Fwd: MBZ Estate Plan Comments
Hi Bud,
I have attached two separ=te lists of comments prepared by Arnold and Porter, having reviewed MBZ=99s estate planning documents. The first list contains comments and s=ggestions relation to language, typos, and other technical items. The second list contains more substantive obse=vations.
Best,
Kris
Technical Comment=:
=nbsp; The parenthetical in Section B of Artic=e First of the Will should be amended to read "(other than works of=art or antiques and other than any items effectively disposed of by Article=Second, Section A)."
=nbsp; Article III, Section A, Paragraph 3 of t=e Trust should include all monetary sums written out in full.
=nbsp; See Sections A and B of Article Third.&=bsp; Should the phrase "upon the trusts therein set forth" b= changed to read "upon the terms of the trusts therein set forth40=8040?
=nbsp; The word "any" should b= removed from the first line of Section A of Article V.
=nbsp; The second sentence of Section B of Art=cle V should be amended to read "To the extent Abigail shall fail t= exercise such power effectively, my Trustees shall allocate....*=9D
=nbsp; The conjunction at the end of Section A=of Article VI should be changed from "or" to "and.4,=804,
=nbsp; The word "Million" shou=d be inserted after the word "Two" in the first sentence of=Article VII.
=nbsp; The second sentence of Section A of Art=cle XI should read "In addition, my Trustees shall pay to such one o= more of the Beneficiary and the Beneficiary's issue....40=9D
=nbsp; See Section G of Article XXII. Wh=t are "accountees"?
Items 1 through 8 have been done/fixed. In response t= item 9, the term "accountees" is defined in Article XXI. I=suppose it would be neater if it was included in the definitions at the end= but the defined term is only used once. Normally, the place where it is used comes shortly after the definition. There's a gr=ater separation here because of the complicated set of trustee provisions.
Substantive Comme=ts:
- The letter from Bud Ehrli=h dated May 23, 2012, suggests that MBZ intends that the New York residence= being left to Abigail are to be sold after MBZ's death. Is t=is correct? Why bequeath the property if it is the intention that such property be sold?
The arrangement is set up to avoid a poten=ial argument that the provision for sale violates the separation agreement,=which requires a bequest/devise of the real estate to Abigail or a trust for her benefit. If there is going to be a sale, as we a=ticipate, the cleanest way would be to have a sale by the executor, but the=separation agreement does not specifically allow that. There is no prohibit=on on a sale by the trustee of Abigail's trust, so this is set up to allow the executor to make the sal=, if so directed by the trustee, on the theory that it is then de facto a s=Ie by the trustee for purposes of the separation agreement.
- Various requirements of t=e Separation Agreement (including disposition of real property) are set for=h in the Will rather than the revocable trust, which means that such dispos=tions will be of public record upon MBZ's death. Why not make a Statement in the Will statin= that MBZ hereby bequeaths property in compliance with the required provisi=ns of the Separation Agreement the details of which are set forth in the re=ocable trust?
I have moved the provision for satisfying the mortgag= and the specific references to the separation agreement to the trust. With=ut some effort (e.g., using an LLC to hold title), the actual transfer of t=e property to Marla would be a matter of public record in any case, and I think it's cleanest just to have=it in the will. It's already a matter of public record that Mort owns the p=operty, and there is presumably no big secret about who actually uses it. l=have also added a reference that I hope is correct to the specific property (4 Three Mile Harbor Drive,=East Hampton, New York), based on the real estate listed in the performance=reports.
- There does not appear to b= any disposition made for specific works of art in the new Will - have thos= intentions been abandoned?
Bud has discussed this with Mort, and he d=es not want to leave any of the art to the girls.
- =nbsp; Article I of the Trust should include a= authorization to make payments during MBZ's incapacity as may be r=quired pursuant to the terms of the Separation Agreement.
Done.
- =nbsp; Article V of the Trust provides for dis=ribution to Abigail of the amount required under 5.F of the Agreement, less="the value of any other property passing to or held for the benefit=of Abigail that constitutes full or partial satisfaction of [his] obligation under the Separation Agreement to leave su=h amount to Abigail." This provision should be clarified, con=istent with the language of the Agreement, to provide that the distribution=takes into account amounts passing to Abigail by "Will, by beneficiary designation or otherwise, including one or=more trusts created during [MBZ's] lifetime."
Done.
- =nbsp; Consider discretionary distributions fo= descendants of nieces and nephews. As currently drafted under Articl= XII, Section B, trustees must distribute to beneficiaries such sums as the= may request, meaning that the trust assets are not protected from claims by a beneficiary's creditors.<=span>
I don't recall all of the history, but Art=cle XII would only take effect if a niece or nephew predeceased Mort, and i='s only intended to hold the property until the beneficiary comes of age (defined here as age 30). There's no real intent to create a m=re expansive trust arrangement for those contingent beneficiaries.
My responses are noted in black belo=.
&nb=p; &=bsp; = &nb=p; --gpm
Hi Lesley,
This is the response em=il from Bingham regarding the comments presented by Arnold & Porter.&nb=p;
Best,
Kris
Kristofer Knutson=/b>
Managing Director I Executive Management -=Office of the Chairman
US News & World Report I New York Daily News
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