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 Smith Family Balance Sheet' Mr. Joe Smith Mrs. Janet S Joint Joe Smith Mrs. Janet 2009 Trust as Smith's Amended & Revocable Restated Trust 2002 Smith Family Trust Daughter #1 2006 Trust dated March 30, 2006 Joe Smith 2002 Trust dated November 5, 2002 Total 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. 2Hedge 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 IRAs 1,416,233 Designated Beneficiary S 1.416,233 1/2 Interest in Jointly-held Cash & Marketable Securities 2.365.960 Janet 2.365.960 1/2 Interest in Jointly-held Investment Real Estate 54,670 Janet 5 54.670 1/2 Interest in Jointly'held Tangible Property 250,000 Janet 250.000 1/2 Interest in Jointly-held Real Estate S 2,500,000 Janet 5 2.500.000 Note: lointly.held property will pass to the survivor upon operation of law at the first death. Joe's Revocable Trust 6,094,364 Mr. Joe Smith's probate estate Tangible Property S Personal Real Estate Cash & Marketable Securities 9.020.417 S Hedge Funds Private Equity 175.000 S 1.415.000 5mfth Partners S 5,000,000 assets will pour over' to Rev Trust Estimated gross estate: Estimated administration expenses: Debts: Estimated federal estate taxes: Estimated state estate taxes: Estimated income taxes: $28,291,663 so (51,000,000) so so so Janet S Janet Note: Joe's Will directs that his tangible property and real property goes to Janet, however. our unckntanding is that the property is jointly.held and will pass to her upon operation of law. Cash gi t to Janet 10.000 Morita Trust Nonexempt GST Exempt S 15.694.801 S 4,000.000 Note: • Janet and Ken Young (if he is NOT over 75) are Trustees. Stan Williams is successor to Joe. There are detailed successor Trustee provisions. • Trustees shall pay to Janet at least annualk all income and may pay her principal from the nonexempt Marital Trust as disinterested Trustee determines. • Janet has a testamentary power to appoint the nonexempt Marital Trust among Joe's issue. Family Trust GST Trust 1.000.000 Note: • Same Tnntees as Marital Trust. • We have shown Janet as disclaiming the amount of the NY exemption. Any disclaimed amount would be held in a Family Trust. We have shown GST allocation as being made to this trust. • During life of Janet, at any time when the is acting as Trustee, Trustees shall pay Janet income and/or principal as disinterested Trustee determines, pay to each of Settler's issue income and/or principal as wife, solely in her fiduciary capacity, determines to be necessary for HEMS of issue, and accumulate income not paid. • When Janet is NOT acting as Trustee, Trustees shall pay among Janet and Senior's issue as DT determines income and/or principal and accumulate income not paid. 611'.Jae Smith's non.includible estate. 2002 Smith Family Trust 261,320 2002 Smith Family Trust S 261.320 Note: • Irrevocable; NY law. • Ice and Janet ale Grantors. Ken Young is Trustee. Randy Luck is successor. Each individual Trustee may designate one or more successor Trustees (other than the Grantors). Any sole Trustee may designate a co-Trustee. • During lifetime of GrdlliO/5, or survivor of them, Trustee may pay income or principal, equal or unequal, as Trustee (other than any beneficiary of trust) may determine among Grantors' descendants living from time to time. Income not paid is added to principal at least annually. • Descendants have withdrawal rights, not to exceed 510,000, over additions to the tr ust. Person making the addition may modify withdrawal rights. • Trusts may be divided for GST purposes. *In 2011 and 2012 the federal estate tax is 35%, the federal estate exemption is $5 million, and the GST exemption is $5 million. We have assumed that neither Joe nor Janet has used any of his and her exemptions. Daughter *1 2006 Trust dated March 30. 2006 2.065.723 Daughter *1 2006 T ust dated March 30, 20.06 S 2.065.723 Note: • Irrevocable; NY law. • Joe is Settler. Ken Young is Trustee. Stan Williams is successor Trustee. Individual Trustee may designate an individual or bank as successor. • Trust for benefit of Settler's daughter, • Trustee (1) shall pay to daughter 01 from income amount equal to LESSER of income for such year AND 5% of value of principal as of 1st day of suds year, (2) MAY pay her income in excess of the Amount as Trustee determines, and (3) shall accumulate and add to principal income not paid. Trustee may pay to daughter NI principal as Trustee determines. • Upon daughter fits's death, trust goes to her issue who survive her per stirpes, with shares held under continuing trust provisions. • All trusts end on 21st anniversary of death of last survivor of Settler, Janet and all individual among Settler's issue who were living on date of trust. • With respect to NON GST exempt portion, Trustee may grant general POA to beneficiary if would save taxes. • Trusts may be divided for GST purposes. Joe Smith 2002 Trust dated November 5. 2002 467.336 Joe Smith 2002 Trust dated November 5. 2002 467,336 Note: • Irrevocable; NY ay, • Joe is Settler. Ken Young is Trustee. Stan Williams is successor to Joe. Individual Trustee may designate an individual or bank as his successor. • Trust for benefit of Settkes daughter NI. • Until daughter NI is 65, Trustee may pay her income and/or principal as Trustee determines, and accumulate income not paid. • When daughter al is 45, I/5 of trust is payable to her; 1/4 at age SO, 1/3 at 55, 1/2 at 60 and remainder at 65. If daughter NI dies before SO, trust goes to her issue who survive, per stirpes with shares held in discretionary trust until the issue is 40 with principal payouts at 30 and 35. If issue dies before 40, trust would go to issue per stirpes, with shares held under same trust provisions. • With respect to any Child's Trust or Descendant's Trust which is not GST exempt. Trustee may confer upon beneficiary a testamentary general POA. • Trusts may be divided for GST 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 IRAs I S 1,450,832 1 Designated Beneficiaries S 1,259,527 Marital Trusts Nonexempt GST Exempt S 15,694,801 S 4,000,000 V Janet's Revocable Trust $ Mrs. Janet Smith's probate estate Tangible Property 500,000 Cash & Marketable Securities (including cash gift received at Joe's death) 5 11,044,779 S Investment Real Personal Real Estate Estate 109,339 S 5,000,000 assets will "pour over" to Rev Trust Note: Upon Janet's death, these trusts would be added to the Trusts for Descendants created under Janet's Revocable Trust. Children 500,000 Trusts for Descendants GST Exempt Nonexempt 5 10,000,000 S 12,754,833 Mrs. Janet Smith's non•includible estate Family Trust • GST Exempt 1,000,000 Note: • Ken Young (if he is NOT over 75) is Trustee. Stan Williams is successor. Each Descendant if over 21 shall be additional Trustee of his or her trust. Each individual Trustee may designate an individual or bank as successor. There is much elaboration about successor Trustees. • Trust divided among issue per stirpes and held under provisions of Art SIXTH for the 'Descendant? Trust would be divided into GST and nonexempt trusts. Janet directs that gift to Nicole be satisfied in part by Janet's interest in stock of any cooperative apartment in which daughter MI is residing at Janet's death. • At any time when Descendant shall NOT be acting as Trustee, Trustees shall pay to Descendant and Descendant's issue as Disinterested Trustee ("DT") determines income and/or principal. • At any time when Descendant is acting as Trustee, Trustees shall pay to Descendant income and/or principal as DT determines, pay to Descendant's issue income and/or principal as Descendant, solely in his fiduciary capacity as Trustee determines for HEMS of issue, and accumulate income not paid. • Upon death of Descendant, trust goes as Descendant appoints by Will among Settlor's issue, other than Descendant (though DT may confer upon Descendant a general POA over trust which is nonexempt). In default, would go to Settlor's issue per stirpes to be held under these same provisions. • All trusts end 21 years after death of last survivor of Settlor, Janet, and all issue living on date of Settlor's death. Estimated gross estate: Est'd administration expenses (l%): Debts: Estimated federal estate taxes: Estimated state estate taxes: Estimated income taxes: $37,799,751 ($377,998) ($408,777) ($7,918,435) (55,388,876) ($191,305) • Note: Upon Janet's death, this trust would be added to the GST Trusts created under Janet's Revocable Trust. S 2002 Smith Family Trust. 61,320 2002 Smith Family Trust $ 261,320 Note: • Irrevocable; NY law. • Joe and Janet are Grantors. Ken Young is Trustee. Randy Luck is successor. Each individual Trustee may designate one or more successor Trustees (other than the Grantors). Any sole Trustee may designate a co-Trustee. • Upon death of survivor of Grantors: if daughter #2 is living and has not attained age 35, Trustee shall pay income and/or principal as Trustee determines among Grantors' descendants, of whatever degree and whether or not born during Grantors' lives, as Trustee selects. • Upon death of daughter #2 or upon her attaining 35, trust goes to Grantors' issue as then living, per stirpes, provided that if Grantors' daughter #1 has not attained age 35 at time of such distribution, property shall be held in trust for her. • Trust for daughter MI: Trustee shall pay out of income and/or principal equal or unequal, as Trustee determines to daughter #1's descendants, of whatever degree and whenever born, as Trustee selects. Income not paid is added to principal. (Note: trust does not say whether Nicole may also get payments.) • Upon daughter #1's death or her attaining 35, trust goes to daughter #1 if living, or if not living, to her issue living per stirpes. • All trusts end 21 years after death of last survivor of all descendants of Grantors' respective parents living on date of trust. • No Trustee who is also a beneficiary shall exercise any discretion in own favor to pay income or principal. No payments in discharge of legal obligation. • Trusts may be divided for GST purposes. Daughter 41 2006 Trust dated March 30, 2006 $ 2,065,723 Daughter 41 2006 Trust dated March 30, 2006 5 2,065,723 Joe Smith 2002 Trust dated November 5, 2002 467,336 1 Joe Smith 2002 Trust dated November 5, 2002 467,336 Note: Please see provisions on previous page. *In 2011 and 2012 the federal estate tax is 35%, the federal estate exemption is $5 million, and the GST exemption is $5 million. We have assumed that neither Joe nor Janet has used any of his and her exemptions. 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 Administration expenses: (377,998) Debts: (1,408,777) Estate taxes: (13,307,312) Income taxes: 0 Total cash required (15,094,086) Liquidity surplus/deficit 11,055,494 Combined Liquidity available to both estates Cash: Marketable securities: Life insurance: 1,676,876 24,472,704 Total cash available 26,149,580 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. P . Mores 1 3 Moran 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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