconsistent with his                 
          fiduciary responsibilities and is not a valid reason for a trust            
          to provide an interest-free loan.                                           






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