EFTA00583490.pdf

CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of January 14, 2014 ACTION TO BE TAKEN RESPONSIBLE PARTY TIMING/STATUS I. SETTLEMENT OF 2006 TRUST ACCOUNTING Ascertain sources of "Trust Accounting Income" (as defined in the 2006 Trust 1. Family Office/Apollo Complete Agreement). Calculate "Trust Accounting Income" that should have been distributed to 2. Apollo Complete Leon annually and in the aggregate. 3. Calculate income actually distributed to Leon annually and in the aggregate. Raich and Family Office Complete 4. Prepare Accounting of 2006 Trust Raich Complete 5. Prepare Accountings of GRATs A-K Raich Complete Evaluate the extent to which other family members (Debra and the children) 6. Team Complete should have separate counsel. Confirm that John Hannan and Richard Ressler will proceed without separate Family Office Complete counsel. Release & Indemnification Agreement for 2006 Trust, to address: (i) that Trustees will not seek reimbursement, (ii) Leon's removal as beneficiary, (iii) 8. MWE Complete exchange of consideration among parties, and (iv) release/indemnification provisions. 9. Release & Indemnification Agreement for GRATs A-J. MWE Complete 10. Execute Release and Indemnification Agreement for 2006 Trust. Various parties Complete 11. Execute Release and Indemnification Agreement 2006 GRATs. Various parties Complete 1 of 9 EFTA00583490  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of January 14, 2014 ACTION TO BE TAKEN RESPONSIBLE PARTY TIMING/STATUS II. ESTABLISH CASH FLOW PLAN Determine appropriate mechanism to increase Leon's liquidity: Either (i) I. creation of freeze partnership or (ii) substitution of Trust assets by Leon in Team Complete exchange for a promissory note. Clarify the trusts from which Leon will acquire BFP interests: • Acquire BFP from 2006 Trust (for cash and/or note) 2. • Acquire BFP from 1997 Trust (or have BFP redeem its interests)? Team Complete • Acquire BFP from LDB 2011 LLC (or have BFP redeem its interests)? LBF Holdings to distribute its BFP interests (70%) to 2006 Trust. 3. Family Office Complete Updating books and records to reflect change of ownership of BFP. Empire is waiting for Value BFP interests held by the 2006 Trust to be acquired by Leon. 4. Empire Valuation/Eileen our final approval on Determine the valuation date. the valuation report. Determine terms of the promissory Note and collateral Leon will give the Team 2006 Trust in exchange for the BFP he will acquire from it. • Need to value assets to be used as collateral. Valuation status-same 5. • Consider including a formula provision in the substitution agreement. as above. • If art is used as collateral, it will not trigger a New York State sales/use tax (PW confirmed). PW is leaning against 6. Determine whether a gift tax return will be filed reporting the substitution. Team doing so. 2 of 9 EFTA00583491  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of January 14, 2014 CTION TO BE TAKEN RESPONSIBLE PARTY TIMING/STATUS Explore financing options relating to the asset substitution and existing loans secured by art. Consider: Preliminary meetings 7 • Using multiple banks (solicit information from BAC, JPM, Morgan 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. R. Team No progress on this 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. 9. Team No progress on this Consider the timing for getting him involved. Prepare and execute (i) assignment documents for the BFP interests being 10. transferred to Leon, (ii) substitution agreement and (iii) if needed, promissory PW Complete note (and security instruments). In progress-waiting for 11. Update books and records to reflect change of ownership of BFP. Family Office final valuations. Consider whether any part of the plan will impact prior SEC filings (change in 12. PW Complete title of BFP from LBF to 2006 Trust, from 2006 Trust to Leon, etc.). Explore additional options for freezing the value of Leon's estate after he acquires all interests in BFP. 13. Team In Progress • Consider implications of Section 2703. 3 of 9 EFTA00583492  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of January 14, 2014 III. NEW WILL/REVOCABLE TRUST FOR LEON AND DEBRA Prepare draft Will, Revocable Trust, powers of attorney and health care proxy 1. PW Complete for Leon. Complete as to summaries. Need to Prepare a memorandum summarizing the proposed documents and 2. Family Office address open issues highlighting open issues for Leon. with Heritage Trust Complete-He does not 3. Consider whether Leon wishes to ask Debra to waive her Right of Election. Team wish to do so. Prepare estate flow illustration based upon new Will/Revocable Trust and 4. following Leon's asset substitution. Consider revisions to plan based on US Trust/Family Office Complete results. Leon to execute Will, Revocable Trust, power of attorney, health care proxy )• Leon/PW Complete and maybe, living Will. IV. Iffi l DECANT EXISTING TRUSTS TO NEW TRUST Complete but I. Confirm tenns of "Heritage Trust" and draft the Trust Agreement. PW revisions likely 2. Leon to execute Trust Agreement. PW Complete Determine which assets will be decanted to the Heritage Trust (2006 Trust, 1997 non-GST exempt trust, etc.) and the timing. Decanting to APO1 3. Team and APO2 as first • If 1997 Trust assets, wait until 2009 GRAT terminates? Or assign step receivable? Draft and execute decanting instruments and any assignment documents and PW See updated 3 page 4. arrange for retitling of assets. list 4 of 9 EFTA00583493  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of January 14, 2014 IV. DECANT EXISTING TRUSTS TO NEW TRUST To be done as soon as 5. Update insurance coverage for art to reflect change in title to Heritage Trust. Family Office Leon signs decanting documents 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 6. between Heritage Trust and Leon (to include the fair market rental rate for his Team to discuss Team to discuss use) • If lease agreement, this will trigger New York State sales tax. V. RESTRUCTURING OF FAMILY BUSINESS ENTITIES (A) BLACK FAMILY PARTNERS I. Confirm each partner's ownership percentage and adjust capital accounts to Waiting for final Family Office reflect partner contributions and partnership distributions. valuations In progress-some 2. Clean up loans to and from BFP. Family Office repaid. Consider restructuring BFP to avoid estate inclusion and other issues. 3. Team No progress on this Consider implications of Section 2701. (B) LDB 2011 LLC 1 Confirm each member's ownership percentage and adjust capital accounts to Waiting for final Family Office reflect member's contributions. valuations 2. Review LLC agreement to ascertain estate inclusion issues. PW 5 of 9 EFTA00583494  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of January 14, 2014 (C) LBF HOLDINGS LLC I. Consider restructuring LLC agreement to avoid estate inclusion issues. PW No progress on this SECURITIES LAW ISSUES VI. 1. Review prior SEC filings for accuracy. PW 2 Address securities law issues (such as reporting or short-swing profit rules) PW with respect to action steps. VII. FOUNDATION PLANNING 1. Create new foundations for each of Leon's children. PW No progress 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/PW foundation investments, administration, and use and distribution of assets. Review governing instrument for Leon's foundation to determine if 4. Family Office provisions still reflect Leon's intentions regarding future governance. 6 of 9 EFTA00583495  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of January 14, 2014 VIII. INSURANCE (A) SPLIT DOLLAR INSURANCE Determine if split dollar arrangements should be unwound and if so, discuss I. Team Complete alternative plans for doing so. If unwinding the split-dollar arrangements: • Consider whether insurance policies should be continued; Team To be discussed after roll-out • Obtain appraisal of the rights under the split-dollar agreements. 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 1. Determine whether there is a need for life insurance and if so, what amount. Team In progress Confirm that Trustees of insurance trusts are doing periodic policy reviews 2. Family Office and obtain copies of all Crummey notices. (C) PERSONAL PROPERTY INSURANCE Good progress made. Prepare full inventory of Leon's personal property, including art and 1. Family Office Need to check with household property (cane collection, rare book collection, bronzes, etc.). Eileen. 2. Prepare inventory of Debra's personal property, including jewelry. Family Office In progress 7 of 9 EFTA00583496  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of January 14, 2014 IX. NOTE REPAYMENT Devise a cash flow plan to repay all outstanding promissory notes between trusts, family members and family entities. I Family Office No progress on this ' • 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 2. refinanced (to reflect business reality or alternatively, use a lower AFR) and Team secured (if they are not). X. FREEZE PARTNERSHIP I. Create new LLC/LP as the preferred partnership. PW On hold 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 PW change in title of financial assets to the preferred partnership. 8 of 9 EFTA00583497  CHECKLIST FOR LEON BLACK ESTATE PLANNING AND RESTRUCTURING As of January 14, 2014 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) XI. ADMINISTRATION OF TRUSTS AND FAMILY ENTITIES Prepare record book for Trustees describing the process by which they made 1. Family Office Slow progress on this 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. XII. FAMILY MEETINGS One family meeting Discuss with Leon whether he wants to implement family meetings or I. Family Office/U.S Trust held. Need to follow "Financial Empowerment" meetings for his children. up with Leon 9 of 9 EFTA00583498