Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the state income tax implications arising from the selection of Delaware as the situs for the Caldwell Family Dynasty Trust (the "Dynasty Trust"), to address the interplay of grantor trust status for GRATs A, B, and C during their respective annuity terms, and to identify ongoing state filing obligations applicable to these structures. This memorandum

II. Background and Factual Context A. Client Overview Jonathan R. Caldwell (date of birth: March 14, 1956) is sixty-seven years of age and is a resident of the State of New York, domiciled at 418 East 72nd Street, Apartment 14A, New York, New York 10021. Mr. Caldwell has been a New York domiciliary for over thirty-five years and maintains no residence in any other state. Based on the information provided to our firm

1. Thomas R. Caldwell (age 38), a New York resident domiciled at 55 Perry Street, Unit 3, New York, New York 10014. Thomas is a managing director at Whitmore Partners LLC and is currently serving as the family co-trustee of the Dynasty Trust.

2. Katherine C. Hartfield (age 35), a Connecticut resident domiciled at 210 Briarcliff Lane, Greenwich, Connecticut 06830. Katherine is married to William J. Hartfield and is a member of the Distribution Committee of the Dynasty Trust.

3. Olivia G. Caldwell (age 30), an Illinois resident domiciled at 1240 North Dearborn Street, Apartment 807, Chicago, Illinois 60610. Olivia is an associate at the law firm of Linden & Fairchild LLP in Chicago and is also a member of the Distribution Committee. Mr. and Mrs. Caldwell have four grandchildren: • James W. Hartfield (age 8), residing with his parents in Greenwich, Connecticut. • Charlotte M. Hartfield (ag

1. Caldwell Family Dynasty Trust The Caldwell Family Dynasty Trust is an irrevocable trust established under Delaware law, executed on April 1, 2023. The trust is sitused in Delaware, and its institutional co-trustee is Northgate Trust Company of Delaware, a Delaware-chartered trust company located at 1201 North Market Street, Suite 1600, Wilmington, Delaware 19801. The family co-trustee is Thomas R. Caldwell. The tr

2. GRAT A — Caldwell 2023 Securities GRAT The Caldwell 2023 Securities GRAT ("GRAT A") was funded on April 15, 2023, with $60,000,000 in publicly traded securities. GRAT A has a two-year annuity term, with an annual annuity payment of $32,195,122. The applicable Section 7520 rate for March 2023 (the month of the transaction) was 5.0%. Jonathan R. Caldwell serves as grantor and trustee. The GRAT is designed as a "zero

3. GRAT B — Caldwell 2023 Realty GRAT The Caldwell 2023 Realty GRAT ("GRAT B") was funded on May 1, 2023, with $80,000,000 in membership interests in Stonecrest Realty Holdings LLC, representing approximately 59.7% of Stonecrest's total equity (based on a total entity value of approximately $134,000,000). GRAT B has a three-year annuity term, with an annual annuity payment of $29,375,859. The applicable Section 7520

4. GRAT C — Caldwell 2023 Carried Interest GRAT The Caldwell 2023 Carried Interest GRAT ("GRAT C") was funded on June 1, 2023, with $38,000,000 in limited partnership interests and carried interest allocations in Caldwell Ridgeline Capital Funds IV ($12,000,000), V ($14,000,000), and VI carried interest ($12,000,000). GRAT C has a three-year annuity term, with an annual annuity payment of $13,953,759. The applicable

5. Caldwell Family Insurance Trust (ILIT) The Caldwell Family Insurance Trust (the "ILIT") was established on March 15, 2023, under Delaware law, with Northgate Trust Company of Delaware as sole trustee. The ILIT holds a second-to-die universal life insurance policy issued by Beacon Life Assurance Company (Policy No. BLA-2023-77419) with a death benefit of $15,000,000 and an annual premium of $187,500. The ILIT is a

III. Delaware State Income Tax Treatment of Trusts A. General Framework — Delaware's Trust Income Tax Rules Delaware has long been recognized as one of the most favorable jurisdictions in the United States for the establishment and administration of irrevocable trusts. Among the principal advantages of Delaware as a trust situs is the state's exceptionally favorable income tax treatment of trust income. Under Delawar

IV. New York State Income Tax Considerations A. New York Taxation of Trusts — General Rules New York imposes its state income tax on the income of a "resident trust," which is defined under New York Tax Law § 605(b)(3) as a trust, or a portion of a trust, consisting of property transferred by will of a decedent who at the date of death was domiciled in New York, or a trust, or portion of a trust, consisting of proper

1. Trustee Domicile: All of the trustees of the trust are domiciled outside of New York State.

2. No New York Source Income: The trust does not have any New York source income, as defined under New York Tax Law Article 22.

3. No New York Real or Tangible Personal Property: The entire corpus of the trust, including accumulated income, does not include any real or tangible personal property located in New York State.

4. No New York Trust Administration: No trustee of the trust conducts trust administration activities in New York State, including maintaining trust records, making discretionary distribution decisions, or communicating with beneficiaries regarding trust administration. If all four conditions are satisfied, the trust is classified as an "exempt resident trust" and is not subject to New York income tax on its accumula

V. Grantor Trust Status of the GRATs — State Income Tax Implications A. Federal Grantor Trust Treatment All three GRATs — GRAT A (Caldwell 2023 Securities GRAT), GRAT B (Caldwell 2023 Realty GRAT), and GRAT C (Caldwell 2023 Carried Interest GRAT) — are treated as grantor trusts under IRC §§ 671–679 during their respective annuity terms. This grantor trust treatment arises because Jonathan R. Caldwell, as the grantor,

VI. Connecticut and Illinois State Income Tax Considerations A. Connecticut — Katherine C. Hartfield Katherine C. Hartfield resides in Greenwich, Connecticut, at 210 Briarcliff Lane, Greenwich, Connecticut 06830, and is a resident of the State of Connecticut for income tax purposes. Connecticut imposes its state income tax on trust income in two principal circumstances: (i) trusts created by a Connecticut resident gr

VII. Coordination with Strathmore Corporation & Greaves LLP on State Filing Obligations Proper and timely compliance with all state fiduciary income tax filing obligations is essential to the success of the Caldwell family's trust planning. This section summarizes the principal filing obligations applicable to each trust structure and outlines the coordination required with Strathmore Corporation & Greaves LLP (Marti

1. Zeroed-out GRAT Funding Transfers: GRAT A ($60,000,000 in publicly traded securities), GRAT B ($80,000,000 gross value, $60,000,000 post-discount value of Stonecrest Realty Holdings LLC membership interests), and GRAT C ($38,000,000 gross value, $25,300,000 post-discount value of Caldwell Ridgeline Capital interests). Each GRAT is designed as a zeroed-out GRAT, with the present value of the retained annuity intere

2. Completed Gift to the Dynasty Trust: $5,000,000 in cash contributed to the Caldwell Family Dynasty Trust on April 1, 2023. This contribution utilizes a portion of Jonathan's remaining applicable exclusion amount (lifetime gift and estate tax exemption).

3. Foundation Contribution: Jonathan's $5,000,000 share of the $10,000,000 contribution to the Caldwell Family Foundation (a Section 501(c)(3) private foundation). While this is a charitable contribution and not a taxable gift, it should be disclosed on the Form 709 as an adequate disclosure item.

4. ILIT Premium Gifts: The $187,500 annual premium payment for the Beacon Life Assurance Company second-to-die policy (Policy No. BLA-2023-77419) held by the ILIT. Of this amount, $51,000 is covered by annual exclusion gifts to the trust beneficiaries (utilizing Crummey withdrawal powers), and the remaining $136,500 utilizes a portion of Jonathan's lifetime exemption. GST exemption allocation of $5,000,000 to the Dyn

1. Beneficiary Residency Status: Confirm the cu