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assets to, MFV:43 (1) Joint management of the family’s assets by
her daughters and eventually her grandchildren;44 (2) maintenance
of the bulk of the family’s assets in a single pool of assets in
order to allow for investment opportunities that would not be
43We also found on the basis of the respective testimonies
of Ginat Mirowski and Ariella Rosengard that another legitimate
nontax reason Ms. Mirowski formed and funded MFV was that she
wanted to provide protection from potential creditors for the
interests in the family’s assets that she intended to provide to
her daughters and her grandchildren in addition to the creditor
protection provided by her daughters’ trusts that, as so-called
spendthrift trusts, were penetrable by creditors for purposes of
alimony or child support. See Zouck v. Zouck, 104 A.2d 573, 575,
578-580 (Md. 1954); Safe Deposit & Trust Co. v. Robertson, 65
A.2d 292 (Md. 1949). We found that Ms. Mirowski’s desire for
additional creditor protection was not a significant reason in
her decision to form and fund MFV.
44On the record before us, we find that Ms. Mirowski’s
significant and legitimate nontax purpose in forming and funding
MFV of ensuring joint management of the family’s assets by her
daughters and eventually her grandchildren, standing alone, is
sufficient to satisfy the requirement that, in order to qualify
for the exception in sec. 2036(a) for a bona fide sale for an
adequate and full consideration in money or money’s worth, there
must be a legitimate and significant nontax reason for creating
the entity in question. Ms. Mirowski’s nontax reason in forming
and funding MFV of ensuring joint management of the family’s
assets by her daughters and eventually her grandchildren was
rooted in Ms. Mirowski’s formative years in Lyon where she and
her family worked together in the family business. Ms. Mirowski
valued the family cohesiveness that joint management of a family
business can foster. Although Ms. Mirowski was aware that her
daughter Ariella Rosengard would probably move to England with
her husband and children, Ms. Mirowski wanted her daughters, and
eventually her grandchildren, to work together, remain closely
knit, and be jointly involved in managing (1) the investments
derived from the royalties received from Dr. Mirowski’s invention
of the ICD and (2) the business matters relating to the ICD
patents and the ICD patents license agreement, including the
litigation arising with respect to those patents and that license
agreement. Her daughters have done so.
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Last modified: March 27, 2008