EFTA00615352.pdf

Joe and Janet Smith Fall 2011 ESTATE DISPOSITION ANALYSIS (ATLAS) Investment products: Not FDIC insured • No bank guarantee • May lose value Please see important information at the end of this presentation. J . P. Morgan ATLAS (Analysis of Tax, Liquidity and Structures) is a proprietary tool that summarizes estate flows, mapped to current balance sheet. EFTA00615352  Joe Smith Joe Smith Mrs. Janet Daughter #1 2002 Trust Mrs. Janet 2009 Trust as Smith's 2002 Smith 2006 Trust Smith Family Balance Sheet' Mr. Joe Smith S Joint Amended & Revocable Family Trust dated March dated Total November 5, Restated Trust 30, 2006 2002 Investable Assets Cash 243,244 359,027 433,877 640,728 28,666 59,626 54,995 1,820,162 Marketable Securities 8,777,173 5,943,833 4,298,042 5,453,656 232,654 2,006,098 412,342 27,123,798 Hedge Fund Investment2 175,000 175,000 Private Equity / Venture Capital3 1,415,000 1,415,000 Investment Real Estate 109,339 109,339 Smith Partners" 5,000,000 5,000,000 Total Investable Assets 15,610,417 6,302,860 4,841,258 6,094,384 261,320 2,065,723 467,336 35,643,298 Personal Assets5 Tangible Property 500,000 500,000 Personal Real Estate (NYC Apt) 5,000,000 5,000,000 Total Personal Assets 5,500,000 5,500,000 Retirement Accounts Traditional IRA 654,434 34,599 689,033 Rollover IRA 761,799 761,799 Total Retirement Assets 1,416,233 34,599 1,450,832 Placeholder for Death Benefit of Life Insurance Total Assets 17,026,650 6,337,459 10,341,258 6,094,384 261,320 2,065,723 467,336 42,594,130 Liabilities Home Mortgage 408,777 408,777 Other6 1,000,000 1,000,000 Total Liabilities 1,000,000 408,777 1,408,777 Total Net Worth 16,026,650 6,337,459 9,932,481 6,094,384 261,320 2,065,723 467,336 41,185,354 1.1.P. Morgan asset values are as of August 31, 2011. Outside assets are as of April 2011 except Daughter #1 2006 Trust and Joe Smith 2002 Trust which are as of June 2011. Statements provided by Joe Smith. 2 Hedge Fund investment represents 5175K in Technology Fund 1. 3Private Equity / Venture Capital includes private equity investment of 5125K in Fund A; includes $500K investment in Fund B, $250K investment in Fund C, $250K in Fund D and $290K investment in Fund E. 4$5MM in Smith Partners as estimated by Joe Smith. sWe have assumed that tangible property and real estate are jointly-held. Tangible property includes $250K in artwork and $250K in jewelry. 6Other liability represents $1MM drawn on J.P. Morgan advised line of credit. J .P. Morgan ATLAS (Analysis of Tax, Liquidity and Structures) is a proprietary tool that summarizes estate flows, mapped to current balance sheet. 1 EFTA00615353 Estimated Estate Disposition for Joe Smith (with Janet Smith surviving) under 2003 Will and Revocable Trust as Amended & Restated* Executor: Janet Smith Successor executor: Stan Williams Dated: August 31, 2011 Mr. Joe Smith's non-probate estate Mr. Joe Smith's probate estate 611'.Jae Smith's non.includible estate. IRAs 1/2 Interest in 1/2 Interest in 1/2 Interest in 1/2 Interest in Joe's Revocable Tangible Property Personal Real Cash & Hedge Funds Private Equity 5mfth Partners 2002 Smith Family Trust Daughter *1 2006 Trust dated March Joe Smith 2002 Trust dated Jointly-held Cash Jointly-held Jointly'held Jointly-held Real Trust Estate Marketable 30. 2006 November 5. 2002 & Marketable Investment Real Tangible Property Estate Securities Securities Estate S 1,416,233 2.365.960 54,670 250,000 S 2, 500,000 6,094,364 S 9.020.417 S 175.000 S 1.415.000 5,000,000 261,320 2.065.723 467.336 assets will pour over' to Rev Trust Designated Janet Janet Janet Janet Janet Janet Cash gi t to Janet Morita Trust Family Trust 2002 Smith Family Trust Daughter *1 2006 T ust dated March Joe Smith 2002 Trust dated Beneficiary 30, 20.06 November 5. 2002 Nonexempt GST Exempt GST Trust S 1.416,233 2.365.960 5 54.670 250.000 5 2.500.000 S 10.000 S 15.694.801 S 4,000.000 1.000.000 S 261.320 S 2.065.723 467,336 Note: Note: Note: Note: Note: Note: Note: lointly.held property will pass to the survivor upon operation of law at the first death. Joe's Will directs that his tangible property • Janet and Ken Young (if he is • Same Tnntees as Marital Trust. • Irrevocable; NY law. • Irrevocable; NY law. • Irrevocable; NY ay, and real property goes to Janet, however. NOT over 75) are Trustees. Stan • We have shown Janet as • Ice and Janet ale Grantors. • Joe is Settler. Ken Young is Trustee. • Joe is Settler. Ken Young is our unckntanding is that the property is Williams is successor to Joe. There disclaiming the amount of the NY Ken Young is Trustee. Stan Williams is successor Trustee. Trustee. Stan Williams is jointly.held and will pass to her upon are detailed successor Trustee exemption. Any disclaimed amount Randy Luck is successor. Individual Trustee may designate an successor to Joe. Individual operation of law. provisions. would be held in a Family Trust. We Each individual Trustee individual or bank as successor. Trustee may designate an • Trustees shall pay to Janet at least have shown GST allocation as being may designate one or • Trust for benefit of Settler's daughter, individual or bank as his annualk all income and may pay her made to this trust. more successor Trustees successor. principal from the nonexempt Marital • During life of Janet, at any time (other than the Grantors). • Trustee (1) shall pay to daughter 01 from • Trust for benefit of Settkes Trust as disinterested Trustee when the is acting as Trustee, Any sole Trustee may income amount equal to LESSER of income daughter NI. determines. Trustees shall pay Janet income designate a co-Trustee. for such year AND 5% of value of principal • Until daughter NI is 65, Trustee • Janet has a testamentary power to and/or principal as disinterested • During lifetime of GrdlliO/5, as of 1st day of suds year, (2) MAY pay her may pay her income and/or principal appoint the nonexempt Marital Trust Trustee determines, pay to each of or survivor of them, Trustee income in excess of the Amount as Trustee as Trustee determines, and among Joe's issue. Settler's issue income and/or may pay income or principal, determines, and (3) shall accumulate and accumulate income not paid. principal as wife, solely in her equal or unequal, as Trustee add to principal income not paid. Trustee • When daughter al is 45, I/5 of fiduciary capacity, determines to be (other than any beneficiary of may pay to daughter NI principal as trust is payable to her; 1/4 at age SO, necessary for HEMS of issue, and trust) may determine among Trustee determines. 1/3 at 55, 1/2 at 60 and remainder at accumulate income not paid. Grantors' descendants living • Upon daughter fits's death, trust goes 65. If daughter NI dies before SO, • When Janet is NOT acting as from time to time. Income to her issue who survive her per stirpes, trust goes to her issue who survive, Trustee, Trustees shall pay among not paid is added to principal with shares held under continuing trust per stirpes with shares held in Janet and Senior's issue as DT at least annually. provisions. discretionary trust until the issue is determines income and/or principal • Descendants have • All trusts end on 21st anniversary of 40 with principal payouts at 30 and and accumulate income not paid. withdrawal rights, not to death of last survivor of Settler, Janet and 35. If issue dies before 40, trust exceed 510,000, over all individual among Settler's issue who would go to issue per stirpes, with additions to the tr ust. Person were living on date of trust. shares held under same trust making the addition may • With respect to NON GST exempt provisions. modify withdrawal rights. portion, Trustee may grant general POA • With respect to any Child's Trust or • Trusts may be divided for to beneficiary if would save taxes. Descendant's Trust which is not GST GST purposes. • Trusts may be divided for GST purposes. exempt. Trustee may confer upon beneficiary a testamentary general POA. • Trusts may be divided for GST Estimated gross estate: $28,291,663 Estimated administration expenses: so *In 2011 and 2012 the federal estate tax is 35%, the federal estate Debts: (51,000,000) exemption is $5 million, and the GST exemption is $5 million. We have Estimated federal estate taxes: so assumed that neither Joe nor Janet has used any of his and her Estimated state estate taxes: so Estimated income taxes: exemptions. so J . P Mor.,_„cran ATLAS (Analysis of Tax, Liquidity and Structures) is a proprietary tool that summarizes estate flows, mapped to current balance sheet. 2 EFTA00615354 Estimated Estate Disposition for Janet Smith (having survived Joe Smith) under 2003 Will and Revocable Trust as Amended & Restated* Executor: Stan Williams Successor executor: Individual Executor may appoint addition or successor Executor Mrs. Janet Smith's non-probate estate Mrs. Janet Smith's probate estate Mrs. Janet Smith's non•includible estate IRAs Marital Trusts Janet's Tangible Cash & Marketable Investment Real Personal Real Family Trust 2002 Smith Family Trust. Daughter 41 Joe Smith 2002 I Revocable Property Securities (including Estate Estate 2006 Trust dated Trust dated • Trust cash gift received at March 30, 2006 November 5, Joe's death) 2002 Nonexempt GST Exempt GST Exempt 1 1 S 1,450,832 S 15,694,801 S 4,000,000 $ 500,000 5 11,044,779 S 109,339 S 5,000,000 1,000,000 S 61,320 $ 2,065,723 467,336 assets will "pour over" to Rev Trust Designated Children Trusts for Descendants 2002 Smith Family Trust Daughter 41 Joe Smith 2002 Beneficiaries 2006 Trust dated Trust dated March 30, 2006 November 5, 2002 GST Exempt Nonexempt S 1,259,527 500,000 5 10,000,000 S 12,754,833 $ 261,320 5 2,065,723 467,336 V • Note: Note: Note: Note: Note: Upon Janet's death, these trusts • Ken Young (if he is NOT over 75) is Trustee. Stan Williams is Upon Janet's • Irrevocable; NY law. Please see provisions on previous page. would be added to the Trusts for successor. Each Descendant if over 21 shall be additional Trustee death, this trust • Joe and Janet are Grantors. Ken Young is Trustee. Randy Luck is Descendants created under Janet's of his or her trust. Each individual Trustee may designate an would be added to successor. Each individual Trustee may designate one or more Revocable Trust. individual or bank as successor. There is much elaboration about the GST Trusts successor Trustees (other than the Grantors). Any sole Trustee successor Trustees. created under may designate a co-Trustee. • Trust divided among issue per stirpes and held under provisions of Art Janet's Revocable • Upon death of survivor of Grantors: if daughter #2 is living and has SIXTH for the 'Descendant? Trust would be divided into GST and Trust. not attained age 35, Trustee shall pay income and/or principal as nonexempt trusts. Janet directs that gift to Nicole be satisfied in part by Trustee determines among Grantors' descendants, of whatever degree Janet's interest in stock of any cooperative apartment in which daughter and whether or not born during Grantors' lives, as Trustee selects. MI is residing at Janet's death. • Upon death of daughter #2 or upon her attaining 35, trust goes to • At any time when Descendant shall NOT be acting as Trustee, Trustees Grantors' issue as then living, per stirpes, provided that if Grantors' shall pay to Descendant and Descendant's issue as Disinterested Trustee daughter #1 has not attained age 35 at time of such distribution, ("DT") determines income and/or principal. property shall be held in trust for her. • At any time when Descendant is acting as Trustee, Trustees shall pay to • Trust for daughter MI: Trustee shall pay out of income and/or Descendant income and/or principal as DT determines, pay to principal equal or unequal, as Trustee determines to daughter #1's Descendant's issue income and/or principal as Descendant, solely in his descendants, of whatever degree and whenever born, as Trustee fiduciary capacity as Trustee determines for HEMS of issue, and selects. Income not paid is added to principal. (Note: trust does not accumulate income not paid. say whether Nicole may also get payments.) • Upon death of Descendant, trust goes as Descendant appoints by Will • Upon daughter #1's death or her attaining 35, trust goes to daughter among Settlor's issue, other than Descendant (though DT may confer #1 if living, or if not living, to her issue living per stirpes. upon Descendant a general POA over trust which is nonexempt). In • All trusts end 21 years after death of last survivor of all descendants default, would go to Settlor's issue per stirpes to be held under these of Grantors' respective parents living on date of trust. same provisions. • No Trustee who is also a beneficiary shall exercise any discretion in • All trusts end 21 years after death of last survivor of Settlor, Janet, and own favor to pay income or principal. No payments in discharge of all issue living on date of Settlor's death. legal obligation. • Trusts may be divided for GST purposes. Estimated gross estate: $37,799,751 Est'd administration expenses (l%): ($377,998) *In 2011 and 2012 the federal estate tax is 35%, the federal estate Debts: ($408,777) exemption is $5 million, and the GST exemption is $5 million. We have Estimated federal estate taxes: ($7,918,435) assumed that neither Joe nor Janet has used any of his and her Estimated state estate taxes: (55,388,876) exemptions. Estimated income taxes: ($191,305) J .P.Mor,cran ATLAS (Analysis of Tax, Liquidity and Structures) is a proprietary tool that summarizes estate flows, mapped to current balance sheet. 3 EFTA00615355  Smith Estate Liquidity Analysis Combined Cash requirements of both estates Combined Liquidity available to both estates Administration expenses: (377,998) Cash: 1,676,876 Debts: (1,408,777) Marketable securities: 24,472,704 Estate taxes: (13,307,312) Income taxes: 0 Life insurance: Total cash required (15,094,086) Total cash available 26,149,580 Liquidity surplus/deficit 11,055,494 J P Morgan • • ATLAS (Analysis of Tax, Liquidity and Structures) is a proprietary tool that summarizes estate flows, mapped to current balance sheet. 4 EFTA00615356  Smith Family Wealth Transfer Summary Where are you now? Where are you later? (assuming 35% Federal estate tax rates) Mr. Joe Smith $23,121,034 Mrs. Janet Smith $6,337,459 Joint $10,341,258 Insurance ? 2002 Smith Family Trust $261,320 $261,320 Daughter #1 2006 Trust dated March 30, 2006 $2,065,723 $2,065,723 Joe Smith 2002 Trust dated November 5, 2002 $467,336 $467,336 Children to Receive: Retirement Accounts $1,259,527 Tangible Property $500,000 Trusts for Descendants-GST Exempt $10,000,000 Trusts for Descendants-Nonexempt $12,754,833 Total Assets $42,594,130 $27,308,740 Debts ($1,408,777) Administration Expenses ($377,998) Income Taxes ($191,305) Estate Taxes ($13,307,312) Total Liabilities ($1,408,777) ($13,876,614) Total $41,185,354 $41,185,354 J. 1P3 . Moran Mores ATLAS (Analysis of Tax, Liquidity and Structures) is a proprietary tool that summarizes estate flows, mapped to current balance sheet. EFTA00615357  Important information IRS Circular 230 Disclosure: !Morgan Chase & Co. and its affiliates do not provide tax advice. 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