EFTA01071282.pdf

CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of October 2, 2013 ACTION TO BE TAKEN Mig RESPONSIBLE PARTY TIMING/STATUS ESTABLISH CASH FLOW PLAN Completed on August I. Substitution of Trust assets by Leon in exchange for a promissory note. Team 15, 2013 Empire is working on 2. Value BFP interests acquired by Leon. Empire Valuation/Team the valuation re . , a PW is leaning against 3. Determine whether a gift tax return will be filed reporting the substitution. Team doing so. Explore financing options relating to the asset substitution and existing loans secured by art. Consider: Preliminary meetings • Using multiple banks (solicit information from BAC, JPM, Morgan 4. Family Office with Deutsche Bank Stanley and Deutsche Bank). taken. • Using assets other than art as collateral. If done, remove bank as payee on art insurance policies. Determine, as a financial matter, how Leon will make note payments and repay the loan prior to his death. 5. Team Consider whether Trustees should (i) distribute funds to Debra to pay income tax or make loan repayments or (ii) reimburse Leon for his tax liability. Jib Black will be the "second" attorney reviewing the cash flow plan. Consider 6. Team the timing for getting him involved. Once valuation is received, update books and records to reflect change of Family Office ownership of BFP. 1 of 7 EFTA01071282  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of October 2, 2013 ACTION TO BE TAKEN RESPONSIBLE PARTY TIMING/STATUS Explore additional options for freezing the value of Leon's estate after he acquires all interests in BFP. New GRAT and family 8. Team • Consider implications of Section 2703. trust in progress. • II. NEW WILLS FOR DEBRA AND THE CHILDREN I. Discuss with Debra need to see Jib for a new Will and related documents 2. Each of the children to meet with Alan to prepare a Will and related documents Family Office/PW In progress III. DECANT EXISTING TRUSTS TO NEW TRUST I. Confirm terms of "Heritage Trust" and draft a revised the Trust Agreement. Team Determine which assets will be decanted to the Heritage Trust (2006 Trust, 1997 non-GST exempt trust, etc.) and the timing. 2. • First decant 2006 Trust to 1997 Trust. Team • Next decant 1997 Trust to Heritage Trust and if not yet paid, assign receivable from 2009 GRAT. Draft and execute decanting instruments and any assignment documents and 3. PW/Family Office arrange for retitling of assets. 4. Update insurance coverage for art to reflect change in title after each decanting. Family Office 2 of 7 EFTA01071283  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of October 2, 2013 ACTION TO BE TAKEN RESPONSIBLE PARTY TIMING/STATUS III. DECANT EXISTING TRUSTS TO NEW TRUST (CONTINUED) Draft and execute either (i) use agreement between Heritage Trust and DB regarding use of art held by the Heritage Trust, or (ii) lease agreement between 5. Heritage Trust and Leon (to include the fair market rental rate for his use) PW • If lease agreement, this will trigger New York State sales tax. IV. RESTRUCTURING OF FAMILY BUSINESS ENTITIES (A) BLACK FAMILY PARTNERS Confirm each partner's ownership percentage and adjust capital accounts to Family Office reflect partner contributions and partnership distributions. 2. Clean up loans to and from BFP. Family Office Consider restructuring BFP to avoid estate inclusion and other issues. Consider 3. Team implications of Section 2701. (B) LDB 2011 LLC Confirm each member's ownership percentage and adjust capital accounts to I. Family Office reflect member's contributions. 2. Review LLC agreement to ascertain estate inclusion issues. PW (C) LBF HOLDINGS LLC I. Consider restructuring LLC agreement to avoid estate inclusion issues. PW 3 of 7 EFTA01071284  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of October 2, 2013 ACTION TO BE TAKEN RESPONSIBLE PARTY TIMING/STATUS SECURITIES LAW ISSUES V. I. Review prior SEC filings for accuracy. PW Address securities law issues (such as reporting or short-swing profit rules) 2. P NV with respect to action steps. ra. FOUNDATION PLANNING I. Create new foundations for each of Leon's children. PW 2. Arrange for Leon to fund each child's foundation. Family Office Prepare a memorandum for each child outlining the rules applicable to private 3. Family Office/1,1W foundation investments, administration, and use and distribution of assets. Review governing instrument for Leon's foundation to determine if provisions 4. Family Office still reflect Leon's intentions regarding future governance. VII. INSURANCE (A) SPLIT DOLLAR INSURANCE Determine if split dollar arrangements should be unwound and if so, discuss I. Team alternative plans for doing so. If unwinding the split-dollar arrangements: 2. • Consider whether insurance policies should be continued; Team • Obtain appraisal of the rights under the split-dollar agreements. 4 of 7 EFTA01071285  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of October 2, 2013 ACTION TO BE TAKEN RESPONSIBLE PARTY TIMING/STATUS If keeping the split-dollar arrangement in place: • Confirm L. Brody opinion that change of sponsor was likely not a 3. material modification (though unclear if sponsor changed). Team • Advise Leon to allocate GST exemption to the trusts to return them to a zero inclusion ratio. (B) LIFE INSURANCE I. Determine whether there is a need for life insurance and if so, what amount. Team Confirm that Trustees of insurance trusts are doing periodic policy reviews and 2. Family Office obtain copies of all Cnunmey notices. (C) PERSONAL PROPERTY INSURANCE In progress (inventory I. Prepare full inventory of Leon's personal property, including art and household Office to be provided by Family property (cane collection, rare book collection, bronzes, etc.). Sotheby's for residences) 2. Prepare inventory of Debra's personal property, including jewelry. Family Office In progress 5 of 7 EFTA01071286  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of October 2, 2013 VIII. NOTE REPAYMENT Devise a cash flow plan to repay all outstanding promissory notes between trusts, family members and family entities. I' Family Office • Consider a pro rata distribution from BFP to all limited partners. • Consider a transfer of assets from the 2006 Trust to 1997 Trust. If loans must remain outstanding, determine whether they should be refinanced 2. (to reflect business reality or alternatively, use a lower AFR) and secured (if Team they are not). IX. FREEZE PARTNERSHIP I. Create new LLC/LP as a preferred partnership. PW 2. Value the art to be contributed by Leon. Art appraiser Confirm whether any art to be contributed is used as collateral for bank loans 3. Family Office and revise loan documentation accordingly. Value the financial assets to be contributed by the Trust and the preferred 4. Empire Valuation coupon rate retained by Leon. Draft and execute contribution and assignment agreements whereby Leon 5. contributes art to the preferred partnership and the Trust contributes financial PW or MWE assets. Coordinate updating insurance coverage for art to reflect change in title to the 6. preferred partnership. Arrange for preferred partnership to pay its share of Family Office insurance premiums. 7 Coordinate updating all books and records (and SEC filings?) to reflect change PW in title of financial assets to the preferred partnership. 6 of 7 EFTA01071287  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of October 2, 2013 ACTION TO BE TAKEN RESPONSIBLE PARTY TIMING/STATUS Draft and execute either (i) agreement between Trust and Debra regarding use 8. of art held in the preferred partnership, or (ii) lease agreement between Trust PW or MWE and Leon (to include the fair market rental rate for his use) X. ADMINISTRATION OF TRUSTS AND FAMILY ENTITIES Prepare record book for Trustees describing the process by which they made 1. Family Office investment and distribution decisions. Prepare books and records for each family business entity, including minute 2. book (with minutes from annual meetings) with all partnership or LLC Family Office documents and formalities. Confirm whether the Direction to take instructions from the Delegee Trustee 3. was ever signed in connection with the 2011 Family Trust and keep with the Family Office Trust's records. Review all trust agreements to determine whether (i) successor Trustee 4. appointments are in place and still appropriate, (ii) compensation agreements Family Office need to be put in place. Por FAMILY MEETINGS I. Discuss with Leon whether he wants to have a second family meeting. Family Office 7 of 7 EFTA01071288