EFTA01088190.pdf

Estate Planning Overview Presented 切： Leon D. and Debra R. Black Overview of Proposed Estate Plan June 29, 2012 Ada Clapp Aaron Shamshoian Managing Director Vice President Wealth Strategies Advisor Associate Wealth Strategies Advisor U.S. Trust, Bank of America Private Wealth Management 114 West 47th Street New Y）rk，New York 10036 EFTA01088190 Leon D. and Debra R. Black Overview of Proposed Estate Plan Statement of Disclosure Investment products such as stocks, bonds and mutual funds: Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed IMPORTANT: This brief summary is for discussion purposes only. t does not contain legal, tax, investment, or insurance advice and cannot be relied upon for implementation and/or protection from penalties. The provisions of your estate planning documents will gove n the disposition of your estate. Always consult with your independent attorney and tax advisor for legal and tax advice. IMPORTANT: These projections are estimates only and are based on constantly changing assumptions. Your actual results may be better or worse. Long-term financial projections cannot be made with any certainty, and are never guaranteed. Always consult with your independent attorney and tax advisor for legal and tax advice. IRS Circular 230 Disclosure: Pursuant to IRS Regulations, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used by any person or entity for the purpose of (i) avoiding tax related penalties imposed by any governmental tax authority or agency, or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. We advise you to consult with an independent tax advisor on your particular tax circumstances. Investment products and services may be available through a relationship managed by US. Trust, Bank of America Private Wealth Management, or through a relationship with Merrill Lynch, Pierce, Fenner & Smith Incorporated. Certain U.S. Trust associates are registered representatives with Merrill Lynch, Pierce, Fenner & Smith Incorporated and may assist you with investment products and services provided through Merrill Lynch, Pierce, Fenner & Smith Incorporated and other subsidiaries of Bank of America Corporation. However, U.S. Trust does not manage investments held at Merrill Lynch, Pierce, Fenner & Smith Incorporated and you must direct your representative to take action on the advice given. Individual transactions you direct will result in your overall portfolio being invested in a manner which may differ from this report. In addition, these materials may discuss various elements of an individual's overall financial profile for which neither U.S. Trust nor Merrill Lynch, Pierce, Fenner & Smith Incorporated serves as an advisor. Merrill Lynch, Pierce, Fenner & Smith Incorporated is a registered broker-dealer, member FINRA and SIPC, and a wholly owned subsidiary of Bank of America Corporation. Merrill Lynch, Pierce, Fenner & Smith Incorporated does not serve as a tax or legal advisor. Several products such as mutual funds, variable annuities, and other alternative investments that may be mentioned as an investment alternative for you are only to be sold when preceded or accompanied by a current prospectus and/or offering memoranda. The prospectus and/or offering memoranda provide more complete information on the product, including charges, expenses and special investment risks, and should be read carefully before investing. The following report is for fiduciary use only. The associate presenting this report to you is acting within his or her fiduciary capacity with US. Trust, not within his or her licensed capacity, if any, with Merrill Lynch. Pierce, Fenner & Smith Incorporated. The information and data in the following report were obtained from sources deemed reliable. Their accuracy and completeness are not guaranteed, and the giving of the same is not deemed an offer or solicitation for the purchase or sale of securities. This report attempts to measure a particular universe of investments by averaging the performance of all securities in the index. The index may be a useful tool, but is in no way representative of past performance of a particular fund or security, and is not representative of any future performance of any particular investment. Assumptions concerning inflation or tax rates are illustrative purposes only and are not intended to predict economic performance. Any asset or portfolio earnings and/or returns shown or used in this report are not intended to predict nor guarantee the actual results of an investment product. Investors may not invest directly in an index. This report is a preliminary analysis and not necessarily the tactical fulfillment of recommendations. This material is for illustrative and educational purposes and has been prepared solely to assist you in the review of your investment alternatives. You should consult appropriate legal and/or tax advisors and then contact your representative to take appropriate next steps. This report does not constitute legal, accounting or expert witness advice. If you choose to follow an investment strategy set forth in the following report(s) repositioning of your portfolio may result in tax consequences. Again, the contents of this presentation should not be acted upon without consulting appropriate legal and/or tax advisors. MI tax calculations herein are merely estimates and should not be relied upon for detailed tax planning purposes. All income taxes are based on flat tax rates and do not take all the details of a states income tax laws into account. This analysis is based on the calendar year. All assets and liabilities are valued at the end of each year. Deaths are also assumed to occur at the end of each year. For the first year of the analysis only, annual returns are prorated on a daily basis. US. Trust, Bank of America Private Wealth Management operates through Bank of America, •. and other subsidiaries of Bank of America Corporation. Bank of America, Member FDIC. 2011 Bank of America Corporation. All rights reserved. Page 2 of 17 EFTA01088191 Leon D. and Debra R. Black Overview of Proposed Estate Plan Inventory of Family Assets as of December 31, 2011 Leon Debra Personal Assets Taxable Assets - Investment Accounts U.S. Trust Cash Account $ 10.000,000 JPM Cash/Marketable Securities 12,000,000 AP Alternative Assets 8,100,000 AP Investment Europe 700,000 Illiquid Assets Black Family Partners (7.1%) 100.600,000 Investment Partnerships 10,000,000 Note due from 1997 Trust 23,000,000 2009 GRAT Annuity Receivable 18.400,000 Real Estate - Personal Real Estate 105.000,000 Miscellaneous Narrows Holdings. LLC 1.500.000,000 Stariire 25.000,000 Other Tangible Personal Property (assumed) 200,000 Total Personal Assets $ 1,813,000,000 I Personal LlablIftles Art Loans (260.000.000) Note Payable to BFP (42.000.000) Total Personal Liabilities $ (302,000,0001 Total Estate Assets S 1,511,000,000 Non-Includible Trust Assets 1992 Life Insurance Trust (death benefit) 13,000,000 Black Family 1997 Trust 286,375,000 1999 Life Insurance Trusts (death benefit) 150.000,000 Black 2006 Family Trust 1,289,200,000 Black 2011 Family Trusts (LDB 2011 LLC) 181,500,000 2009 GRAT (less annuity amounts payable) 94.000.000 Total Trust Assets I $ 2,014,075,000 Total Family Assets IS 3,525,075,000 Page 3 of 17 EFTA01088192 Leon D. and Debra R. Black Overview of Proposed Estate Plan Assumptions Exemption Amounts: Leon Debra Prior Taxable Gifts 1.000.000 $ 1.000,000 Available Unified Credit Amount 4.120.000 4.120,000 Prior GST Exemption Allocation 3.500.000 Available GST Exemption Amount 1.620.000 5.120,000 Federal Estate Tax Federal Estate Tax Highest Federal Estate Highest New York Estate Year Exclusion & GST Credit Tax Rate Tax Rate Exemption Amounts 2012 5.120.000 $ 1,772,800 35% 16°/O Notes and Assumptions: • Leon and Debra are presumed to die in 2012, with Leon immediately predeceasing Debra. • The Overview illustrates proposed revisions to Leon's Will and Revocable Trust and to the Black Family 1997 Trust and the Black 2006 Family Trust. • Debra's personal assets are not reflected in the Overview and her Will and Revocable Trust provisions are assumed to mirror those in Leon's proposed documents. • The Overview does not reflect the proposed art partnership, 2012 gifts or split-dollar transaction. • Administration expenses are presumed to be 2% of the gross estate. • Estate taxes are paid from assets passing to descendants (to preserve the charitable deduction). • It is assumed that art will be sold to family trusts (i) on Leon's death to repay art loans and (ii) on Debra's death to pay estate taxes. • The 2009 GRAT is illustrated as if Leon survived the trust term. • The provisions of the Leon D. Black Insurance Trust #2 are assumed to be identical to the Leon D. Black Insurance Trust #1 dated September 13, 1999. Page 4 of 17 EFTA01088193 Leon D. and Debra R. Black Overview of Proposed Estate Plan Estate Flow Chart Upon Leon's Death Executors: Debra, Barry Cohen, John Hannan and Richard Ressler Leon Black Gross Estate Probate Property 1.794.600,000 GRAT Receivable 18.400,000 Gross Estate 1,813.000,000 Last Will and Testament Proposed 2012 Gross Estate $ 1,813.000,000 Administration Expenses (2%) (36.260,000) Art Loans (260.000,000) Residuary Estate 1.516.740,000 Yacht and Tangibles Passes to Revocable Trust Outright Bequest to Debra Yacht $ 25.000,000 Trustees: Debra, Barry Cohen, Tangible Property 200,000 John Hannan and Richard Ressler. Revocable Trust Agreement Residential Real Estate Proposed 2012 Outright Bequest to Debra 1 Residuary Estate: 1.516.740,000 Real Estate $ 105.000,000 Narrows LLC to Marital Trust (1.240.000,000) Bequests to Debra (155.200,000) Bequest to Judy (5.000,000) NY Estate Tax (508,706) Federal Estate Tax (473,846) Cash Bequest Revocable Trust Residue 115.557,448 Outri • ht to Debra Passes to Marital Trust Cash Bequest 25.000,000 1 Marital Trusts GST Exempt Marital Trust 1.620,000 Cash Bequest Non-Exempt Marital Trust: In Trust for Judy Narrows LLC (Art) 1,240.000,000 Cash Bequest 5.000,000 Revocable Trust Residue 113.937,448 Total Marital Trusts 1,355.557,448 Page 5 of 17 EFTA01088194 Leon D. and Debra R. Black Overview of Proposed Estate Plan Estate Flow Chart Upon Debra's Death Executors & Trustees: Barry Cohen, John Hannan and Richard Ressler Debra Black Marital Trusts Debra Black (Under Leon's Revocable Trust) Gross Estate GST Exempt Marital Trust 1.620.000 Yacht & Tangibles 25,200,000 Non-Exempt Marital Trust 1,353.937.448 Residential Real Estate 105,000,000 Total Marital Trusts 1.355.557.448 Investable Assets 25,000,000 Bequest of 1/2 to Foundation (677,778.724) NY Estate Tax (108,752.979) Gross Estate 155,200,000 Federal Estate Tax (199.586.322) Marital Trust Residue 367.819.423 GST Exempt Marital Trust 1,620.000 Passes to Black 2006 Family Trust Last Will and Testament Pro .osed 2012 Gross Estate $ 155,200,000 Administration Expenses (2%) (30,219,149) Note Payable to BFP (42,000,000) Residuary Estate 82,980,851 Passes to Revocable Trust Leon Black Family Foundation Black 2006 Family Trust 1/2 Total Marital Trusts 677.778.724 GST Exempt Marital Trust 1,620.000 Revocable Trust Agreement Marital Trust Residue 367,819,423 Proposed 2012 Debra's GST Bequest 5,120,000 Residuary Estate 82,980,851 Debra's Rev. Trust Residue 17,313.085 GST Bequest to 2006 Trust (5,120,000) Total Added Upon Debra's Death 391 872.508 Tangibles & Yacht to Children (25,200,000) NY Estate Tax (12,467,353) Federal Estate Tax (22,880,413) Revocable Trust Residue 17,313,085 Passes to Black 2006 Family Trust Yacht and Tangibles Outright to Children in Equal Shares 1 Yacht 25,000,000 Tangible Property 200,000 Page 6 of 17 EFTA01088195 Leon D. and Debra R. Black Overview of Proposed Estate Plan Black 2006 Family Trust (Proposed 2012) Flow Chart - Following Debra's Death Trustees: John Hannan Black 2006 Family Trust and Richard Ressler Trust Assets (Net of Liabilities) 1,289,200,000 Added Upon Debra's Death: GST Exempt Marital Trust 1,620,000 Marital Trust Residue 367,819,423 Debra's GST Bequest 5,120,000 Debra's Rev. Trust Residue 17,313,085 Total 1,681,072,508 Upon the death of the survivor of Debra and Leon: • Trust Principal is divided into separate shares for Debra and Leon's children. • 75% of each child's share is held in a separate trust (a "Child's Trust") under Article III. • 25% of each child's share is held in a separate trust (a "Child's Trust") under Article IV. 1 Trustees have discretion to pay the child income and principal from the Child's Trusts for - health, education, maintenance and support. 2 Independent Trustee has discretion to pay the child income and principal for any purpose. 3 At age 35, child can remove and replace Trustees and become a co-Trustee. 4 The Child's Trusts terminate upon the death of the child: - The child has a testamentary power to appoint the principal as noted below. - Assets not appointed will pass to the child's issue, subject to lifetime trusts. Article III Trust Article IV Trust There must always be a corporate Trustee with No corporate Trustee is required. - distribution and investment discretion. Child may appoint trust property to a spouse or Leon's issue. Child may appoint trust property to Leon's issue. Child may withdraw $5 million (inflation adjusted) per year. Funded with: Funded with: - Debra's GST Bequest; - Art (100% of Marital Trusts Residue); - The GST Exempt Marital Trust; - 25% of Current Trust Assets; and - 75% of Current Trust Assets; and - 25% of Debra's Rev. Trust Residue. - 75% of Debra's Rev. Trust Residue. Child'sTrusts f/b/o Benjamin Eli Black Child's Trusts f/b/o Joshua Max Black Child's Trusts f/b/o Alexander S. Black Child's Trusts f/b/o Victoria R. Black Article III Trust $ 245,376,203 Article III Trust 245,376,203 Article III Trust 245,376,203 Article III Trust 245,376,203 Article IV Trust 173,611,924 Article IV Trust 173,611,924 Article IV Trust 173,611,924 Article IV Trust 173,611,924 Page 7 of 17 EFTA01088196 Leon D. and Debra R. Black Overview of Proposed Estate Plan Black Family 1997 Trust (Proposed 2012) Flow Chart - Following Debra's Death Trustees: Barry Cohen, Black Family 1997 Trust John Hannan and Richard Ressler Current Trust Assets: 286,375,000 2009 GRAT Remainder: 94,000,000 Total 380,375,000 Upon the death of the survivor of Debra and Leon: • Trust Principal is divided into separate shares for Debra and Leon's children. • 75% of each child's share is held in a separate trust (a "Child's Trust") under Article III. • 25% of each child's share is held in as separate trust (a "Child's Trust") under Article IV. 1 Trustees have discretion to pay the child income and principal from the Child's Trusts for - health, education, maintenance and support. 2 Independent Trustee has discretion to pay the child income and principal for any purpose. 3 At age 35, child can remove and replace Trustees and become a co-Trustee. 4 The Child's Trusts terminate upon the death of the child: - The child has a testamentary power to appoint the principal as noted below. - Assets not appointed will pass to the child's issue, subject to lifetime trusts. Article III Trust Article IV Trust There must always be a corporate Trustee with No corporate Trustee is required. -distribution and investment discretion. The child may appoint trust property to a spouse or to Leon's The child may appoint trust property to Leon's issue. Child may withdraw $5 million (inflation adjusted) per year. Funded with 75% of principal Funded with 25% of principal Black Family 1997 Trust f/b/o Benjamin Eli Black Black Family 1997 Trust f/b/o Joshua Max Black Black Family 1997 Trust f/b/o Alexander S. Black Black Family 1997 Trust fibto Victoria R. Black Article III Trust $ 71,320,313 Article III Trust 71,320,313 Article III Trust 71,320,313 Article III Trust 71,320,313 Article IV Trust 23,773,438 Article IV Trust 23,773,438 Article IV Trust 23,773,438 Article IV Trust 23,773,438 Page 8 of 17 EFTA01088197 Leon D. and Debra R. Black Overview of Proposed Estate Plan Black 2011 Family Trust Flow Chart - Following Debra's Death Trustees: Barry Cohen and John Hannan Black 2011 Family Trust Administrative Trustee: U.S. Trust Company of Delaware LDB 2011 LLC $ 181,500,000 Property is held in four separate Trusts: one for each child: 1 Prior to age 25, Trustees have discretion to pay the child income. 2 After age 25, child receives all trust income quarterly. 3 Trustees have broad discretion to distribute principal to the child. 4 Each child's trust terminates upon the child's death: - If Leon and Debra are deceased and child was over age 35, child may appoint the principal of his/her trust to Leon's issue. - Unappointed assets will pass to child's issue, subject to lifetime trusts. 2011 Trust f/b/o Benjamin Eli Black 2011 Trust t/b/o Joshua Max Black 2011 Trust f/b/o Alexander S. Black 2011 Trust f/b/o Victoria R. Black $ 45,375.000 $ 45.375.000 $ 45.375.000 $ 45.375.000 Page 9 of 17 EFTA01088198 Leon D. and Debra R. Black Overview of Proposed Estate Plan Leon D. Black Insurance Trusts #1 & #2 Flow Chart - Following Debra's Death Trustees: Norman Brownstein, then 1999 Life Insurance Trusts John Hannan #1 & #2 Combined Death Benefit: $ 150.000,000 Upon the death of the survivor of Leon and Debra, Trust principal is divided into separate trusts; one for each of Leon's children. 1 Prior to age 21, Trustee has discretion to pay the child income. 2 After age 21, child receives all trust income quarterly. 3 The Trustee has broad discretion to pay principal to the child. 4 Each child's trust terminates 21 years after the death of the survivor of: - Leon, Debra and their issue living on 9/13/99. 5 Child has a testamentary power to appoint the trust to his/her issue. - Assets not appointed will pass to the child's issue. 1992 Trusts f/b/o Benjamin Eli Black 1992 Trusts fibto Joshua Max Black 1 1992 Trusts f/b/o Alexander S. Black 1992 Trusts f/b/o Victoria R. Black $ 37.500.000 37,500,000 $ 37,500,000 $ 37,500,000 Page 10 of 17 EFTA01088199 Leon D. and Debra R. Black Overview of Proposed Estate Plan Debra and Leon D. Black Life Insurance Trust Flow Chart - Following Debra's Death Trustee: Barry Cohen 1992 Life Insurance Trust Death Benefit: $13,000.000 Upon the death of the survivor of Debra and Leon. Trust is divide into separate trusts; one for each of Leon's children. 1 Prior to age 25, Trustees has discretion to pay the child income. 2 After age 25, the child receives all trust income quarterly. 3 Trustee has broad discretion to pay principal to the child. 4 Trustee is authorized (if deemed advisable) to distribute principal: - 1/4th at age 30; - another 1/3rd at age 35; - another 1/2 at age 40; and - the balance of the child's trust principal at age 45. 5 If the child dies prior to age 45, assets will pass to the child's issue, subject to trust until age 45. 1992 Trust flb/o Benjamin Eli Black 1992 Trust f/b/o Joshua Max Black 1992 Trust f/b/o Alexander S. Black 1992 Trust f/b/o Victoria R. Black $ 3.250.000 $ 3,250.000 3.250.000 $ 3.250.000 Page 11 of 17 EFTA01088200 Leon D. and Debra R. Black 2012 Estate Planning Overview Distributions Upon Leon's/Debra's Death Dispositive Upon Leon's Upon Debra's Lifetime Planning Provisions Death Death Benjamin Eli Black $ 607,786,877 1992 Insurance Trust Trust until age 45 $ $ 3.250,000 Black Family 1997 Trust Trust for Life 95,093,750 1999 Insurance Trust Trust for Life 37,500,000 Black 2006 Family Trust Trust for Life 97,968,127 322,300,000 Black 2011 Family Trust Trust for Life 45,375,000 Tangibles Outright from Debra's Estate Outright 6,300,000 Joshua Max Black $ 607,786,877 1992 Insurance Trust Trust until age 45 $ $ 3.250,000 Black Family 1997 Trust Trust for Life 95.093,750 1999 Insurance Trust Trust for Life 37,500,000 Black 2006 Family Trust Trust for Life 97,968,127 322,300,000 Black 2011 Family Trust Trust for Life 45,375,000 Tangibles Outright from Debra's Estate Outright 6,300,000 Alexander S. Black $ 607,786,877 1992 Insurance Trust Trust until age 45 $ $ 3,250,000 Black Family 1997 Trust Trust for Life 95,093,750 1999 Insurance Trust Trust for Life 37,500,000 Black 2006 Family Trust Trust for Life 97,968,127 322,300,000 Black 2011 Family Trust Trust for Life 45,375,000 Tangibles Outright from Debra's Estate Outright 6,300,000 Victoria R. Black $ 607,786,877 1992 Insurance Trust Trust until age 45 $ $ 3,250,000 Black Family 1997 Trust Trust for Life 95,093,750 1999 Insurance Trust Trust for Life 37,500,000 Black 2006 Family Trust Trust for Life 97,968,127 322,300,000 Black 2011 Family Trust Trust for Life 45,375,000 Tangibles Outright from Debra's Estate Outright 6,300,000 Judy Black $ 5,000,000 Trust f/b/o Judy Black - Under Leon's Rev Trust Trust for Life $ 5.000,000 Leon Black Family Foundation $ 677,778,724 $ 713,148,768 Federal Estate Tax $ 473,846 $ 222,466,735 New York Estate Tax 508,706 121,220,332 Administration Expenses (1) 36,260,000 30,219,149 Liabilities 260,000,000 42,000,000 Total Assets $ 3,827,075,000 (1) Based on 2% of the gross estate Page 12 of 17 EFTA01088201 Leon D. and Debra R. Black Overview of Proposed Estate Plan Estimated Estate Tax Calculations Leon's Gross Estate $ 1,813,000,000 Debra's Gross Estate S 1,510,957,448 Less Deductions: Less Deductions: Liabilities (260.000,000) Liabilities (42,000,000) Administration Expenses (36.260,000) Administration Expenses (30,219,149) Charitable Deduction Charitable Deduction (677,778,724) Marital Deduction (1,510.757,448) Marital Deduction Estimated New York Estate Tax (508,706) Estimated New York Estate Tax (121,220,332) Plus: Adjusted Taxable Gifts 1,000,000 Plus: Adjusted Taxable Gifts 1,000.000 Taxable Estate 6.473,846 Taxable Estate $ 640,739,243 Tentative Federal Estate Tax 2,246,646 Tentative Federal Estate Tax 224,239,535 Less Credits/Payments: Less Credits/Payments: Unified Credit (1.772,800) Unified Credit (1,772,800) Gift Taxes Paid Gift Taxes Paid Estimated Federal Estate Tax $ 473,846 Estimated Federal Estate Tax $ 222,466,735 Estimated New York Estate Tax $ 508,706 Estimated New York Estate Tax $ 121,220,332 Total Estate Tax Due Upon Leon's Death 982,552 Total Estate Tax Due Upon Debra's Death 343,687,067 Combined Federal Estate $ 222,940,581 Combined State Estate Tax 121,729,038 Total Combined Estate Tax $ 344,669,619 Page 13 of 17 EFTA01088202 Leon D. and Debra R. Black Overview of Proposed Estate Plan Black Family Partners - Financial Inventory Detail Assets Cash U.S. Trust Cash Account $ 13,400,000 Marketable Securities Lone Cascade LP 36,800,000 King Street Capital 12,600,000 AINV shs dist fr AIC 3,900,000 Anchorage Capital Partners 12,500,000 Millennium Group 19,600,000 Canyon Value Realization 13,200,000 Illiquid Assets Investment Partnerships: 56,800,000 HAO Capital Fund LP $ 3,000,000 iCrete LLC 1.600,000 Knowledge Universe 32,000,000 Wolfensohn Cap Ptrs 2,000,000 Sustainable Woodlands 18,200,000 44% Interest BRH Hldgs 1,143,000,000 Apollo Colnvest III