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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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