CALDERWOOD & HARKNESS LLP 375 Park Avenue, 42nd Floor New York, New York 10152
Telephone: (212) 554-7000
CONFIDENTIAL — CLIENT INFORMATION QUESTIONNAIRE
Generational Estate Planning Engagement
IMPORTANT INSTRUCTIONS: This questionnaire is being completed in connection with the engagement of Calderwood & Harkness LLP for comprehensive estate planning services. Please complete all sections as fully and accurately as possible. Attach additional pages as needed. All information provided herein will be treated as strictly confidential and protected by the attorney-client privilege. If you are uncertain about any question or require clarification, please contact Monica Reyes at (212) 554-7148 or mreyes@calderwoodharkness.com. Please note that the asset inventory referenced herein is anticipated to be finalized as of March 1, 2023. Where valuations are provided, they reflect good-faith estimates as of the date of this questionnaire and will be subject to formal appraisal and verification in the course of the engagement.
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SECTION I: PERSONAL INFORMATION — CLIENT
I.A. Client Identification
Jonathan Robert Caldwell is a United States citizen domiciled in the State of New York. Mr. Caldwell has maintained his domicile in New York continuously for more than thirty years. He does not hold citizenship in any foreign country and has no pending applications for residency or citizenship in any jurisdiction outside the United States.
I.B. Residence
Mr. Caldwell's primary residence is a cooperative apartment on the Upper East Side of Manhattan. He has maintained this address as his principal place of abode since approximately 2001. As a cooperative apartment, Client's interest is held in the form of shares in the cooperative corporation together with a proprietary lease, rather than direct ownership of real property. The cooperative shares and proprietary lease are held in Client's individual name.
Secondary Residence(s): Mr. Caldwell does not maintain any secondary personal residences at this time. It is noted, however, that Stonecrest Realty Holdings LLC, an entity wholly owned by Mr. Caldwell, holds several residential investment properties, including single-family homes in Rye, New York and Westport, Connecticut, as further detailed in Section VII.C below. These properties are held for investment purposes and are not used as personal residences by Mr. Caldwell or his family.
I.C. Contact Information
All communications from Calderwood & Harkness LLP regarding this matter will be directed to the contact information provided above unless Mr. Caldwell instructs otherwise in writing. Mr. Caldwell has indicated a preference for communication via mobile telephone and personal email for matters related to this engagement.
I.D. Employment / Business Background
Mr. Caldwell retired from active management of Caldwell Ridgeline Capital LLC in 2019, at which time he transitioned day-to-day management responsibilities to the firm's partners. Caldwell Ridgeline Capital LLC is a Delaware limited liability company that operates as a registered investment adviser and manages a series of private equity and credit-oriented funds. At the time of Mr. Caldwell's retirement, the firm managed approximately $2.1 billion in assets under management across multiple fund vehicles.
Current Affiliations and Business Interests:
Despite his retirement from active management, Mr. Caldwell retains the following economic interests in the Caldwell Ridgeline Capital platform:
(a) Limited partner interests in Caldwell Ridgeline Fund IV LP (Delaware limited partnership, 2015 vintage);
(b) Limited partner interests in Caldwell Ridgeline Fund V LP (Delaware limited partnership, 2018 vintage);
(c) A carried-interest position in Caldwell Ridgeline Fund VI LP (Delaware limited partnership, 2021 vintage).
In addition, Mr. Caldwell is the sole member of Stonecrest Realty Holdings LLC, a New York limited liability company with its principal office at 330 Madison Avenue, Suite 2401, New York, NY 10017. Stonecrest Realty Holdings LLC is a holding company that owns interests in eleven commercial and residential real estate properties located in New York, New Jersey, and Connecticut, as further described in Section VII.C below.
Mr. Caldwell does not serve as an officer, director, trustee, or manager of any publicly traded company. He does not hold any professional licenses or certifications. He does not serve in any governmental, quasi-governmental, or regulatory capacity.
SECTION II: PERSONAL INFORMATION — SPOUSE
II.A. Spouse Identification
Eleanor Victoria Caldwell is the spouse of Jonathan Robert Caldwell. She is a United States citizen and is domiciled in the State of New York.
II.B. Spouse Residence
Mrs. Caldwell resides with Mr. Caldwell at their primary residence on East 72nd Street. Mrs. Caldwell does not maintain a separate primary or secondary personal residence.
II.C. Marital Information
Jonathan and Eleanor Caldwell were married in 1985 and have remained continuously married since that time. Neither Mr. Caldwell nor Mrs. Caldwell has been previously married. The parties did not execute a prenuptial agreement prior to their marriage and have not entered into a postnuptial agreement at any time thereafter.
New York is a separate property jurisdiction. Accordingly, there is no community property classification applicable to the Caldwells' assets. However, it is noted that there is a significant community of interest between the spouses — both in terms of jointly held assets (if any) and in terms of the alignment of their respective estate planning goals and philanthropic objectives. The precise titling and ownership classification of each asset will be confirmed during the asset verification phase of this engagement.
II.D. Spouse Employment / Background
Mrs. Caldwell was formerly a partner in the Whitmore-Langdon Gallery, a contemporary art gallery. The gallery business was sold in 2017. Since that time, Mrs. Caldwell has devoted her professional activities to philanthropic work, including board service for several cultural nonprofit organizations in the New York metropolitan area. Details of her specific board positions and affiliations are available upon request but have not been included in this questionnaire, as they are not directly relevant to the current engagement.
Spouse's Separate Assets: Mrs. Caldwell holds assets in her own name and under her sole control with an estimated aggregate value of approximately $18,000,000. These assets are not part of the current engagement with Calderwood & Harkness LLP and are being addressed separately through Mrs. Caldwell's independent estate planning process, as described in Section II.E below.
II.E. Spouse's Independent Counsel
Mrs. Caldwell has been advised by Calderwood & Harkness LLP that she may wish to retain independent counsel in connection with her own estate planning needs, particularly given the complexity and scale of the Caldwell family's overall wealth and the potential for divergent interests in certain planning structures. Mrs. Caldwell has acknowledged this recommendation and has engaged independent counsel as follows:
Calderwood & Harkness LLP represents only Jonathan R. Caldwell in connection with this engagement. Any communications between Calderwood & Harkness LLP and Mrs. Caldwell's independent counsel at Pemberton, Locke & Strauss LLP will be conducted in accordance with the joint coordination protocol to be established between the firms, with the express written consent of both clients.
SECTION III: CHILDREN
Mr. and Mrs. Caldwell have three children, all of whom are adults. Each child is identified below with relevant personal, family, occupational, and estate planning information.
III.A. Child 1 — Thomas Robert Caldwell
Thomas Robert Caldwell is the eldest child of Jonathan and Eleanor Caldwell. He resides in New York City with his wife, Dr. Sarah P. Caldwell, a physician, and their two minor children, Lucas T. Caldwell (age 3) and Nora E. Caldwell (age 1). Thomas is employed as Vice President of Acquisitions at Meridian Crest Partners LLC, a mid-market real estate private equity firm.
Anticipated Estate Plan Role:
• Primary beneficiary of GRAT remainder interests
• Trustee designee of the dynasty trust (family co-trustee)
• Director designee of the Caldwell Family Foundation
Thomas has been identified by Mr. Caldwell as the family member best positioned to serve in fiduciary capacities, including as successor executor, successor trustee of the revocable trust, and family co-trustee of the dynasty trust. His professional background in real estate finance and investment is expected to complement the institutional trustee's expertise in trust administration.
III.B. Child 2 — Katherine Claire Hartfield (née Caldwell)
Katherine Claire Hartfield is the second child of Jonathan and Eleanor Caldwell. She resides in Greenwich, Connecticut with her husband, Dr. Andrew W. Hartfield, an orthopedic surgeon at Preswick Medical Center, and their two minor children, James W. Hartfield (age 8) and Charlotte M. Hartfield (age 5). Katherine operates a freelance interior design practice.
Anticipated Estate Plan Role:
• Beneficiary of GRAT remainder interests
• Beneficiary of the dynasty trust
• Director designee of the Caldwell Family Foundation
• Member of the Distribution Committee of the dynasty trust
It is noted that Katherine resides in Connecticut, which imposes its own estate tax and may impose income tax on distributions from trusts with Connecticut connections. State income tax implications for trust distributions to Katherine will be evaluated as part of the planning process.
III.C. Child 3 — Olivia Grace Caldwell
Olivia Grace Caldwell is the youngest child of Jonathan and Eleanor Caldwell. She resides in Chicago, Illinois, where she is an associate attorney at Linden & Fairchild LLP, a Chicago-based law firm. Olivia practices environmental law. She is unmarried and has no children.
Anticipated Estate Plan Role:
• Beneficiary of GRAT remainder interests
• Beneficiary of the dynasty trust
• Director designee of the Caldwell Family Foundation
• Member of the Distribution Committee of the dynasty trust
It is noted that Olivia resides in Illinois, which imposes its own income tax regime. State income tax implications for trust distributions to Olivia will be evaluated as part of the planning process. Additionally, Olivia's interest in environmental law may align with the environmental conservation mission area identified for the Caldwell Family Foundation, and her legal training may be of particular value in foundation governance.
SECTION IV: GRANDCHILDREN
IV.A. Summary Table
As of the date of this questionnaire, Mr. Caldwell has four grandchildren, all of whom are minors. The grandchildren are the biological children of Mr. Caldwell's son, Thomas R. Caldwell, and his daughter, Katherine C. Hartfield (née Caldwell). Mr. Caldwell's youngest daughter, Olivia G. Caldwell, does not presently have any children.
IV.B. Additional Notes
(a) Minor Status: All four grandchildren are minors as of the date of this questionnaire. Accordingly, any trust interests or other estate planning benefits designated for the grandchildren will require appropriate provisions for custodial management and distribution standards during their respective minorities.
(b) Special Needs / Guardianship: No special needs or guardianship issues have been identified with respect to any grandchild. None of the grandchildren currently receive, or are anticipated to receive, means-tested government benefits. In the event that any grandchild is subsequently identified as having special needs, the applicable trust instruments should include provisions permitting the creation of supplemental needs sub-trusts or the modification of distribution standards as appropriate.
(c) Future Issue: Mr. Caldwell anticipates that additional grandchildren may be born in the future, including potential children of Olivia G. Caldwell. All estate planning documents prepared in connection with this engagement should be drafted to accommodate future issue, including issue born after the execution of the applicable instruments, in a manner consistent with the overall disposition and governance framework of the estate plan.
SECTION V: OTHER FAMILY MEMBERS / DEPENDENTS
The following additional family members have been identified through the information provided in Section III above:
• Dr. Sarah P. Caldwell (née Brennan): Daughter-in-law; spouse of Thomas R. Caldwell. Physician. Resides in New York, NY.
• Dr. Andrew W. Hartfield: Son-in-law; spouse of Katherine C. Hartfield. Orthopedic surgeon, Preswick Medical Center. Resides in Greenwich, CT.
Mr. Caldwell has confirmed that, other than the family members identified in Sections II through IV above and the daughters-in-law and son-in-law noted above, there are no other individuals for whom Mr. Caldwell has a legal or moral support obligation. Mr. Caldwell does not have any dependents outside of his immediate family. There are no individuals, other than those identified herein, whom Mr. Caldwell wishes to benefit under his estate plan.
Mr. Caldwell has not adopted any children and does not have any children born outside of his marriage to Eleanor V. Caldwell. He has no pending paternity or support proceedings.
SECTION VI: ADVISORS AND PROFESSIONAL TEAM
Mr. Caldwell has assembled a professional advisory team to support the estate planning engagement. Calderwood & Harkness LLP will coordinate with each advisor as necessary to gather relevant data, implement planning structures, and ensure consistency across all aspects of Mr. Caldwell's financial, tax, and estate planning affairs.
VI.A. Accountants / Tax Advisors
Strathmore Corporation & Greaves LLP has served as Mr. Caldwell's personal tax advisor for approximately fifteen years. Martin J. Prescott, CPA, is the lead engagement partner and is familiar with the full scope of Mr. Caldwell's income tax, gift tax, and financial reporting history. Calderwood & Harkness LLP will issue a data request letter to Strathmore Corporation & Greaves LLP to obtain copies of all relevant prior tax returns, including personal income tax returns and gift tax returns, as well as supporting schedules and workpapers necessary for the estate planning analysis.
VI.B. Financial Advisor / Wealth Manager
Havensbrook Wealth Advisors LLC serves as Mr. Caldwell's primary wealth manager and oversees the management of his liquid investment portfolio, which consists of publicly traded equities, fixed-income securities, and cash and cash equivalents with an estimated aggregate value of approximately $112,000,000 as of the date of this questionnaire. Diana R. Linden is the lead advisor and manages the overall relationship, including financial planning, asset allocation strategy, and liquidity analysis. Calderwood & Harkness LLP will coordinate with Ms. Linden on asset titling, account beneficiary designations, and the funding mechanics for the various trust structures to be established under the estate plan.
VI.C. Insurance Broker
Glenmore Insurance Brokerage LLC is assisting Mr. Caldwell in the procurement of a second-to-die universal life insurance policy, as further described in Section XI below. Nathan C. Freed is the lead broker on the engagement and is coordinating the underwriting and policy placement process. Calderwood & Harkness LLP will work with Mr. Freed to ensure that the policy is structured and owned in a manner consistent with the ILIT to be established as part of the estate plan.
VI.D. Other Advisors
The following additional professional contacts have been identified as relevant to the estate planning engagement:
Calderwood & Harkness LLP will coordinate directly with Mr. Fenton regarding the valuation of Mr. Caldwell's limited partner interests and carried-interest position in the Caldwell Ridgeline Capital fund vehicles. Mr. Fenton will be asked to provide capital account statements, distribution histories, and underlying fund-level financial data to support the independent appraisals to be conducted by Ashford Valuation Group LLC.
Similarly, Calderwood & Harkness LLP will coordinate with Mr. Sinclair regarding the Stonecrest Realty Holdings LLC operating agreement, property-level financial data, rent rolls, capital expenditure projections, and other information necessary to support the valuation of Mr. Caldwell's membership interest in Stonecrest for estate and gift tax purposes.
SECTION VII: ASSET SUMMARY
VII.A. Overview
The following table summarizes Mr. Caldwell's estimated gross estate as of the date of this questionnaire. All valuations are good-faith estimates and will be subject to formal appraisal and verification. The asset inventory is anticipated to be finalized as of March 1, 2023.
The composition of Mr. Caldwell's estate reflects a significant concentration in real estate (44.7% of total estate value), held through his wholly owned holding company, Stonecrest Realty Holdings LLC. The liquid securities portfolio constitutes approximately 37.3% of the total estate, providing a substantial base of liquid assets for planning flexibility. The carried-interest and fund stakes in the Caldwell Ridgeline Capital platform represent approximately 12.7% of the estate and present unique valuation, transfer, and tax planning considerations that are addressed further below.
VII.B. Liquid Securities ($112,000,000)
Mr. Caldwell's liquid securities portfolio is managed by Havensbrook Wealth Advisors LLC. The portfolio is held in brokerage and custodial accounts, the specific details of which (including account numbers, custodian identification, titling, and beneficiary designations) will be provided by Havensbrook in connection with the data request to be issued by Calderwood & Harkness LLP.
Mr. Caldwell has confirmed that there are no margin loans, securities-based lending arrangements, or pledges currently outstanding against the liquid securities portfolio. There are no restrictions on transfer with respect to the publicly traded securities, and no concentrated stock positions that would require special diversification planning.
The liquid portfolio will be a primary source of assets for the funding of the planned GRAT structures and for the initial capitalization of the Caldwell Family Foundation.
VII.C. Real Estate — Stonecrest Realty Holdings LLC ($134,000,000)
Jonathan R. Caldwell holds a 100% membership interest in Stonecrest Realty Holdings LLC, a New York limited liability company. Stonecrest Realty Holdings LLC serves as a holding company for interests in eleven commercial and residential real estate properties located across New York, New Jersey, and Connecticut. The day-to-day operations of Stonecrest are managed by Robert M. Sinclair, COO.
The following table sets forth the properties currently held through Stonecrest Realty Holdings LLC, together with their type, location, and estimated fair market value:
Debt and Liabilities: Mortgages and other real estate–related indebtedness on the Stonecrest properties are held at the entity level within Stonecrest Realty Holdings LLC. Mr. Caldwell has confirmed that none of the entity-level debt is personally guaranteed by him; all mortgages are non-recourse to Mr. Caldwell individually. Accordingly, the entity-level liabilities do not increase Mr. Caldwell's personal liability exposure, and the net equity value attributable to Mr. Caldwell's membership interest in Stonecrest reflects the fair market value of the properties net of entity-level debt. The $134,000,000 estimate set forth above represents the estimated equity value of the Stonecrest portfolio after accounting for entity-level indebtedness.
Valuation Considerations: The valuation of Mr. Caldwell's 100% membership interest in Stonecrest Realty Holdings LLC may be subject to valuation discounts for lack of marketability and, depending on the planning strategies employed, other applicable discounts. Any such discounts must be supportable upon examination by the Internal Revenue Service. Formal independent appraisals of the Stonecrest properties and of Mr. Caldwell's membership interest in the entity will be required in connection with the GRAT funding, gift tax reporting, and estate tax planning components of this engagement. Ashford Valuation Group LLC has been retained for this purpose.
Operating Agreement: A copy of the Stonecrest Realty Holdings LLC operating agreement has been requested and will be attached to this questionnaire as Attachment 4, together with the current property schedule. Calderwood & Harkness LLP will review the operating agreement to identify any transfer restrictions, consent requirements, or other provisions that may affect the assignment of membership interests to estate planning vehicles.
VII.D. Carried Interest & Fund Stakes — Caldwell Ridgeline Capital ($38,000,000)
Mr. Caldwell retains limited partner interests and a carried-interest position in three funds managed by Caldwell Ridgeline Capital LLC. The following table summarizes these interests:
CFO Contact for Fund-Level Financial Data: Gregory S. Fenton, CFO, Caldwell Ridgeline Capital LLC, 280 Park Avenue, 35th Floor, New York, NY 10017.
Valuation: The estimated fair market values set forth above are based on information provided by Mr. Caldwell and his advisory team as of the date of this questionnaire. Formal independent appraisals of these interests will be required for GRAT funding purposes and for gift tax return reporting (Form 709). Ashford Valuation Group LLC has been retained to perform these appraisals. The valuation of the carried-interest position in Fund VI presents particular complexity, as the value of carried interest is dependent upon the future performance of Fund VI's underlying investments, the applicable distribution waterfall, and the timing of realizations.
Transfer Restrictions: The limited partnership agreements governing Funds IV, V, and VI may contain restrictions on the transfer or assignment of limited partner interests and carried-interest positions, including requirements for general partner consent, rights of first refusal, or outright prohibitions on transfer. Calderwood & Harkness LLP will review the applicable fund agreements to determine whether Mr. Caldwell's interests can be validly assigned to GRAT vehicles or other estate planning trusts. If consent is required, Calderwood & Harkness LLP will coordinate with Gregory S. Fenton and the current general partner of each fund to obtain the necessary approvals.
Tax Considerations: The carried-interest position in Fund VI may generate income subject to the provisions of Section 1061 of the Internal Revenue Code, which imposes a three-year holding period for long-term capital gains treatment on certain partnership interests held in connection with the performance of services. The income tax treatment of carried interest and its interaction with the grantor trust rules applicable to the proposed GRAT structures will require careful analysis and coordination with Strathmore Corporation & Greaves LLP.
VII.E. Art & Collectibles ($9,000,000)
Mr. Caldwell maintains a personal collection of paintings, sculptures, and decorative arts with an estimated aggregate value of approximately $9,000,000. The collection is located primarily at Mr. Caldwell's residence at 418 East 72nd Street, Apt. 14A, New York, NY 10021.
A formal appraisal of the art collection will be performed by Ashford Valuation Group LLC under the direction of Dr. Leonard K. Whitfield, who holds the Accredited Senior Appraiser (ASA) designation. The appraisal will be conducted in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) and will be suitable for use in connection with gift tax reporting and estate tax planning.
An inventory of the art collection, together with any prior appraisals, has been requested and will be attached to this questionnaire as Attachment 9.
VII.F. Other Assets ($7,000,000)
Mr. Caldwell has identified additional personal property, including automobiles, jewelry, furnishings, and miscellaneous assets, with an estimated aggregate value of approximately $7,000,000. A detailed inventory of these assets has not been prepared as of the date of this questionnaire but will be compiled as part of the asset verification process.
VII.G. Liabilities
Mr. Caldwell has confirmed that he has no significant personal liabilities. All real estate–related debt is held at the entity level within Stonecrest Realty Holdings LLC and is non-recourse to Mr. Caldwell personally. There are no outstanding personal loans, guarantees, judgments, liens, or tax deficiencies attributable to Mr. Caldwell individually.
Accordingly, Mr. Caldwell's net estate is approximately equal to his gross estate of $300,000,000.
SECTION VIII: EXISTING ESTATE PLANNING DOCUMENTS
VIII.A. Revocable Trust
The Caldwell Revocable Trust was established by Jonathan R. Caldwell on October 3, 2010. Mr. Caldwell serves as both the settlor and the current trustee. The trust instrument designates successor trustees in the event of Mr. Caldwell's incapacity or death, the identities and sequence of which are set forth in the original trust instrument currently on file.
In connection with this engagement, Calderwood & Harkness LLP will prepare an amended and restated version of the Caldwell Revocable Trust. The restated trust is anticipated to become effective on or about April 1, 2023. The restated trust will incorporate credit shelter trust and marital QTIP trust provisions designed to maximize the use of Mr. Caldwell's remaining federal estate tax exemption at death, as further described in Section XII.B below.
A copy of the existing Caldwell Revocable Trust (dated October 3, 2010) has been requested and will be attached to this questionnaire as Attachment 1.
VIII.B. Existing Will
The existing Last Will and Testament of Jonathan R. Caldwell was executed on October 3, 2010. The will is a pour-over will, the primary function of which is to direct any assets passing through Mr. Caldwell's probate estate into the Caldwell Revocable Trust for administration and distribution pursuant to the terms of the trust instrument.
In connection with this engagement, Calderwood & Harkness LLP will prepare a new pour-over will coordinated with the amended and restated Caldwell Revocable Trust. The existing will dated October 3, 2010 will be revoked upon execution of the new will.
A copy of the existing Last Will and Testament (dated October 3, 2010) has been requested and will be attached to this questionnaire as Attachment 2.
VIII.C. Powers of Attorney / Health Care Directives
Calderwood & Harkness LLP will review the existing durable power of attorney and health care proxy to confirm their current effectiveness and identify any deficiencies. In connection with this engagement, new versions of both documents will be prepared, together with a living will and HIPAA authorization, to ensure comprehensive coverage for incapacity planning purposes.
VIII.D. Other Existing Estate Instruments
Mr. Caldwell has confirmed that the following estate planning instruments do not currently exist:
• No existing Grantor Retained Annuity Trusts (GRATs)
• No existing dynasty trust or generation-skipping trust
• No existing Irrevocable Life Insurance Trust (ILIT)
• No existing private foundation or donor-advised fund
• No existing Qualified Personal Residence Trust (QPRT)
• No existing charitable remainder trust or charitable lead trust
The absence of these structures is noted for planning purposes. The proposed estate plan contemplates the establishment of multiple GRATs, a dynasty trust, an ILIT, and a private foundation, as further described in Section XII.B below.
SECTION IX: PRIOR GIFTS AND GIFT TAX HISTORY
IX.A. Lifetime Taxable Gifts
Mr. Caldwell has made prior lifetime taxable gifts in the aggregate amount of $6,750,000. Detailed information regarding the nature, timing, recipients, and valuation of these prior gifts will be obtained from the prior gift tax returns (Form 709) filed by Strathmore Corporation & Greaves LLP on Mr. Caldwell's behalf. Copies of all prior gift tax returns have been requested as part of the data request to Strathmore Corporation & Greaves LLP and will be attached to this questionnaire as Attachment 7.
IX.B. Gift Tax Exemption Status (2023)
The following table summarizes Mr. Caldwell's remaining federal lifetime gift tax exemption as of 2023:
Mr. Caldwell's remaining lifetime gift tax exemption of $6,170,000 represents the maximum amount of additional taxable gifts that Mr. Caldwell can make without incurring current federal gift tax liability (subject to the unified credit against the estate and gift tax). This remaining exemption will be allocated strategically across the planned trust structures, including the GRATs and the dynasty trust, to maximize the tax efficiency of the overall estate plan.
IX.C. Generation-Skipping Transfer (GST) Tax Exemption
Mr. Caldwell's 2023 federal GST tax exemption is $12,920,000. The extent to which prior GST exemption allocations have been made — whether on a timely filed gift tax return (Form 709) or by automatic allocation — will be confirmed through review of Mr. Caldwell's prior gift tax returns. This confirmation is essential, as the coordination of GST exemption allocations will be critical to the dynasty trust and GRAT remainder planning strategies contemplated under the proposed estate plan. Improper or unintended GST exemption allocations on prior gifts could significantly impact the available GST exemption for the planned structures.
IX.D. Annual Exclusion Gifts
The current federal annual exclusion for gifts of present interests is $17,000 per donee for 2023. Mr. Caldwell has been asked to confirm his current annual gifting pattern, including any regular gifts to children, grandchildren, or other individuals, and any contributions to 529 education savings plans or custodial accounts. This information is relevant to the overall gift planning strategy and to ensure that annual exclusion gifts are coordinated with the larger transfer tax planning objectives.
SECTION X: INCOME AND TAX INFORMATION
X.A. Estimated Adjusted Gross Income
Mr. Caldwell's estimated adjusted gross income for the 2022 tax year is approximately $22,500,000, as reported by Strathmore Corporation & Greaves LLP. The principal sources of income include:
• Investment income (interest, dividends, and capital gains) from the liquid securities portfolio managed by Havensbrook Wealth Advisors LLC;
• Fund distributions and allocable income from Mr. Caldwell's limited partner interests in Caldwell Ridgeline Funds IV and V;
• Operating income from Stonecrest Realty Holdings LLC (rental income, net of depreciation and entity-level expenses);
• Carried-interest income from Mr. Caldwell's carried-interest position in Caldwell Ridgeline Fund VI.
The level and composition of Mr. Caldwell's annual income are relevant to the estate planning engagement for several reasons, including the determination of charitable contribution deduction limitations, the analysis of cash flow available for GRAT annuity payments, and the assessment of the income tax consequences of grantor trust treatment of the planned trust structures.
X.B. Tax Return Preparer
Calderwood & Harkness LLP will issue a data request letter to Strathmore Corporation & Greaves LLP to obtain copies of Mr. Caldwell's most recent federal and New York State personal income tax returns (2022), together with all supporting schedules, K-1 forms, and workpapers. These documents will be attached to this questionnaire as Attachment 6 upon receipt.
X.C. Charitable Deduction Considerations
In connection with the planned initial funding of the Caldwell Family Foundation, the following charitable deduction limitations are noted:
• For cash contributions to a private foundation, the federal income tax charitable deduction is limited to 30% of adjusted gross income in the year of contribution.
• Based on Mr. Caldwell's estimated 2022 AGI of $22,500,000, the maximum charitable deduction for cash contributions to a private foundation in a single tax year would be approximately $6,750,000 ($22,500,000 × 30%).
• Any excess charitable contributions above the 30% AGI limitation may be carried forward for up to five (5) additional tax years, subject to the same percentage limitations in each carryforward year.
These limitations will be factored into the timing and structure of the planned $10,000,000 initial funding of the Caldwell Family Foundation. To the extent that the initial contribution exceeds the deductible amount in the year of contribution, the excess will generate a charitable contribution carryforward. The deduction timing analysis will be coordinated with Strathmore Corporation & Greaves LLP.
SECTION XI: INSURANCE
XI.A. Life Insurance — Existing Policies
Mr. Caldwell has indicated that he does not currently have any life insurance policies on his life that are in force. This information will be confirmed through the data request process, and any existing policies (or policies that have lapsed or been surrendered) will be identified and reviewed. If any existing policies are identified, they will be attached to this questionnaire as Attachment 8.
XI.B. Life Insurance — Planned
In connection with this estate planning engagement, Mr. Caldwell is pursuing the procurement of a new life insurance policy with the following anticipated characteristics:
The second-to-die policy is designed to provide estate tax liquidity upon the death of the survivor of Jonathan and Eleanor Caldwell. By having the policy owned by an irrevocable life insurance trust (ILIT) rather than by Mr. Caldwell individually, the death benefit proceeds will be excluded from both Mr. Caldwell's and Mrs. Caldwell's gross estates for federal estate tax purposes. The $15,000,000 target death benefit is calibrated to provide a meaningful portion of the estimated estate tax liability that may be due upon the second death, thereby reducing the need for the sale of illiquid assets (such as real estate or fund interests) to satisfy estate tax obligations.
Calderwood & Harkness LLP will draft the ILIT instrument, coordinate with Nathan C. Freed at Glenmore Insurance Brokerage LLC on the policy application and placement, and establish the procedures for Crummey withdrawal notices to ensure that premium payments funded by gifts from Mr. Caldwell qualify for the annual gift tax exclusion.
XI.C. Other Insurance
Property and Casualty Insurance: Mr. Caldwell maintains property and casualty insurance coverage on his personal property and cooperative apartment. Details of these policies are not part of the current estate planning engagement but are noted for reference.
Long-Term Care Insurance: The status of any long-term care insurance coverage for Mr. Caldwell and/or Mrs. Caldwell is to be confirmed. Long-term care insurance is not a primary focus of this engagement, but Calderwood & Harkness LLP may recommend a review of long-term care coverage as part of a comprehensive incapacity planning analysis.
SECTION XII: ESTATE PLANNING GOALS AND OBJECTIVES
XII.A. Primary Objectives
Mr. Caldwell has identified the following primary objectives for the comprehensive estate plan to be developed and implemented by Calderwood & Harkness LLP:
1. Minimize Federal Estate Tax Exposure.
Without planning, Mr. Caldwell's estimated federal estate tax liability is calculated as follows:
This estimated liability of approximately $117,532,000 underscores the urgency and importance of comprehensive estate tax mitigation strategies. Mr. Caldwell's goal is to achieve a reduction in the projected estate tax liability of between $24,000,000 and $30,000,000 through the combination of planning structures described below. The specific tax savings will depend on asset appreciation rates, the applicable Section 7520 rate at the time of GRAT funding, and the ultimate valuation discounts applied to transferred interests.
2. Transfer Wealth to Children and Grandchildren.
Mr. Caldwell wishes to transfer significant wealth to his three children and four grandchildren in a tax-efficient manner that spans multiple generations. The transfers should be structured to maintain appropriate controls over the disposition and management of family wealth, including provisions addressing creditor protection, divorce protection, and responsible stewardship of assets.
3. Establish a Charitable Vehicle for Family Philanthropy.
Mr. Caldwell and Mrs. Caldwell wish to establish a private foundation — the Caldwell Family Foundation — to serve as the family's primary vehicle for structured charitable giving. The foundation will focus on the arts, education, and environmental conservation, with a geographic emphasis on the New York metropolitan area. All three of the Caldwell children will serve as director designees, fostering multi-generational engagement in the family's philanthropic mission.
4. Provide Estate Tax Liquidity.
Mr. Caldwell recognizes that a significant portion of his estate consists of illiquid assets, including real estate (held through Stonecrest Realty Holdings LLC) and private fund interests (held in the Caldwell Ridgeline Capital platform). To avoid the forced liquidation of these assets to satisfy estate tax obligations, Mr. Caldwell intends to procure a second-to-die life insurance policy with a $15,000,000 death benefit, to be held outside the taxable estate in an irrevocable life insurance trust (ILIT).
5. Preserve Family Governance and Flexibility.
Mr. Caldwell places a high value on the ability of trust structures to adapt to changing circumstances, evolving tax law, and the developing needs of family members across multiple generations. Trust instruments should include appropriate provisions for trust protector powers, modification mechanisms, decanting authority, and distribution standards that balance flexibility with responsible stewardship.
XII.B. Specific Structures Under Consideration
The following estate planning structures have been identified as under active consideration for implementation as part of this engagement:
1. Grantor Retained Annuity Trusts (GRATs).
Calderwood & Harkness LLP will design and implement multiple "zeroed-out" GRATs, in which Mr. Caldwell will transfer assets to irrevocable trusts and retain the right to receive annuity payments over a fixed term. The annuity payments will be calculated to return the full initial value of the contributed assets (plus interest at the applicable Section 7520 hurdle rate) to Mr. Caldwell over the annuity term, resulting in a gift tax value of zero or near-zero. Any appreciation in the trust assets in excess of the Section 7520 hurdle rate will pass to the remainder beneficiaries — Mr. Caldwell's children and/or the dynasty trust — free of federal gift and estate tax.
The GRAT strategy is particularly well-suited to the current interest rate environment and to assets with significant appreciation potential, such as the carried-interest position in Caldwell Ridgeline Fund VI and the LP interests in Funds IV and V.
2. Dynasty Trust.
Calderwood & Harkness LLP will establish a Delaware-situs perpetual trust (the "Caldwell Family Dynasty Trust") to receive the remainder interests from the GRATs and to hold family wealth across multiple generations. The dynasty trust will be structured to take advantage of Delaware's abolition of the rule against perpetuities, allowing the trust to continue indefinitely without being subject to federal estate tax at the death of any generation of beneficiaries. The trust will be administered by a family co-trustee (Thomas R. Caldwell) and an institutional co-trustee (Northgate Trust Company of Delaware), with a Distribution Committee consisting of all three Caldwell children.
3. Private Foundation — The Caldwell Family Foundation.
Calderwood & Harkness LLP will prepare the organizational documents (certificate of incorporation and bylaws) for the Caldwell Family Foundation, a New York not-for-profit corporation to be organized and operated exclusively for charitable purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code. The foundation will be governed by a board of directors consisting of the three Caldwell children and an independent director, Dr. Margaret P. Elsworth, Professor Emerita at Columbia University. The foundation will be initially funded with a joint gift of $10,000,000 from Jonathan and Eleanor Caldwell ($5,000,000 attributable to each spouse).
4. Irrevocable Life Insurance Trust (ILIT).
Calderwood & Harkness LLP will draft an ILIT to hold the planned second-to-die universal life insurance policy outside the taxable estates of both Mr. and Mrs. Caldwell. The ILIT will be administered by Northgate Trust Company of Delaware as trustee. Premium payments will be funded by annual gifts from Mr. Caldwell to the ILIT, accompanied by Crummey withdrawal notices to the trust beneficiaries, to qualify the premium payments for the federal annual gift tax exclusion.
5. Amended and Restated Revocable Trust.
Calderwood & Harkness LLP will prepare an amended and restated version of the Caldwell Revocable Trust to incorporate updated dispositive provisions, including credit shelter trust and marital QTIP trust provisions designed to maximize the use of Mr. Caldwell's remaining federal estate tax exemption at death and to provide for the surviving spouse through a qualifying terminable interest property (QTIP) trust.
6. New Pour-Over Will.