EFTA02673286.pdf

From: Ada Clapp Sent: Monday, September 23, 2013 10:08 PM To: Jeffrey Epstein; Eileen Alexanderson Subject: Estate Overview Attachments: Black_EstatePlanningAnalysis_2013 (9.23.13).pdf-, Untitled attachment 00321.htm Hi Jeffrey and =ileen, Attached is the revised Estate Planning =verview prepared by US Trust. As I mentioned, the prior Overview =as inaccurate because their program was not updated and calculated the =ax using the 35% rate in effect for 2012. The attached Overview =effects the 45% tax rate currently in =ffect. Items to highlight (noted with the last =ersion): The =verview illustrates the 1997 Trust and the 2006 Trust already decanted =nto the Heritage Trust. • BFP interests are discounted 30% to reflect =he reality of the Note substitution. This deflates the value of =eon's estate (good for estate tax but the children's inheritance =ppears smaller). As Leon monetizes AGM shares, the discounts will =disappear". Assuming no principal repayments, the note value =ill remain frozen at the discounted value. • The Overview assumes that Debra =as transferred title to all residences to Leon. =nbsp; Leon's new Will and Revocable Trust are drafted as if Leon =wns all residences individually. In fact, all but two parcels are =wned jointly by Debra and Leon. Unless she transfer =er title to Leon, the residences will pass to her outright on Leon's =eath rather than to the Marital Trust (and later the Heritage Trust) as =eon wants. Leon needs to be reminded of =his. • The =verview assumes Leon selects $200 million of art from his estate and =100 million from the Heritage Trust to be held in each child's Legacy =rust. Leon's selection of what passes to the Legacy Trusts will =ramatically influence the estate tax calculation. The greater the =mount of includible art that passes to the Legacy Trusts on Debra's =eath, the greater the estate tax. =nbsp; • If =eon died today, the Overview assumes (i) art would be sold to pay the =ank of America Loans and cover estate tax and (ii) all of his BFP =nterest would be used to repay the Note to the Heritage Trust and =he Note to BFP. Debra's Marital Trust would be funded with =nbsp;art, residences and the GST exemption amount ($1,750,000). =nbsp;No other investment assets. Of course, Debra could require =he Trustees to sell art and reinvest the proceeds to produce =ncome. As Leon pays down the Note to the Heritage Trust and =onetizes AGM over time, there should be more liquid assets to =ass to the Marital Trust. That is because he will either pay-off =he "discounted" Note with non discounted assets such as cash from =onetization, or with appreciated BFP interests, assuming =ppreciation. I will =ring the Estate Overview to our meeting with Leon on Wednesday so we =an walk him through it. EFTA_R1_01949008 EFTA02673286 Best =egards, New York NY 10019 phone IRS Circular 230 =isclosure: Pursuant to IRS =egulations, I inform you that any tax advice contained in this =ommunication (including attachments) is not intended or written to be =sed, and cannot be used by any person or entity for the purpose of (i) =voiding tax related penalties imposed by any governmental tax =uthority, or (ii) promoting, marketing or recommending to another party =ny transaction or matter discussed herein. I advise you to consult with =n independent tax advisor on your particular tax =ircumstances. This communication, =nd any attachment, is for the intended recipient(s) only and may =ontain information that is privileged, confidential and/or proprietary =nbsp;lf you are not the intended recipient, you are hereby notified =hat further dissemination of this communication and its attachments is =rohibited. Please delete all copies of this communication and its =nbsp;attachments and notify me immediately that you have received them =n error. <=html>.= 2 EFTA_R1_01949009 EFTA02673287