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assets to decrease in value. The record reflects that
insufficient assets were left to allow the estate to pay its
debts. We acknowledge that the Partnership characterized the
disbursements of funds to the estate as a purchase of Mrs.
Erickson’s home and redemption of some of the estate’s
partnership interests. The form of the transaction, however, is
not controlling. Moreover, the record does not reflect that the
Partnership and the estate would have engaged in these
transactions absent the estate’s need for funds.
Mrs. Erickson’s age and health at the time of the
transaction strongly indicate that the transfers were made to
avoid estate tax. Mrs. Erickson was 88 years old when the
parties formed the Partnership in 2001 and had been suffering
from Alzheimer’s disease for several years. Mrs. Erickson was by
then unable to handle her own financial affairs, was no longer
cooking for herself or driving, had difficulties recalling family
members, and was disoriented regarding the date, time, or place.
Mrs. Erickson’s age and declining health weigh against a finding
that the parties formed the Partnership for any reason other than
to help reduce Mrs. Erickson’s estate tax liability.
Finally, while it is undisputed that each partner
contributed assets of value to the partnership in exchange for
his or her partnership interest, the existence of these
legitimate transfers of value does not mandate a conclusion that
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