-26-
assets intended to assist Mrs. Erickson’s tax planning and
benefit the family.
While Karen and Sigrid discussed the Partnership before it
was formed, the circumstances suggest that the Partnership was
essentially formed unilaterally, with Karen controlling the
transaction. Sigrid admitted at trial that she did not
understand the particulars of the transaction, nor is there any
credible evidence that Mrs. Erickson understood the transaction.
Karen was on every side of the transaction. She acted as
attorney-in-fact for her mother, she was the personal
representative of her mother’s estate, she was both a general
partner and a limited partner in the Partnership in her
individual capacity, and she was a co-trustee of the credit
trust, which was also a partner in the Partnership. Moreover,
the same law firm represented all parties to the transaction.
While retaining counsel to assist in an important transaction is
entirely appropriate, the fact that no family member was
represented by different counsel also suggests a unilateral
approach to the transaction.6
Another key fact indicating that no significant nontax
purpose existed was the delay in contributing assets to the
6Sigrid’s informal mention of the arrangement to an attorney
friend is not probative. Sigrid admitted that their discussion
was informal and that she never signed an engagement letter.
Sigrid’s own testimony indicates that Sigrid’s friend was not
acting as Sigrid’s attorney in the formation of the Partnership.
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
Last modified: November 10, 2007