1034-00004 · Group Strathmore Corp · Engagement & Administrative

staffing-budget-memorandum.docx DOCUMENT M&A / Corporate

19 / 75 ← → ✕

Contract analysis Extract to table

MEMORANDUM

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

To: Victoria Chambers, Responsible Partner; Howard Quinn, Billing Partner

From: Monica Reyes, Lead Associate

Date: February 15, 2023

Re: Staffing, Budget, and Timeline — Generational Estate Plan for Jonathan R. Caldwell

Matter No.: 1034-00004

Billing Code: 78412-JRC

I. Purpose and Scope of Memorandum

This memorandum sets forth the proposed staffing plan, fee estimate, billing arrangements, projected timeline, and allocation of responsibilities for the comprehensive generational estate planning engagement for Jonathan Robert Caldwell. The purpose of this memorandum is to ensure that the responsible partner and billing partner have full visibility into the anticipated scope of work, the personnel assigned to each workstream, and the projected cost of the engagement so that the firm may manage the matter efficiently and in accordance with the terms of the executed engagement letter.

The engagement was formally opened on February 6, 2023, following an initial client meeting at which Mr. Caldwell outlined his planning objectives and authorized the firm to proceed. The engagement letter, together with the Engagement Scope Addendum — Tax Advisory Services, was executed by Mr. Caldwell on February 15, 2023.

Client. Jonathan Robert Caldwell, age 67 (date of birth: March 14, 1956), a resident of the State of New York, residing at 418 East 72nd Street, Apartment 14A, New York, New York 10021. Mr. Caldwell is a United States citizen and has been domiciled in New York for the entirety of his adult life. He is married to Eleanor Victoria Caldwell; they have three adult children — Thomas Robert Caldwell, Katherine Charlotte Hartfield (née Caldwell), and Olivia Grace Caldwell — and four grandchildren.

Estimated Gross Estate. Based on preliminary information provided by Mr. Caldwell and his accountants at Strathmore Corporation & Greaves LLP, Mr. Caldwell's estimated gross estate is approximately $300,000,000, composed of the following asset categories:

• Liquid securities (brokerage accounts, publicly traded equities, fixed-income positions, and cash equivalents): approximately $112,000,000;

• Real estate held through Stonecrest Realty Holdings LLC (a New York limited liability company of which Mr. Caldwell holds a 59.7% membership interest; portfolio includes commercial properties in Manhattan, Brooklyn, and Westchester County): approximately $134,000,000 (Mr. Caldwell's proportionate share of entity-level fair market value);

• Carried interest and fund stakes in Caldwell Ridgeline Capital LLC (a Delaware limited liability company operating as a private equity fund manager; Mr. Caldwell holds limited partnership interests in Funds IV, V, and VI, as well as carried interest in Fund VI): approximately $38,000,000;

• Art and collectibles (fine art, antiques, and rare books, primarily housed at the East 72nd Street residence and a storage facility in Long Island City): approximately $9,000,000; and

• Other assets (retirement accounts, personal property, automobiles, jewelry, life insurance cash value, and miscellaneous holdings): approximately $7,000,000.

Scope of Engagement. The engagement encompasses the design and implementation of a comprehensive, multigenerational estate plan, including, without limitation, the following components:

1. Design, documentation, and funding of three Grantor Retained Annuity Trusts ("GRATs") — specifically, GRAT A (publicly traded securities), GRAT B (Stonecrest Realty Holdings LLC membership interests), and GRAT C (Caldwell Ridgeline Capital LLC limited partnership interests and carried interest);

2. Establishment and funding of a Delaware dynasty trust (the "Caldwell Family Dynasty Trust"), structured to leverage Mr. Caldwell's remaining generation-skipping transfer tax ("GST") exemption;

3. Formation of a private foundation (The Caldwell Family Foundation), including preparation and filing of all organizational documents, the IRS Form 1023 application for recognition of tax-exempt status under Internal Revenue Code ("IRC") § 501(c)(3), and the initial contribution agreement;

4. Establishment and funding of an irrevocable life insurance trust (the "Caldwell Family Insurance Trust" or "ILIT"), including coordination of the acquisition and assignment of a $15,000,000 second-to-die life insurance policy issued by Beacon Life Assurance Company;

5. Amendment and restatement of Mr. Caldwell's existing revocable trust, originally dated October 3, 2010, to incorporate credit shelter trust and marital qualified terminable interest property ("QTIP") trust provisions;

6. Execution of a new pour-over will, revoking Mr. Caldwell's prior will dated October 3, 2010;

7. Preparation and execution of a durable general power of attorney, health care proxy, living will/advance directive, and HIPAA authorization;

8. Coordination of gift tax return (IRS Form 709) preparation for the 2023 taxable year, in conjunction with Mr. Caldwell's accounting firm, Strathmore Corporation & Greaves LLP; and

9. Coordination with all third-party advisors, counsel, trustees, and service providers necessary to effectuate the foregoing.

The balance of this memorandum addresses the engagement team, fee estimate, billing arrangements, projected timeline, allocation of responsibilities by workstream, third-party coordination, risk factors and budget contingencies, and approval requirements.

II. Engagement Team

The following individuals have been assigned to the Caldwell engagement. Given the breadth and complexity of the matter, the team draws upon both the firm's Tax practice group and cross-staffed attorneys from other practice groups who have existing client-relationship responsibilities or relevant experience. Each team member's practice group, role, hourly rate, and estimated hours are set forth below.

A. Victoria Chambers — Responsible Partner

Practice Group: White Collar & Investigations (cross-staffed for client-relationship purposes)

Role: Victoria Chambers will serve as the overall engagement supervisor and primary point of contact for Jonathan R. Caldwell. In this capacity, Ms. Chambers will be responsible for the following:

• Overall strategic direction and supervision of all aspects of the engagement;

• Maintenance of the client relationship, including attendance at all principal client meetings and telephone conferences;

• Approval authority over all deliverables, including trust agreements, memoranda, letters to third parties, and client communications, prior to transmission to the client or external advisors;

• Coordination with Mr. Caldwell's outside advisors and independent counsel, including Pemberton, Locke & Strauss LLP (counsel to Eleanor V. Caldwell), Havensbrook Wealth Advisors LLC, and senior management of Caldwell Ridgeline Capital LLC and Stonecrest Realty Holdings LLC;

• Resolution of any engagement-level issues, including scope disputes, conflicts, and fee-related matters; and

• Periodic status updates to Mr. Caldwell regarding progress against the project plan.

Hourly Rate: $1,450 per hour

Estimated Hours: 80–100 hours

Additional Role — Trust Protector Designation: At Mr. Caldwell's specific request, Victoria Chambers has been designated as the initial Trust Protector of the Caldwell Family Dynasty Trust, serving in a non-fiduciary capacity. This designation carries certain powers, including the power to remove and appoint successor institutional trustees, the power to modify administrative provisions of the trust, and a limited power to add or exclude beneficiaries (subject to certain restrictions set forth in the trust agreement). The trust protector role will require ongoing monitoring of any potential conflict implications, including under the New York Rules of Professional Conduct, Rule 1.7 (Conflict of Interest: Current Clients) and Rule 1.8 (Conflict of Interest: Current Clients — Specific Rules). Ms. Chambers's service as Trust Protector was reviewed and approved by the firm's General Counsel's Office on February 10, 2023, subject to the requirement that Ms. Chambers recuse herself from any matter in which the interests of the trust and the interests of Mr. Caldwell or the firm may diverge. A copy of the General Counsel's Office clearance memorandum is on file in the matter folder.

B. Howard Quinn — Billing Partner

Practice Group: White Collar & Investigations

Role: Howard Quinn will serve as the billing partner for the engagement, with responsibility for the following:

• Administrative and billing oversight, including monthly review of all time entries posted to Matter No. 1034-00004;

• Preparation and issuance of monthly invoices to Mr. Caldwell;

• Fee management against the budget cap of $2,100,000, including tracking of actual hours and fees against the projections set forth in this memorandum;

• Coordination with the firm's finance department regarding collections, trust account management, and any billing adjustments; and

• Communication with Victoria Chambers regarding billing trends and any projected overruns.

Hourly Rate: $1,350 per hour

Estimated Hours: 15–25 hours

Note: Mr. Quinn's involvement in the engagement will be primarily administrative and billing-related. He will have limited substantive involvement in the planning work, except to the extent that billing or administrative issues require his review of substantive materials.

C. Sylvia Hartwell — Specialist Partner (Tax)

Practice Group: Tax

Role: Sylvia Hartwell will serve as the tax structuring lead for the engagement. Ms. Hartwell brings more than twenty-five years of experience in estate and gift tax planning for ultra-high-net-worth individuals and will be responsible for the following:

• Design and structuring of all three GRAT transactions, including selection of annuity terms, calculation of zeroed-out annuity amounts under IRC § 2702, and analysis of the applicable § 7520 rate for each funding month;

• Analysis of the monthly § 7520 rates published by the Internal Revenue Service and strategic timing of GRAT fundings to optimize the annuity structure;

• Development of the generation-skipping transfer tax exemption allocation strategy, including allocation of Mr. Caldwell's remaining GST exemption to the dynasty trust and analysis of the GST consequences of each GRAT's potential remainder distributions;

• Private foundation compliance analysis under IRC §§ 4940 through 4946, including analysis of the excise tax on net investment income (§ 4940), restrictions on self-dealing (§ 4941), minimum distribution requirements (§ 4942), excess business holdings (§ 4943), jeopardizing investments (§ 4944), and taxable expenditures (§ 4945);

• Charitable deduction analysis, including computation of Mr. Caldwell's charitable contribution deduction for the initial foundation contribution, application of the 30% of adjusted gross income limitation for contributions to private foundations, and analysis of the five-year carryforward provisions;

• Preparation of estate tax projections, including a baseline analysis of the federal estate tax liability that would result in the absence of the proposed plan and a comparison of projected savings under the proposed structure;

• Gift tax return (Form 709) preparation for the 2023 taxable year, in coordination with Strathmore Corporation & Greaves LLP (Martin J. Prescott, CPA), including reporting of all GRAT fundings, the dynasty trust gift, the foundation contribution, and ILIT premium gifts; and

• Ongoing tax advisory services as issues arise during the implementation process.

Hourly Rate: $1,500 per hour

Estimated Hours: 200–250 hours

Note: Sylvia Hartwell's engagement in this matter is covered by the Engagement Scope Addendum — Tax Advisory Services, which was executed concurrently with the engagement letter on February 15, 2023. The addendum specifies that Ms. Hartwell's tax advisory services are subject to the same fee cap and billing arrangements as the balance of the engagement.

D. Monica Reyes — Lead Associate

Practice Group: Antitrust & Competition (cross-staffed for estate planning matter)

Role: Monica Reyes will serve as the lead associate and day-to-day project manager for the engagement, with responsibility for the following:

• Day-to-day management of the project plan, including maintenance of the timeline set forth in Section IV of this memorandum, tracking of deliverables and deadlines, and coordination of team activities;

• Primary drafting responsibility for all trust agreements, including the Caldwell Family Dynasty Trust agreement, the Caldwell Family Insurance Trust (ILIT) agreement, and all three GRAT agreements;

• Drafting of the pour-over will, including the self-proving affidavit and attestation clause;

• Drafting of the Amended and Restated Caldwell Revocable Trust, incorporating credit shelter trust and marital QTIP trust provisions;

• Preparation of all organizational documents for The Caldwell Family Foundation, including the certificate of incorporation, bylaws, organizational board resolutions, conflict-of-interest policy, gift acceptance policy, investment policy statement, and grant-making policy and procedures manual;

• Drafting of all powers of attorney, health care proxy, living will/advance directive, and HIPAA authorization;

• Coordination with Northgate Trust Company of Delaware (Philip A. Rossiter, Senior Vice President) regarding trustee acceptance, fee schedules, administrative procedures, and ongoing fiduciary responsibilities;

• Coordination with Pemberton, Locke & Strauss LLP (Rachel F. Dunlap, Esq.) regarding Eleanor V. Caldwell's independent review of the spousal consent and related documents;

• Coordination with Ashford Valuation Group LLC (Dr. Leonard K. Whitfield, ASA) regarding the appraisal engagement, valuation dates, scope of work, and deliverable timelines;

• Coordination with Glenmore Insurance Brokerage LLC (Nathan C. Freed, Senior Vice President) regarding procurement and assignment of the Beacon Life Assurance Company second-to-die policy;

• Coordination with Ridgewell & Thorn LLP (Margaret A. Colvin, Esq., Delaware counsel to Northgate Trust Company) regarding fiduciary acceptance matters and Delaware trust law compliance;

• Coordination with Stonecrest Realty Holdings LLC (Robert M. Sinclair, COO) and Caldwell Ridgeline Capital LLC (Gregory S. Fenton, CFO) regarding entity-level transfer documentation, consent requirements, and operating agreement provisions;

• Preparation of the closing binder, document index, and closing checklist, encompassing all approximately seventy-five documents produced during the engagement; and

• Preparation of monthly budget-to-actual reports for Howard Quinn's review.

Hourly Rate: $875 per hour

Estimated Hours: 450–550 hours

Note: Given the scope of the engagement, Monica Reyes will handle the majority of the document production volume and inter-party correspondence. Ms. Reyes's workload on this matter will require that her antitrust matters be reassigned or deferred during the peak drafting periods (March through May 2023). This has been discussed with and approved by Marcus Ellison, Practice Group Leader, Antitrust & Competition.

E. Elliot Nguyen — Working Associate

Practice Group: Antitrust & Competition (cross-staffed)

Role: Elliot Nguyen will serve as the working associate on the engagement, performing research, drafting support, and document preparation under the supervision of Monica Reyes and Sylvia Hartwell. Mr. Nguyen's specific assignments will include the following:

• Research and preparation of a dynasty trust situs analysis comparing Delaware, Nevada, and South Dakota as potential trust situs jurisdictions, with particular attention to each state's rule against perpetuities (or abolition thereof), state income tax treatment of trust income, asset protection provisions, decanting statutes, and directed trust provisions;

• Research and preparation of a private foundation compliance memorandum addressing the requirements and prohibitions of IRC §§ 4940 through 4946;

• GRAT sensitivity modeling, including construction of return scenario analyses at assumed annual rates of return of 4%, 6%, 8%, and 10%, demonstrating the potential remainder values passing to the dynasty trust or other designated beneficiaries upon termination of each GRAT term;

• Research and preparation of a valuation discount analysis memorandum addressing the supportability of the proposed lack-of-marketability and minority-interest discounts for the Stonecrest Realty Holdings LLC membership interests (proposed combined discount: 25%), the Caldwell Ridgeline Capital LLC limited partnership interests (proposed combined discount: 35%), and the Caldwell Ridgeline Capital LLC carried interest (proposed discount: 30%);

• Preparation of gift tax return supporting schedules, including valuation summaries, § 7520 rate computations, annuity present value calculations, and GST exemption tracking worksheets;

• Assembly of closing materials, including the closing binder, document index, and executed originals for delivery to Mr. Caldwell; and

• Assistance with the IRS Form 1023 application for The Caldwell Family Foundation, including preparation of the narrative description of activities, financial data schedules, and supporting documentation.

Hourly Rate: $650 per hour

Estimated Hours: 350–425 hours

Note: Elliot Nguyen will also serve as one of two attesting witnesses to the pour-over will execution on the signing date (the other witness will be Monica Reyes). Mr. Nguyen has confirmed that he has no personal or familial relationship with Mr. Caldwell or any beneficiary of the estate plan that would disqualify him as a witness under New York Estates, Powers and Trusts Law § 3-2.1(a)(2).

F. Support Staff

In addition to the attorneys identified above, the following support staff resources have been allocated to the engagement:

• Paralegal Support: Estimated 60–80 hours at $350 per hour (estimated cost: $21,000–$28,000). Paralegal support will be utilized for document management and version control, coordination of notarization and execution ceremonies, filing of organizational documents with the New York Department of State, assembly and binding of closing binder materials, and general administrative support as directed by Monica Reyes. Paralegal support will be drawn from the firm's Trusts & Estates paralegal pool, with Sandra K. DiMartino designated as the primary paralegal contact for this matter.

• Firm Librarian / Research Services: Estimated flat allocation of $5,000–$8,000 for specialized research support, including access to proprietary tax databases, legislative history research, and retrieval of comparable valuation reports and Tax Court decisions relevant to the valuation discount analysis.

III. Fee Estimate and Billing Arrangements

A. Estimated Total Fees

Based on the scope of work described in this memorandum, the staffing plan set forth in Section II, and the projected timeline set forth in Section IV, the total estimated professional fees for the engagement are as follows:

Total Estimated Professional Fees: $1,850,000

Fee Cap (Not-to-Exceed): $2,100,000

The fee cap of $2,100,000 covers all professional time of the engagement team members identified in this memorandum, including partner, associate, and paralegal time. The fee cap does not cover disbursements, third-party costs, or out-of-scope matters. In the event that the scope of the engagement materially changes — for example, if Mr. Caldwell requests supplemental planning advice in connection with potential changes to the federal estate and gift tax exemption following the scheduled 2025 sunset of the Tax Cuts and Jobs Act provisions — such additional work would be treated as a separate engagement or amendment to the existing engagement, subject to a supplemental fee arrangement with the client.

B. Fee Build-Up by Team Member

The following table sets forth the estimated fee build-up by team member, based on estimated hours at the applicable hourly rate:

The following observations are relevant to understanding the fee build-up:

• Blended Hourly Rates. The blended hourly rate across all partner time (Chambers, Quinn, and Hartwell combined) is approximately $1,275 per hour at the midpoint of estimated hours. The blended hourly rate across all associate time (Reyes and Nguyen combined) is approximately $762 per hour at the midpoint. The overall blended rate across all professional time, including paralegal support, is approximately $1,050–$1,100 per hour.

• Contingency Allowance. The total estimated fee of $1,850,000 reflects the midpoint projection of the fee build-up (approximately $1,208,875) plus a contingency allowance of approximately 25–30% to account for complexity, additional client meetings beyond those currently scheduled, regulatory delays (e.g., IRS processing of the Foundation's Form 1023 application), potential revisions to trust instruments and organizational documents, and unanticipated coordination with third-party advisors. In the lead associate's experience with matters of comparable complexity, a contingency allowance in this range is appropriate and reflects the reality that estate planning engagements of this scope routinely involve multiple rounds of revision and iteration.

• Fee Cap Cushion. The fee cap of $2,100,000 provides approximately 13.5% cushion above the $1,850,000 estimate. This cushion is intended to absorb cost overruns attributable to unforeseen complications, such as contested valuation discount positions, delays in obtaining third-party consents, or additional tax analysis prompted by changes in law or IRS guidance during the engagement period.

C. Billing Method

The engagement will be billed on a monthly basis, at the hourly rates specified above. The billing process will operate as follows:

• All time will be recorded and billed to Matter No. 1034-00004, Billing Code 78412-JRC.

• At the end of each calendar month, Howard Quinn will review all time entries posted to the matter for accuracy, appropriateness, and compliance with the engagement letter.

• Following Mr. Quinn's review, monthly invoices will be submitted to Jonathan R. Caldwell at the address on file, with copies transmitted electronically to Mr. Caldwell and to Martin J. Prescott at Strathmore Corporation & Greaves LLP (per Mr. Caldwell's instruction).

• Payment terms are net thirty (30) days from the invoice date, as specified in the engagement letter executed February 15, 2023.

• Monica Reyes will prepare monthly budget-to-actual reports comparing actual fees incurred against the projections set forth in this memorandum, broken down by team member and by workstream. These reports will be submitted to Howard Quinn for review and will be available to Victoria Chambers upon request.

D. Excluded Costs / Disbursements (Billed Separately)

The fee estimate and fee cap set forth above do not include the following costs and disbursements, which will be billed separately to Mr. Caldwell or paid directly by Mr. Caldwell to the relevant third party, as indicated:

1. Ashford Valuation Group LLC Appraisal Fees. Ashford Valuation Group LLC has been engaged independently by Mr. Caldwell to prepare qualified appraisals of the Stonecrest Realty Holdings LLC membership interests, the Caldwell Ridgeline Capital LLC limited partnership interests and carried interest, and the art and collectibles collection. The estimated appraisal fees are $150,000–$200,000, depending on the complexity of the valuations. These fees will be billed directly by Ashford to Mr. Caldwell.

2. Northgate Trust Company of Delaware Institutional Trustee Fees. Northgate Trust Company of Delaware will serve as institutional co-trustee of the Caldwell Family Dynasty Trust and as sole institutional trustee of the Caldwell Family Insurance Trust (ILIT). Northgate's annual trustee fees will be charged in accordance with Northgate's published fee schedule, which is based on a percentage of trust assets under administration. These fees will be charged directly to the trusts and paid from trust assets.

3. Glenmore Insurance Brokerage LLC / Beacon Life Assurance Company Insurance Premiums and Broker Fees. The annual premium on the Beacon Life Assurance Company second-to-die life insurance policy (Policy No. BLA-2023-77419) is $187,500. Glenmore Insurance Brokerage LLC's broker fees are included in the premium amount. The premium will be paid by the ILIT trustee (Northgate) from contributions made to the ILIT by Mr. Caldwell (with Crummey withdrawal notices issued to each trust beneficiary).

4. Pemberton, Locke & Strauss LLP Fees. Pemberton, Locke & Strauss LLP has been engaged by Eleanor V. Caldwell as independent counsel to advise her regarding the spousal consent and related documents. Pemberton's fees will be billed directly to Eleanor V. Caldwell.

5. Ridgewell & Thorn LLP Fees. Ridgewell & Thorn LLP serves as Delaware counsel to Northgate Trust Company of Delaware and will provide advice regarding Delaware trust law and fiduciary acceptance matters. Ridgewell's fees will be billed to Northgate or to Mr. Caldwell, per the arrangement between Northgate and Mr. Caldwell.

6. Filing Fees. These include the New York Department of State filing fee for the Foundation's certificate of incorporation, the IRS Form 1023 user fee (currently $600), and any other governmental filing fees incurred during the engagement. These fees are estimated at $2,000–$3,500 in the aggregate.

7. Travel, Copying, Courier, and Miscellaneous Disbursements. Estimated at $5,000–$10,000 for the duration of the engagement. This includes travel expenses for meetings with the client, with Northgate Trust Company in Wilmington, Delaware, and with other third parties, as well as photocopying, binding, courier service, and overnight delivery charges.

IV. Projected Timeline

The engagement is divided into four phases, as described below. The milestones and target dates set forth in this section are subject to adjustment based on client availability, third-party responsiveness, and regulatory processing times.

A. Phase 1: Information Gathering and Analysis (February – March 2023)

Phase 1 encompasses the opening of the matter, execution of the engagement letter, collection and analysis of client financial data and existing estate planning documents, and preparation of the preliminary estate planning strategy memorandum and tax analysis. This phase will establish the factual and analytical foundation for all subsequent planning work.

B. Phase 2: Structure Design and Document Drafting (March – May 2023)

Phase 2 is the principal drafting and implementation phase, during which the majority of the legal documents will be prepared, reviewed, negotiated (where applicable), and executed. This is the most resource-intensive phase of the engagement and is expected to consume the largest share of professional time.

The technical memoranda to be produced during March and April 2023 include the following:

• GRAT Structuring Memorandum — analysis of zeroed-out GRAT designs under IRC § 2702, including annuity calculation methodology, application of the § 7520 rate (5.0% for March 2023), selection of GRAT terms (two-year and three-year), and comparison of short-term versus long-term GRAT strategies;

• GRAT Sensitivity Analysis — return scenario modeling at assumed annual rates of return of 4%, 6%, 8%, and 10%, demonstrating the range of potential remainder values for each GRAT;

• Valuation discount Analysis Memorandum — analysis of proposed discounts for lack of marketability and minority interest, including 25% combined discount for Stonecrest Realty Holdings LLC membership interests, 35% combined discount for Caldwell Ridgeline Capital LLC limited partnership interests, and 30% discount for carried interest, with citations to relevant Tax Court precedent and appraisal methodology;

• Dynasty Trust Situs Analysis — comparison of Delaware, Nevada, and South Dakota as potential situs jurisdictions, with recommendation of Delaware based on the maturity of the Delaware trust code, the absence of a state income tax on trust income for trusts with no Delaware-resident beneficiaries, the availability of directed trust provisions, and the strength of the Delaware decanting statute;

• GST Allocation Memorandum — analysis of Mr. Caldwell's available GST exemption and recommended allocation strategy, including allocation to the dynasty trust and analysis of the automatic allocation rules under IRC § 2632;

• ILIT/Crummey Memorandum — analysis of Crummey withdrawal powers, annual exclusion coverage ($17,000 per beneficiary × 3 beneficiaries = $51,000 covered by annual exclusion; $136,500 balance uses lifetime gift tax exemption), and the IRC § 2035 three-year lookback rule applicable to the transferred life insurance policy;

• Private Foundation Compliance Memorandum — comprehensive analysis of the operational requirements and prohibitions applicable to private foundations under IRC §§ 4940–4946;

• Foundation vs. Donor-Advised Fund Comparison — analysis of the relative advantages and disadvantages of a private foundation compared to a donor-advised fund, given Mr. Caldwell's charitable objectives and desire for family involvement in grant-making;

• Marital/Credit Shelter Trust Design Memorandum — analysis of the optimal allocation between credit shelter trust and QTIP marital trust provisions in the restated revocable trust, including portability analysis under IRC § 2010(c)(4);

• State Income Tax Planning Memorandum — analysis of Delaware situs for the dynasty trust as a state income tax planning strategy, including confirmation that trust income will not be subject to New York or Delaware state income tax; and

• Power of Appointment/Decanting Flexibility Memorandum — analysis of the limited and general powers of appointment included in the dynasty trust and the availability of the Delaware decanting statute (12 Del. C. § 3528) as a mechanism for future trust modification.

C. Phase 3: Appraisals, GRAT C Funding, and Foundation Determination (June – July 2023)

Phase 3 encompasses the funding of the final GRAT (GRAT C, involving the more complex carried-interest and limited partnership assets), receipt and review of the qualified appraisal reports from Ashford Valuation Group LLC, and receipt of the IRS determination letter for The Caldwell Family Foundation.

D. Phase 4: Gift Tax Return Preparation and Closing (August – September 2023)

Phase 4 is the final phase of the engagement, encompassing preparation of the 2023 gift tax return, coordination with Strathmore Corporation & Greaves LLP, final document review, closing binder assembly, and the closing of the matter.

V. Allocation of Responsibilities by Workstream

The engagement has been organized into seven discrete workstreams, each with a designated lead, supporting team members, specified deliverables, key coordination points, and an estimated hour allocation. The workstream structure is designed to facilitate efficient project management, clear lines of accountability, and accurate time tracking against the budget projections. Each workstream is described in detail below.

A. Workstream 1: GRAT Structures (GRATs A, B, and C)

Lead: Sylvia Hartwell (tax design and annuity calculations)

Support: Monica Reyes (document drafting — trust agreements, schedules, assignment agreements, trustee acknowledgments); Elliot Nguyen (sensitivity analysis modeling, valuation discount research)

Deliverables:

• Three GRAT trust agreements (Caldwell 2023 Securities GRAT, Caldwell 2023 Realty GRAT, Caldwell 2023 Carried Interest GRAT);

• Three Schedule A funded property lists (one for each GRAT, describing the assets transferred at funding);

• Three annuity payment schedules (one for each GRAT, specifying the annuity amount, payment dates, and term);

• Two assignment agreements — (i) assignment of Stonecrest Realty Holdings LLC membership interests to GRAT B, and (ii) assignment of Caldwell Ridgeline Capital LLC limited partnership interests and carried interest to GRAT C;

• Trustee acknowledgment (Mr. Caldwell as initial trustee of each GRAT during the annuity term);

• GRAT Structuring Memorandum (zeroed-out design analysis, § 7520 rate selection, annuity computation methodology);

• GRAT Sensitivity Analysis (return scenario modeling at 4%, 6%, 8%, and 10% annual returns); and

• Valuation discount Analysis Memorandum (lack-of-marketability and minority-interest discount analysis for each asset class).

Key Coordination:

• Ashford Valuation Group LLC / Dr. Leonard K. Whitfield, ASA (appraisals of Stonecrest membership interests and Caldwell Ridgeline LP/carried interests);

• Caldwell Ridgeline Capital LLC / Gregory S. Fenton, CFO (fund interest valuations, review of limited partnership agreements for transfer restrictions and consent requirements, execution of transfer consent);

• Stonecrest Realty Holdings LLC / Robert M. Sinclair, COO (membership interest transfer documentation, review of operating agreement for transfer restrictions and right-of-first-refusal provisions, preparation of amended membership interest schedule reflecting GRAT B transfer).

Estimated Hours for Workstream: 300–375 hours

B. Workstream 2: Caldwell Family Dynasty Trust

Lead: Monica Reyes (trust agreement drafting and trustee/protector coordination)

Support: Sylvia Hartwell (GST exemption allocation, tax structuring); Elliot Nguyen (situs analysis, decanting/flexibility research)

Deliverables:

• Caldwell Family Dynasty Trust agreement (Delaware situs, perpetual duration under Delaware law);

• Schedule A (description of initial trust property — $5,000,000 cash);

• Trustee acceptance — Thomas R. Caldwell (individual co-trustee);

• Institutional trustee acceptance — Northgate Trust Company of Delaware;

• Trust protector designation — Victoria Chambers (non-fiduciary capacity);

• Investment policy statement (coordinated with Havensbrook Wealth Advisors LLC / Diana R. Linden, CFP®);

• Distribution committee operating procedures (establishing guidelines for discretionary distributions to beneficiaries);

• Beneficiary designation and per stirpes schedule (identifying Thomas R. Caldwell, Katherine C. Hartfield, Olivia G. Caldwell, and their respective issue as beneficiaries);

• Dynasty Trust Situs Analysis (comparative analysis of Delaware, Nevada, and South Dakota);

• GST Allocation Memorandum (allocation of Mr. Caldwell's remaining GST exemption to the dynasty trust); and

• Power of Appointment/Decanting Flexibility Memorandum (analysis of trust modification mechanisms available under Delaware law).

Key Coordination:

• Northgate Trust Company of Delaware / Philip A. Rossiter, SVP (trustee acceptance, fee schedule negotiation, account opening procedures, and ongoing administrative coordination);

• Ridgewell & Thorn LLP / Margaret A. Colvin, Esq. (Delaware counsel to Northgate, advising on Delaware trust law compliance, fiduciary acceptance, and related matters);

• Havensbrook Wealth Advisors LLC / Diana R. Linden, CFP® (investment data, asset allocation recommendations, and coordination of the investment policy statement for the dynasty trust).

Estimated Hours for Workstream: 175–225 hours

C. Workstream 3: The Caldwell Family Foundation

Lead: Monica Reyes (organizational documents and IRS application)

Support: Sylvia Hartwell (§ 501(c)(3)/§ 509(a) analysis, charitable deduction calculations, §§ 4940–4946 compliance); Elliot Nguyen (research, Form 1023 preparation, foundation vs. DAF comparison)

Deliverables:

• Certificate of incorporation (filed with the New York Department of State);

• Bylaws;

MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
To: Victoria Chambers, Responsible Partner; Howard Quinn, Billing Partner
From: Monica Reyes, Lead Associate
Date: February 15, 2023
Re: Staffing, Budget, and Timeline — Generational Estate Plan for Jonathan R. Caldwell
Matter No.: 1034-00004
Billing Code: 78412-JRC
I. Purpose and Scope of Memorandum
This memorandum sets forth the proposed staffing plan, fee estimate, billing arrangements, projected timeline, and allocation of responsibilities for the comprehensive generational estate planning engagement for Jonathan Robert Caldwell. The purpose of this memorandum is to ensure that the responsible partner and billing partner have full visibility into the anticipated scope of work, the personnel assigned to each workstream, and the projected cost of the engagement so that the firm may manage the matter efficiently and in accordance with the terms of the executed engagement letter.
The engagement was formally opened on February 6, 2023, following an initial client meeting at which Mr. Caldwell outlined his planning objectives and authorized the firm to proceed. The engagement letter, together with the Engagement Scope Addendum — Tax Advisory Services, was executed by Mr. Caldwell on February 15, 2023.
Client. Jonathan Robert Caldwell, age 67 (date of birth: March 14, 1956), a resident of the State of New York, residing at 418 East 72nd Street, Apartment 14A, New York, New York 10021. Mr. Caldwell is a United States citizen and has been domiciled in New York for the entirety of his adult life. He is married to Eleanor Victoria Caldwell; they have three adult children — Thomas Robert Caldwell, Katherine Charlotte Hartfield (née Caldwell), and Olivia Grace Caldwell — and four grandchildren.
Estimated Gross Estate. Based on preliminary information provided by Mr. Caldwell and his accountants at Strathmore Corporation & Greaves LLP, Mr. Caldwell's estimated gross estate is approximately $300,000,000, composed of the following asset categories:
•  Liquid securities (brokerage accounts, publicly traded equities, fixed-income positions, and cash equivalents): approximately $112,000,000;
•  Real estate held through Stonecrest Realty Holdings LLC (a New York limited liability company of which Mr. Caldwell holds a 59.7% membership interest; portfolio includes commercial properties in Manhattan, Brooklyn, and Westchester County): approximately $134,000,000 (Mr. Caldwell's proportionate share of entity-level fair market value);
•  Carried interest and fund stakes in Caldwell Ridgeline Capital LLC (a Delaware limited liability company operating as a private equity fund manager; Mr. Caldwell holds limited partnership interests in Funds IV, V, and VI, as well as carried interest in Fund VI): approximately $38,000,000;
•  Art and collectibles (fine art, antiques, and rare books, primarily housed at the East 72nd Street residence and a storage facility in Long Island City): approximately $9,000,000; and
•  Other assets (retirement accounts, personal property, automobiles, jewelry, life insurance cash value, and miscellaneous holdings): approximately $7,000,000.
Scope of Engagement. The engagement encompasses the design and implementation of a comprehensive, multigenerational estate plan, including, without limitation, the following components:
1.  Design, documentation, and funding of three Grantor Retained Annuity Trusts ("GRATs") — specifically, GRAT A (publicly traded securities), GRAT B (Stonecrest Realty Holdings LLC membership interests), and GRAT C (Caldwell Ridgeline Capital LLC limited partnership interests and carried interest);
2.  Establishment and funding of a Delaware dynasty trust (the "Caldwell Family Dynasty Trust"), structured to leverage Mr. Caldwell's remaining generation-skipping transfer tax ("GST") exemption;
3.  Formation of a private foundation (The Caldwell Family Foundation), including preparation and filing of all organizational documents, the IRS Form 1023 application for recognition of tax-exempt status under Internal Revenue Code ("IRC") § 501(c)(3), and the initial contribution agreement;
4.  Establishment and funding of an irrevocable life insurance trust (the "Caldwell Family Insurance Trust" or "ILIT"), including coordination of the acquisition and assignment of a $15,000,000 second-to-die life insurance policy issued by Beacon Life Assurance Company;
5.  Amendment and restatement of Mr. Caldwell's existing revocable trust, originally dated October 3, 2010, to incorporate credit shelter trust and marital qualified terminable interest property ("QTIP") trust provisions;
6.  Execution of a new pour-over will, revoking Mr. Caldwell's prior will dated October 3, 2010;
7.  Preparation and execution of a durable general power of attorney, health care proxy, living will/advance directive, and HIPAA authorization;
8.  Coordination of gift tax return (IRS Form 709) preparation for the 2023 taxable year, in conjunction with Mr. Caldwell's accounting firm, Strathmore Corporation & Greaves LLP; and
9.  Coordination with all third-party advisors, counsel, trustees, and service providers necessary to effectuate the foregoing.
The balance of this memorandum addresses the engagement team, fee estimate, billing arrangements, projected timeline, allocation of responsibilities by workstream, third-party coordination, risk factors and budget contingencies, and approval requirements.
II. Engagement Team
The following individuals have been assigned to the Caldwell engagement. Given the breadth and complexity of the matter, the team draws upon both the firm's Tax practice group and cross-staffed attorneys from other practice groups who have existing client-relationship responsibilities or relevant experience. Each team member's practice group, role, hourly rate, and estimated hours are set forth below.
A. Victoria Chambers — Responsible Partner
Practice Group: White Collar & Investigations (cross-staffed for client-relationship purposes)
Role: Victoria Chambers will serve as the overall engagement supervisor and primary point of contact for Jonathan R. Caldwell. In this capacity, Ms. Chambers will be responsible for the following:
•  Overall strategic direction and supervision of all aspects of the engagement;
•  Maintenance of the client relationship, including attendance at all principal client meetings and telephone conferences;
•  Approval authority over all deliverables, including trust agreements, memoranda, letters to third parties, and client communications, prior to transmission to the client or external advisors;
•  Coordination with Mr. Caldwell's outside advisors and independent counsel, including Pemberton, Locke & Strauss LLP (counsel to Eleanor V. Caldwell), Havensbrook Wealth Advisors LLC, and senior management of Caldwell Ridgeline Capital LLC and Stonecrest Realty Holdings LLC;
•  Resolution of any engagement-level issues, including scope disputes, conflicts, and fee-related matters; and
•  Periodic status updates to Mr. Caldwell regarding progress against the project plan.
Hourly Rate: $1,450 per hour
Estimated Hours: 80–100 hours
Additional Role — Trust Protector Designation: At Mr. Caldwell's specific request, Victoria Chambers has been designated as the initial Trust Protector of the Caldwell Family Dynasty Trust, serving in a non-fiduciary capacity. This designation carries certain powers, including the power to remove and appoint successor institutional trustees, the power to modify administrative provisions of the trust, and a limited power to add or exclude beneficiaries (subject to certain restrictions set forth in the trust agreement). The trust protector role will require ongoing monitoring of any potential conflict implications, including under the New York Rules of Professional Conduct, Rule 1.7 (Conflict of Interest: Current Clients) and Rule 1.8 (Conflict of Interest: Current Clients — Specific Rules). Ms. Chambers's service as Trust Protector was reviewed and approved by the firm's General Counsel's Office on February 10, 2023, subject to the requirement that Ms. Chambers recuse herself from any matter in which the interests of the trust and the interests of Mr. Caldwell or the firm may diverge. A copy of the General Counsel's Office clearance memorandum is on file in the matter folder.
B. Howard Quinn — Billing Partner
Practice Group: White Collar & Investigations
Role: Howard Quinn will serve as the billing partner for the engagement, with responsibility for the following:
•  Administrative and billing oversight, including monthly review of all time entries posted to Matter No. 1034-00004;
•  Preparation and issuance of monthly invoices to Mr. Caldwell;
•  Fee management against the budget cap of $2,100,000, including tracking of actual hours and fees against the projections set forth in this memorandum;
•  Coordination with the firm's finance department regarding collections, trust account management, and any billing adjustments; and
•  Communication with Victoria Chambers regarding billing trends and any projected overruns.
Hourly Rate: $1,350 per hour
Estimated Hours: 15–25 hours
Note: Mr. Quinn's involvement in the engagement will be primarily administrative and billing-related. He will have limited substantive involvement in the planning work, except to the extent that billing or administrative issues require his review of substantive materials.
C. Sylvia Hartwell — Specialist Partner (Tax)
Practice Group: Tax
Role: Sylvia Hartwell will serve as the tax structuring lead for the engagement. Ms. Hartwell brings more than twenty-five years of experience in estate and gift tax planning for ultra-high-net-worth individuals and will be responsible for the following:
•  Design and structuring of all three GRAT transactions, including selection of annuity terms, calculation of zeroed-out annuity amounts under IRC § 2702, and analysis of the applicable § 7520 rate for each funding month;
•  Analysis of the monthly § 7520 rates published by the Internal Revenue Service and strategic timing of GRAT fundings to optimize the annuity structure;
•  Development of the generation-skipping transfer tax exemption allocation strategy, including allocation of Mr. Caldwell's remaining GST exemption to the dynasty trust and analysis of the GST consequences of each GRAT's potential remainder distributions;
•  Private foundation compliance analysis under IRC §§ 4940 through 4946, including analysis of the excise tax on net investment income (§ 4940), restrictions on self-dealing (§ 4941), minimum distribution requirements (§ 4942), excess business holdings (§ 4943), jeopardizing investments (§ 4944), and taxable expenditures (§ 4945);
•  Charitable deduction analysis, including computation of Mr. Caldwell's charitable contribution deduction for the initial foundation contribution, application of the 30% of adjusted gross income limitation for contributions to private foundations, and analysis of the five-year carryforward provisions;
•  Preparation of estate tax projections, including a baseline analysis of the federal estate tax liability that would result in the absence of the proposed plan and a comparison of projected savings under the proposed structure;
•  Gift tax return (Form 709) preparation for the 2023 taxable year, in coordination with Strathmore Corporation & Greaves LLP (Martin J. Prescott, CPA), including reporting of all GRAT fundings, the dynasty trust gift, the foundation contribution, and ILIT premium gifts; and
•  Ongoing tax advisory services as issues arise during the implementation process.
Hourly Rate: $1,500 per hour
Estimated Hours: 200–250 hours
Note: Sylvia Hartwell's engagement in this matter is covered by the Engagement Scope Addendum — Tax Advisory Services, which was executed concurrently with the engagement letter on February 15, 2023. The addendum specifies that Ms. Hartwell's tax advisory services are subject to the same fee cap and billing arrangements as the balance of the engagement.
D. Monica Reyes — Lead Associate
Practice Group: Antitrust & Competition (cross-staffed for estate planning matter)
Role: Monica Reyes will serve as the lead associate and day-to-day project manager for the engagement, with responsibility for the following:
•  Day-to-day management of the project plan, including maintenance of the timeline set forth in Section IV of this memorandum, tracking of deliverables and deadlines, and coordination of team activities;
•  Primary drafting responsibility for all trust agreements, including the Caldwell Family Dynasty Trust agreement, the Caldwell Family Insurance Trust (ILIT) agreement, and all three GRAT agreements;
•  Drafting of the pour-over will, including the self-proving affidavit and attestation clause;
•  Drafting of the Amended and Restated Caldwell Revocable Trust, incorporating credit shelter trust and marital QTIP trust provisions;
•  Preparation of all organizational documents for The Caldwell Family Foundation, including the certificate of incorporation, bylaws, organizational board resolutions, conflict-of-interest policy, gift acceptance policy, investment policy statement, and grant-making policy and procedures manual;
•  Drafting of all powers of attorney, health care proxy, living will/advance directive, and HIPAA authorization;
•  Coordination with Northgate Trust Company of Delaware (Philip A. Rossiter, Senior Vice President) regarding trustee acceptance, fee schedules, administrative procedures, and ongoing fiduciary responsibilities;
•  Coordination with Pemberton, Locke & Strauss LLP (Rachel F. Dunlap, Esq.) regarding Eleanor V. Caldwell's independent review of the spousal consent and related documents;
•  Coordination with Ashford Valuation Group LLC (Dr. Leonard K. Whitfield, ASA) regarding the appraisal engagement, valuation dates, scope of work, and deliverable timelines;
•  Coordination with Glenmore Insurance Brokerage LLC (Nathan C. Freed, Senior Vice President) regarding procurement and assignment of the Beacon Life Assurance Company second-to-die policy;
•  Coordination with Ridgewell & Thorn LLP (Margaret A. Colvin, Esq., Delaware counsel to Northgate Trust Company) regarding fiduciary acceptance matters and Delaware trust law compliance;
•  Coordination with Stonecrest Realty Holdings LLC (Robert M. Sinclair, COO) and Caldwell Ridgeline Capital LLC (Gregory S. Fenton, CFO) regarding entity-level transfer documentation, consent requirements, and operating agreement provisions;
•  Preparation of the closing binder, document index, and closing checklist, encompassing all approximately seventy-five documents produced during the engagement; and
•  Preparation of monthly budget-to-actual reports for Howard Quinn's review.
Hourly Rate: $875 per hour
Estimated Hours: 450–550 hours
Note: Given the scope of the engagement, Monica Reyes will handle the majority of the document production volume and inter-party correspondence. Ms. Reyes's workload on this matter will require that her antitrust matters be reassigned or deferred during the peak drafting periods (March through May 2023). This has been discussed with and approved by Marcus Ellison, Practice Group Leader, Antitrust & Competition.
E. Elliot Nguyen — Working Associate
Practice Group: Antitrust & Competition (cross-staffed)
Role: Elliot Nguyen will serve as the working associate on the engagement, performing research, drafting support, and document preparation under the supervision of Monica Reyes and Sylvia Hartwell. Mr. Nguyen's specific assignments will include the following:
•  Research and preparation of a dynasty trust situs analysis comparing Delaware, Nevada, and South Dakota as potential trust situs jurisdictions, with particular attention to each state's rule against perpetuities (or abolition thereof), state income tax treatment of trust income, asset protection provisions, decanting statutes, and directed trust provisions;
•  Research and preparation of a private foundation compliance memorandum addressing the requirements and prohibitions of IRC §§ 4940 through 4946;
•  GRAT sensitivity modeling, including construction of return scenario analyses at assumed annual rates of return of 4%, 6%, 8%, and 10%, demonstrating the potential remainder values passing to the dynasty trust or other designated beneficiaries upon termination of each GRAT term;
•  Research and preparation of a valuation discount analysis memorandum addressing the supportability of the proposed lack-of-marketability and minority-interest discounts for the Stonecrest Realty Holdings LLC membership interests (proposed combined discount: 25%), the Caldwell Ridgeline Capital LLC limited partnership interests (proposed combined discount: 35%), and the Caldwell Ridgeline Capital LLC carried interest (proposed discount: 30%);
•  Preparation of gift tax return supporting schedules, including valuation summaries, § 7520 rate computations, annuity present value calculations, and GST exemption tracking worksheets;
•  Assembly of closing materials, including the closing binder, document index, and executed originals for delivery to Mr. Caldwell; and
•  Assistance with the IRS Form 1023 application for The Caldwell Family Foundation, including preparation of the narrative description of activities, financial data schedules, and supporting documentation.
Hourly Rate: $650 per hour
Estimated Hours: 350–425 hours
Note: Elliot Nguyen will also serve as one of two attesting witnesses to the pour-over will execution on the signing date (the other witness will be Monica Reyes). Mr. Nguyen has confirmed that he has no personal or familial relationship with Mr. Caldwell or any beneficiary of the estate plan that would disqualify him as a witness under New York Estates, Powers and Trusts Law § 3-2.1(a)(2).
F. Support Staff
In addition to the attorneys identified above, the following support staff resources have been allocated to the engagement:
•  Paralegal Support: Estimated 60–80 hours at $350 per hour (estimated cost: $21,000–$28,000). Paralegal support will be utilized for document management and version control, coordination of notarization and execution ceremonies, filing of organizational documents with the New York Department of State, assembly and binding of closing binder materials, and general administrative support as directed by Monica Reyes. Paralegal support will be drawn from the firm's Trusts & Estates paralegal pool, with Sandra K. DiMartino designated as the primary paralegal contact for this matter.
•  Firm Librarian / Research Services: Estimated flat allocation of $5,000–$8,000 for specialized research support, including access to proprietary tax databases, legislative history research, and retrieval of comparable valuation reports and Tax Court decisions relevant to the valuation discount analysis.
III. Fee Estimate and Billing Arrangements
A. Estimated Total Fees
Based on the scope of work described in this memorandum, the staffing plan set forth in Section II, and the projected timeline set forth in Section IV, the total estimated professional fees for the engagement are as follows:
Total Estimated Professional Fees: $1,850,000
Fee Cap (Not-to-Exceed): $2,100,000
The fee cap of $2,100,000 covers all professional time of the engagement team members identified in this memorandum, including partner, associate, and paralegal time. The fee cap does not cover disbursements, third-party costs, or out-of-scope matters. In the event that the scope of the engagement materially changes — for example, if Mr. Caldwell requests supplemental planning advice in connection with potential changes to the federal estate and gift tax exemption following the scheduled 2025 sunset of the Tax Cuts and Jobs Act provisions — such additional work would be treated as a separate engagement or amendment to the existing engagement, subject to a supplemental fee arrangement with the client.
B. Fee Build-Up by Team Member
The following table sets forth the estimated fee build-up by team member, based on estimated hours at the applicable hourly rate:
The following observations are relevant to understanding the fee build-up:
•  Blended Hourly Rates. The blended hourly rate across all partner time (Chambers, Quinn, and Hartwell combined) is approximately $1,275 per hour at the midpoint of estimated hours. The blended hourly rate across all associate time (Reyes and Nguyen combined) is approximately $762 per hour at the midpoint. The overall blended rate across all professional time, including paralegal support, is approximately $1,050–$1,100 per hour.
•  Contingency Allowance. The total estimated fee of $1,850,000 reflects the midpoint projection of the fee build-up (approximately $1,208,875) plus a contingency allowance of approximately 25–30% to account for complexity, additional client meetings beyond those currently scheduled, regulatory delays (e.g., IRS processing of the Foundation's Form 1023 application), potential revisions to trust instruments and organizational documents, and unanticipated coordination with third-party advisors. In the lead associate's experience with matters of comparable complexity, a contingency allowance in this range is appropriate and reflects the reality that estate planning engagements of this scope routinely involve multiple rounds of revision and iteration.
•  Fee Cap Cushion. The fee cap of $2,100,000 provides approximately 13.5% cushion above the $1,850,000 estimate. This cushion is intended to absorb cost overruns attributable to unforeseen complications, such as contested valuation discount positions, delays in obtaining third-party consents, or additional tax analysis prompted by changes in law or IRS guidance during the engagement period.
C. Billing Method
The engagement will be billed on a monthly basis, at the hourly rates specified above. The billing process will operate as follows:
•  All time will be recorded and billed to Matter No. 1034-00004, Billing Code 78412-JRC.
•  At the end of each calendar month, Howard Quinn will review all time entries posted to the matter for accuracy, appropriateness, and compliance with the engagement letter.
•  Following Mr. Quinn's review, monthly invoices will be submitted to Jonathan R. Caldwell at the address on file, with copies transmitted electronically to Mr. Caldwell and to Martin J. Prescott at Strathmore Corporation & Greaves LLP (per Mr. Caldwell's instruction).
•  Payment terms are net thirty (30) days from the invoice date, as specified in the engagement letter executed February 15, 2023.
•  Monica Reyes will prepare monthly budget-to-actual reports comparing actual fees incurred against the projections set forth in this memorandum, broken down by team member and by workstream. These reports will be submitted to Howard Quinn for review and will be available to Victoria Chambers upon request.
D. Excluded Costs / Disbursements (Billed Separately)
The fee estimate and fee cap set forth above do not include the following costs and disbursements, which will be billed separately to Mr. Caldwell or paid directly by Mr. Caldwell to the relevant third party, as indicated:
1.  Ashford Valuation Group LLC Appraisal Fees. Ashford Valuation Group LLC has been engaged independently by Mr. Caldwell to prepare qualified appraisals of the Stonecrest Realty Holdings LLC membership interests, the Caldwell Ridgeline Capital LLC limited partnership interests and carried interest, and the art and collectibles collection. The estimated appraisal fees are $150,000–$200,000, depending on the complexity of the valuations. These fees will be billed directly by Ashford to Mr. Caldwell.
2.  Northgate Trust Company of Delaware Institutional Trustee Fees. Northgate Trust Company of Delaware will serve as institutional co-trustee of the Caldwell Family Dynasty Trust and as sole institutional trustee of the Caldwell Family Insurance Trust (ILIT). Northgate's annual trustee fees will be charged in accordance with Northgate's published fee schedule, which is based on a percentage of trust assets under administration. These fees will be charged directly to the trusts and paid from trust assets.
3.  Glenmore Insurance Brokerage LLC / Beacon Life Assurance Company Insurance Premiums and Broker Fees. The annual premium on the Beacon Life Assurance Company second-to-die life insurance policy (Policy No. BLA-2023-77419) is $187,500. Glenmore Insurance Brokerage LLC's broker fees are included in the premium amount. The premium will be paid by the ILIT trustee (Northgate) from contributions made to the ILIT by Mr. Caldwell (with Crummey withdrawal notices issued to each trust beneficiary).
4.  Pemberton, Locke & Strauss LLP Fees. Pemberton, Locke & Strauss LLP has been engaged by Eleanor V. Caldwell as independent counsel to advise her regarding the spousal consent and related documents. Pemberton's fees will be billed directly to Eleanor V. Caldwell.
5.  Ridgewell & Thorn LLP Fees. Ridgewell & Thorn LLP serves as Delaware counsel to Northgate Trust Company of Delaware and will provide advice regarding Delaware trust law and fiduciary acceptance matters. Ridgewell's fees will be billed to Northgate or to Mr. Caldwell, per the arrangement between Northgate and Mr. Caldwell.
6.  Filing Fees. These include the New York Department of State filing fee for the Foundation's certificate of incorporation, the IRS Form 1023 user fee (currently $600), and any other governmental filing fees incurred during the engagement. These fees are estimated at $2,000–$3,500 in the aggregate.
7.  Travel, Copying, Courier, and Miscellaneous Disbursements. Estimated at $5,000–$10,000 for the duration of the engagement. This includes travel expenses for meetings with the client, with Northgate Trust Company in Wilmington, Delaware, and with other third parties, as well as photocopying, binding, courier service, and overnight delivery charges.
IV. Projected Timeline
The engagement is divided into four phases, as described below. The milestones and target dates set forth in this section are subject to adjustment based on client availability, third-party responsiveness, and regulatory processing times.
A. Phase 1: Information Gathering and Analysis (February – March 2023)
Phase 1 encompasses the opening of the matter, execution of the engagement letter, collection and analysis of client financial data and existing estate planning documents, and preparation of the preliminary estate planning strategy memorandum and tax analysis. This phase will establish the factual and analytical foundation for all subsequent planning work.
B. Phase 2: Structure Design and Document Drafting (March – May 2023)
Phase 2 is the principal drafting and implementation phase, during which the majority of the legal documents will be prepared, reviewed, negotiated (where applicable), and executed. This is the most resource-intensive phase of the engagement and is expected to consume the largest share of professional time.
The technical memoranda to be produced during March and April 2023 include the following:
•  GRAT Structuring Memorandum — analysis of zeroed-out GRAT designs under IRC § 2702, including annuity calculation methodology, application of the § 7520 rate (5.0% for March 2023), selection of GRAT terms (two-year and three-year), and comparison of short-term versus long-term GRAT strategies;
•  GRAT Sensitivity Analysis — return scenario modeling at assumed annual rates of return of 4%, 6%, 8%, and 10%, demonstrating the range of potential remainder values for each GRAT;
•  Valuation discount Analysis Memorandum — analysis of proposed discounts for lack of marketability and minority interest, including 25% combined discount for Stonecrest Realty Holdings LLC membership interests, 35% combined discount for Caldwell Ridgeline Capital LLC limited partnership interests, and 30% discount for carried interest, with citations to relevant Tax Court precedent and appraisal methodology;
•  Dynasty Trust Situs Analysis — comparison of Delaware, Nevada, and South Dakota as potential situs jurisdictions, with recommendation of Delaware based on the maturity of the Delaware trust code, the absence of a state income tax on trust income for trusts with no Delaware-resident beneficiaries, the availability of directed trust provisions, and the strength of the Delaware decanting statute;
•  GST Allocation Memorandum — analysis of Mr. Caldwell's available GST exemption and recommended allocation strategy, including allocation to the dynasty trust and analysis of the automatic allocation rules under IRC § 2632;
•  ILIT/Crummey Memorandum — analysis of Crummey withdrawal powers, annual exclusion coverage ($17,000 per beneficiary × 3 beneficiaries = $51,000 covered by annual exclusion; $136,500 balance uses lifetime gift tax exemption), and the IRC § 2035 three-year lookback rule applicable to the transferred life insurance policy;
•  Private Foundation Compliance Memorandum — comprehensive analysis of the operational requirements and prohibitions applicable to private foundations under IRC §§ 4940–4946;
•  Foundation vs. Donor-Advised Fund Comparison — analysis of the relative advantages and disadvantages of a private foundation compared to a donor-advised fund, given Mr. Caldwell's charitable objectives and desire for family involvement in grant-making;
•  Marital/Credit Shelter Trust Design Memorandum — analysis of the optimal allocation between credit shelter trust and QTIP marital trust provisions in the restated revocable trust, including portability analysis under IRC § 2010(c)(4);
•  State Income Tax Planning Memorandum — analysis of Delaware situs for the dynasty trust as a state income tax planning strategy, including confirmation that trust income will not be subject to New York or Delaware state income tax; and
•  Power of Appointment/Decanting Flexibility Memorandum — analysis of the limited and general powers of appointment included in the dynasty trust and the availability of the Delaware decanting statute (12 Del. C. § 3528) as a mechanism for future trust modification.
C. Phase 3: Appraisals, GRAT C Funding, and Foundation Determination (June – July 2023)
Phase 3 encompasses the funding of the final GRAT (GRAT C, involving the more complex carried-interest and limited partnership assets), receipt and review of the qualified appraisal reports from Ashford Valuation Group LLC, and receipt of the IRS determination letter for The Caldwell Family Foundation.
D. Phase 4: Gift Tax Return Preparation and Closing (August – September 2023)
Phase 4 is the final phase of the engagement, encompassing preparation of the 2023 gift tax return, coordination with Strathmore Corporation & Greaves LLP, final document review, closing binder assembly, and the closing of the matter.
V. Allocation of Responsibilities by Workstream
The engagement has been organized into seven discrete workstreams, each with a designated lead, supporting team members, specified deliverables, key coordination points, and an estimated hour allocation. The workstream structure is designed to facilitate efficient project management, clear lines of accountability, and accurate time tracking against the budget projections. Each workstream is described in detail below.
A. Workstream 1: GRAT Structures (GRATs A, B, and C)
Lead: Sylvia Hartwell (tax design and annuity calculations)
Support: Monica Reyes (document drafting — trust agreements, schedules, assignment agreements, trustee acknowledgments); Elliot Nguyen (sensitivity analysis modeling, valuation discount research)
Deliverables:
•  Three GRAT trust agreements (Caldwell 2023 Securities GRAT, Caldwell 2023 Realty GRAT, Caldwell 2023 Carried Interest GRAT);
•  Three Schedule A funded property lists (one for each GRAT, describing the assets transferred at funding);
•  Three annuity payment schedules (one for each GRAT, specifying the annuity amount, payment dates, and term);
•  Two assignment agreements — (i) assignment of Stonecrest Realty Holdings LLC membership interests to GRAT B, and (ii) assignment of Caldwell Ridgeline Capital LLC limited partnership interests and carried interest to GRAT C;
•  Trustee acknowledgment (Mr. Caldwell as initial trustee of each GRAT during the annuity term);
•  GRAT Structuring Memorandum (zeroed-out design analysis, § 7520 rate selection, annuity computation methodology);
•  GRAT Sensitivity Analysis (return scenario modeling at 4%, 6%, 8%, and 10% annual returns); and
•  Valuation discount Analysis Memorandum (lack-of-marketability and minority-interest discount analysis for each asset class).
Key Coordination:
•  Ashford Valuation Group LLC / Dr. Leonard K. Whitfield, ASA (appraisals of Stonecrest membership interests and Caldwell Ridgeline LP/carried interests);
•  Caldwell Ridgeline Capital LLC / Gregory S. Fenton, CFO (fund interest valuations, review of limited partnership agreements for transfer restrictions and consent requirements, execution of transfer consent);
•  Stonecrest Realty Holdings LLC / Robert M. Sinclair, COO (membership interest transfer documentation, review of operating agreement for transfer restrictions and right-of-first-refusal provisions, preparation of amended membership interest schedule reflecting GRAT B transfer).
Estimated Hours for Workstream: 300–375 hours
B. Workstream 2: Caldwell Family Dynasty Trust
Lead: Monica Reyes (trust agreement drafting and trustee/protector coordination)
Support: Sylvia Hartwell (GST exemption allocation, tax structuring); Elliot Nguyen (situs analysis, decanting/flexibility research)
Deliverables:
•  Caldwell Family Dynasty Trust agreement (Delaware situs, perpetual duration under Delaware law);
•  Schedule A (description of initial trust property — $5,000,000 cash);
•  Trustee acceptance — Thomas R. Caldwell (individual co-trustee);
•  Institutional trustee acceptance — Northgate Trust Company of Delaware;
•  Trust protector designation — Victoria Chambers (non-fiduciary capacity);
•  Investment policy statement (coordinated with Havensbrook Wealth Advisors LLC / Diana R. Linden, CFP®);
•  Distribution committee operating procedures (establishing guidelines for discretionary distributions to beneficiaries);
•  Beneficiary designation and per stirpes schedule (identifying Thomas R. Caldwell, Katherine C. Hartfield, Olivia G. Caldwell, and their respective issue as beneficiaries);
•  Dynasty Trust Situs Analysis (comparative analysis of Delaware, Nevada, and South Dakota);
•  GST Allocation Memorandum (allocation of Mr. Caldwell's remaining GST exemption to the dynasty trust); and
•  Power of Appointment/Decanting Flexibility Memorandum (analysis of trust modification mechanisms available under Delaware law).
Key Coordination:
•  Northgate Trust Company of Delaware / Philip A. Rossiter, SVP (trustee acceptance, fee schedule negotiation, account opening procedures, and ongoing administrative coordination);
•  Ridgewell & Thorn LLP / Margaret A. Colvin, Esq. (Delaware counsel to Northgate, advising on Delaware trust law compliance, fiduciary acceptance, and related matters);
•  Havensbrook Wealth Advisors LLC / Diana R. Linden, CFP® (investment data, asset allocation recommendations, and coordination of the investment policy statement for the dynasty trust).
Estimated Hours for Workstream: 175–225 hours
C. Workstream 3: The Caldwell Family Foundation
Lead: Monica Reyes (organizational documents and IRS application)
Support: Sylvia Hartwell (§ 501(c)(3)/§ 509(a) analysis, charitable deduction calculations, §§ 4940–4946 compliance); Elliot Nguyen (research, Form 1023 preparation, foundation vs. DAF comparison)
Deliverables:
•  Certificate of incorporation (filed with the New York Department of State);
•  Bylaws;
•  Organizational board resolutions (including election of officers, adoption of bylaws, designation of registered agent, authorization of bank account, and authorization of Form 1023 filing);
•  Conflict-of-interest policy;
•  Gift acceptance policy;
•  Investment policy statement;
•  IRS Form 1023 application for recognition of tax-exempt status (draft and final);
•  IRS determination letter transmittal memorandum;
•  Grant-making policy and procedures manual; and
•  Initial contribution agreement ($10,000,000 cash).
Board of Directors:
•  Jonathan R. Caldwell — President
•  Eleanor V. Caldwell — Vice President
•  Thomas R. Caldwell — Secretary
•  Katherine C. Hartfield — Treasurer
•  Olivia G. Caldwell — Director
•  Dr. Margaret P. Elsworth — Independent Director
Key Details:
•  Initial contribution: $10,000,000 in cash;
•  Employer Identification Number: 88-3021547;
•  New York Department of State Filing No.: 230320-001847;
•  Mission: support of arts, education, and environmental conservation, with a primary geographic focus on the New York City metropolitan area;
•  Minimum annual distribution: 5% of net investment assets ($500,000 in Year 1, based on initial contribution);
•  No compensation to family directors; Dr. Margaret P. Elsworth may receive reasonable compensation as an independent director, subject to board approval and IRC § 4941 self-dealing analysis.
Estimated Hours for Workstream: 125–160 hours
D. Workstream 4: Irrevocable Life Insurance Trust (ILIT)
Lead: Monica Reyes (trust agreement drafting, policy assignment, Crummey notice template)
Support: Sylvia Hartwell (gift tax/annual exclusion analysis)
Gift Tax Analysis:
•  Annual ILIT premium contribution: $187,500;
•  Crummey withdrawal right beneficiaries: three (Thomas R. Caldwell, Katherine C. Hartfield, Olivia G. Caldwell);
•  Annual exclusion coverage: $17,000 × 3 beneficiaries = $51,000;
•  Balance of premium contribution not covered by annual exclusion: $136,500;
•  The $136,500 balance will use a portion of Mr. Caldwell's remaining lifetime gift tax exemption;
•  IRC § 2035 three-year lookback analysis: the policy assignment and premium contributions must be analyzed under the three-year lookback rule; if Mr. Caldwell dies within three years of the initial policy assignment (i.e., before March 15, 2026), the $15,000,000 death benefit would be included in his gross estate.
Deliverables:
•  ILIT trust agreement (Caldwell Family Insurance Trust);
•  Schedule A (description of the Beacon Life Assurance Company Policy No. BLA-2023-77419, $15,000,000 second-to-die death benefit);
•  Trustee acceptance — Northgate Trust Company of Delaware;
•  Policy assignment (transferring ownership of the Beacon Life policy from Mr. Caldwell to the ILIT);
•  Form Crummey withdrawal notice (template to be used annually upon each premium contribution); and
•  Annual premium funding letter (template letter from Mr. Caldwell to Northgate directing premium payment).
Key Coordination:
•  Glenmore Insurance Brokerage LLC / Nathan C. Freed, SVP (procurement of the Beacon Life policy, coordination of underwriting, policy issuance, and assignment documentation);
•  Beacon Life Assurance Company (underwriting, medical examination coordination, policy issuance, and execution of policy assignment forms); and
•  Northgate Trust Company of Delaware / Philip A. Rossiter, SVP (trustee acceptance, establishment of premium payment procedures, and coordination of annual Crummey withdrawal notices).
Estimated Hours for Workstream: 50–70 hours
E. Workstream 5: Revocable Trust, Pour-Over Will, and Ancillary Documents
Lead: Monica Reyes (drafting of all instruments)
Support: Victoria Chambers (review and client communication); Sylvia Hartwell (marital trust/credit shelter trust tax design, portability analysis)
Deliverables:
•  Amended and Restated Caldwell Revocable Trust (original trust dated October 3, 2010; restated effective April 1, 2023), incorporating credit shelter trust and marital QTIP trust provisions, revised trustee succession provisions, and updated beneficiary designations;
•  Revised Schedule A to the Amended and Restated Caldwell Revocable Trust;
•  Certification of trust (for use by financial institutions and title companies);
•  Pour-over will (revoking the will dated October 3, 2010), directing that all probate assets be distributed to the revocable trust;
•  Self-proving affidavit (witnesses: Monica Reyes and Elliot Nguyen; notarization by firm notary);
•  Spousal consent and acknowledgment (executed by Eleanor V. Caldwell following independent review by Rachel F. Dunlap, Esq. of Pemberton, Locke & Strauss LLP);
•  Durable general power of attorney (agent: Eleanor V. Caldwell; successor agent: Thomas R. Caldwell);
•  Health care proxy (agent: Eleanor V. Caldwell; successor agent: Katherine C. Hartfield);
•  Living will / advance directive;
•  HIPAA authorization (authorized individuals: Eleanor V. Caldwell, Thomas R. Caldwell, Katherine C. Hartfield, and Olivia G. Caldwell); and
•  Marital Trust/Credit Shelter Trust Design Memorandum (including portability analysis under IRC § 2010(c)(4) and comparison of the credit shelter trust approach with a portability-only strategy).
Key Coordination:
•  Pemberton, Locke & Strauss LLP / Rachel F. Dunlap, Esq. (independent review of the spousal consent and related documents for Eleanor V. Caldwell; Ms. Dunlap will advise Eleanor regarding the legal effect of the spousal consent and the provisions of the restated revocable trust that affect Eleanor's interests).
Estimated Hours for Workstream: 100–130 hours
F. Workstream 6: Tax Advisory and Gift Tax Return Coordination
Lead: Sylvia Hartwell (all tax analysis and Form 709 preparation)
Support: Elliot Nguyen (supporting schedules, valuation summaries, § 7520 computations, GST exemption tracking)
Deliverables:
•  Federal Estate and Gift Tax Analysis (comprehensive projection of estate tax savings under the proposed plan);
•  State Income Tax Planning Memorandum (Delaware situs analysis for income tax purposes);
•  Draft Form 709 for the 2023 taxable year;
•  Gift tax return supporting schedules and valuation summaries (including detailed descriptions of each reported gift, applicable valuation discounts, and § 7520 present value computations for each GRAT);
•  Appraisal engagement instructions to Ashford Valuation Group LLC;
•  Calderwood & Harkness internal review memorandum on the Ashford appraisal reports; and
•  Coordination letter to Strathmore Corporation & Greaves LLP transmitting draft Form 709 and supporting documentation for review and finalization.
Key Coordination:
•  Strathmore Corporation & Greaves LLP / Martin J. Prescott, CPA (provision of prior gift tax returns, financial data, and income tax returns; review and finalization of the 2023 Form 709; coordination of filing with Mr. Caldwell's individual income tax return);
•  Ashford Valuation Group LLC / Dr. Leonard K. Whitfield, ASA (communication of appraisal standards and requirements, review of draft and final appraisal reports for compliance with USPAP and IRC § 170(f)(11), and identification of any areas of potential IRS challenge).
Key Figures:
•  Lifetime gift and estate tax exemption (2023): $12,920,000;
•  Prior taxable gifts (cumulative through December 31, 2022): $6,750,000;
•  Remaining lifetime gift tax exemption before implementation of plan: $6,170,000;
•  Dynasty trust gift: $5,000,000 (utilizes $5,000,000 of remaining exemption);
•  Remaining lifetime gift tax exemption after dynasty trust gift: $1,170,000;
•  Jonathan's share of foundation contribution (under gift-splitting election with Eleanor): $5,000,000 (charitable deduction offsets gift; no net use of lifetime exemption);
•  GRAT fundings: zeroed-out structures, $0 taxable gift for each GRAT;
•  ILIT premium gifts: $187,500 per year ($51,000 covered by annual exclusion; $136,500 applied against remaining lifetime exemption, reducing remaining exemption from $1,170,000 to $1,033,500 after first premium payment).
Estimated Hours for Workstream: 150–200 hours
G. Workstream 7: Closing and Administrative
Lead: Monica Reyes (closing checklist, document index, closing binder)
Support: Elliot Nguyen (document assembly); Victoria Chambers (closing letter)
Deliverables:
•  Closing checklist and document index (comprehensive index of all approximately seventy-five documents produced during the engagement, organized by workstream, with document title, date of execution, and location of original and copies);
•  Letter to Northgate Trust Company of Delaware confirming fiduciary acceptance for the Caldwell Family Dynasty Trust and the Caldwell Family Insurance Trust (ILIT);
•  Closing letter to Jonathan R. Caldwell, dated September 29, 2023, summarizing all completed work, identifying ongoing obligations, and providing recommendations for periodic review and future planning considerations.
Storage Instructions:
•  Originals: Delivered to Jonathan R. Caldwell at 418 East 72nd Street, Apartment 14A, New York, New York 10021, via hand delivery or bonded courier, with executed receipt;
•  Copies: Retained by Calderwood & Harkness LLP in the firm's document vault (Matter No. 1034-00004) and transmitted to Northgate Trust Company of Delaware for the trustee's records.
Estimated Hours for Workstream: 40–55 hours
VI. Key Third-Party Coordination Summary
The following table summarizes the principal third-party entities and individuals with whom the engagement team will coordinate during the course of the engagement, along with the designated Calderwood & Harkness contact for each third party and the purpose of the coordination:
Given the number and diversity of third-party participants, Monica Reyes will maintain a centralized coordination log tracking all communications with third parties, outstanding requests, and pending deliverables. This log will be updated weekly and will be available to all engagement team members via the firm's document management system.
VII. Risk Factors and Budget Contingencies
The following risk factors have been identified as potential sources of cost overruns or timeline delays. The contingency allowance built into the fee estimate (approximately 25–30% above the midpoint fee build-up) is intended to account for these risks:
Valuation Challenges. The proposed valuation discounts — 25% combined discount for Stonecrest Realty Holdings LLC membership interests, 35% combined discount for Caldwell Ridgeline Capital LLC limited partnership interests, and 30% discount for Caldwell Ridgeline Capital LLC carried interest — are within the range of discounts accepted by the Tax Court in comparable cases, but they are at the higher end of the spectrum for certain asset classes. There is a meaningful risk that the Internal Revenue Service will challenge one or more of these discounts on audit, particularly the 35% discount for the LP interests and the 30% discount for the carried interest. In the event of an IRS audit, Calderwood & Harkness would be prepared to defend the valuations, but such defense work would likely require additional professional time beyond the scope of this engagement. The budget includes a contingency allowance to cover additional analysis and internal review of the Ashford appraisal reports, but does not include the cost of IRS audit defense, which would be treated as a separate engagement.
IRS Processing Times. The Form 1023 application for The Caldwell Family Foundation may experience processing delays. The IRS has historically taken between three and twelve months to process Form 1023 applications, depending on the complexity of the application and the Service's workload. Based on our conversations with the IRS Exempt Organizations Division and our experience with recent filings, we anticipate that the determination letter will be received by approximately July 2023. The actual determination letter was received on July 14, 2023, consistent with this expectation. However, any delays in IRS processing could require additional follow-up time by Monica Reyes and Elliot Nguyen.
Client Revisions. Multiple rounds of revisions to the dynasty trust distribution provisions and the foundation bylaws are anticipated, given the number of family stakeholders involved in the planning process. Mr. Caldwell has three adult children (Thomas R. Caldwell, Katherine C. Hartfield, and Olivia G. Caldwell), two in-law spouses, and four grandchildren, each of whom may have views regarding the distribution provisions, trustee selections, and foundation governance. Based on the initial client meeting, it is clear that Mr. Caldwell intends to solicit input from each of his children regarding the dynasty trust distribution standards, which is likely to generate multiple rounds of revision. The contingency allowance is intended to account for this anticipated revision process.
Coordination Complexity. The engagement involves at least ten third-party entities and advisors, each with its own timeline, deliverable requirements, and communication protocols. Scheduling of meetings, execution ceremonies, and document-flow coordination will consume significant associate time, particularly during Phase 2 (March through May 2023). The centralized coordination log maintained by Monica Reyes will help mitigate this risk, but some degree of scheduling friction is inevitable given the number of participants.
Potential Sunset Considerations. The federal estate and gift tax exemption is currently set at $12,920,000 per individual for 2023, as a result of the Tax Cuts and Jobs Act of 2017. The TCJA provisions that increased the exemption are scheduled to sunset on December 31, 2025, at which point the exemption is expected to revert to approximately $6,000,000–$7,000,000 per individual (adjusted for inflation). Mr. Caldwell may request supplemental planning advice in 2024 or 2025 to address the potential impact of the sunset on his estate plan. Any such supplemental planning advice would be outside the scope of the current engagement and would be billed separately under a supplemental engagement letter or amendment. The budget for the current engagement does not include any allowance for sunset-related planning work.
VIII. Approval and Next Steps
This memorandum is submitted for the approval of Victoria Chambers, Responsible Partner, and Howard Quinn, Billing Partner. The staffing plan, fee estimate, budget cap, timeline, and workstream allocations set forth herein are subject to their review and approval before implementation.
Upon approval, the engagement team will immediately commence Phase 1 activities. The data request letter to Strathmore Corporation & Greaves LLP (Martin J. Prescott, CPA) has already been prepared and is ready for transmission upon authorization. The Client Information Questionnaire has been drafted and will be sent to Mr. Caldwell concurrently with the data request.
The following ongoing reporting and budget management procedures will be implemented:
1.  Monthly Budget-to-Actual Reports. Monica Reyes will prepare monthly budget-to-actual reports comparing actual fees incurred against the projections set forth in this memorandum, broken down by team member and by workstream. These reports will be submitted to Howard Quinn for review by the fifth business day of each month.
2.  Projected Overrun Notification. Any projected overruns approaching the fee cap of $2,100,000 will be flagged promptly to Victoria Chambers and Howard Quinn for discussion and, if warranted, communication to Mr. Caldwell. Under the terms of the engagement letter, any fees in excess of the fee cap require prior written approval from the client.
3.  Scope Change Management. Any requests from Mr. Caldwell or his advisors that fall outside the scope of the engagement as defined in the engagement letter will be identified by the engagement team and referred to Victoria Chambers for evaluation. If a scope change is warranted, Victoria Chambers will communicate with Mr. Caldwell regarding the additional scope, estimated cost, and any necessary amendment to the engagement letter.
We respectfully request that Victoria Chambers and Howard Quinn indicate their approval of this memorandum by executing the approval block below.
APPROVAL
APPROVED:
________________________________________
Victoria Chambers, Responsible Partner Calderwood & Harkness LLP
Date: ________
APPROVED:
________________________________________
Howard Quinn, Billing Partner Calderwood & Harkness LLP
Date: ________
Prepared by: Monica Reyes, Lead Associate, Calderwood & Harkness LLP
Reviewed by: Victoria Chambers, Responsible Partner; Howard Quinn, Billing Partner
Matter No. 1034-00004 | Billing Code 78412-JRC
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
Team Member | Role | Rate ($/hr) | Est. Hours (Low) | Est. Hours (High) | Est. Fee (Low) | Est. Fee (High)
Victoria Chambers | Responsible Partner | $1,450 | 80 | 100 | $116,000 | $145,000
Howard Quinn | Billing Partner | $1,350 | 15 | 25 | $20,250 | $33,750
Sylvia Hartwell | Tax Specialist Partner | $1,500 | 200 | 250 | $300,000 | $375,000
Monica Reyes | Lead Associate | $875 | 450 | 550 | $393,750 | $481,250
Elliot Nguyen | Working Associate | $650 | 350 | 425 | $227,500 | $276,250
Paralegal Support | — | $350 | 60 | 80 | $21,000 | $28,000
Total | 1,155 | 1,430 | $1,078,500 | $1,339,250
Target Date | Milestone | Responsible
Feb. 6, 2023 | Matter opened; initial client meeting with Jonathan R. Caldwell at the firm's offices to discuss planning objectives, family dynamics, asset composition, and preliminary timeline expectations | Victoria Chambers, Monica Reyes
Feb. 10, 2023 | Conflict check memorandum completed and approved; all engagement team members and relevant third parties cleared through the firm's conflict checking system | Monica Reyes, Victoria Chambers
Feb. 15, 2023 | Engagement letter and Engagement Scope Addendum — Tax Advisory Services executed by Jonathan R. Caldwell and countersigned by Victoria Chambers and Sylvia Hartwell, respectively | Victoria Chambers, Sylvia Hartwell
Feb. 20, 2023 | Data request letter sent to Strathmore Corporation & Greaves LLP (attention: Martin J. Prescott, CPA) requesting complete financial records, including brokerage statements, Caldwell Ridgeline Capital LLC fund statements (Funds IV, V, and VI), Stonecrest Realty Holdings LLC operating agreement, membership interest schedule, and financial statements, prior gift tax returns (Form 709), copies of all existing trust documents and amendments, copies of the October 3, 2010 will and revocable trust, and three years of federal and state income tax returns | Monica Reyes
Feb. 20–28, 2023 | Client Information Questionnaire completed by Mr. Caldwell, providing biographical information for all family members, identification of all assets and liabilities, beneficiary designation information, and details regarding Mr. Caldwell's charitable objectives | Monica Reyes (coordination)
Mar. 1, 2023 | Preliminary asset inventory and summary completed, consolidating all financial data received from Strathmore Corporation & Greaves and from Mr. Caldwell directly; preliminary tax analysis completed, including computation of baseline federal estate tax liability and identification of planning opportunities | Sylvia Hartwell, Elliot Nguyen
Mar. 1–15, 2023 | Estate Planning Strategy Memorandum drafted and delivered to Mr. Caldwell, setting forth the recommended planning structure, anticipated tax savings, key implementation steps, and risk considerations; memorandum to be discussed with Mr. Caldwell at a follow-up meeting | Sylvia Hartwell, Monica Reyes
Mar. 1–15, 2023 | Federal Estate and Gift Tax Analysis prepared, establishing a baseline projection of approximately $117,500,000 in federal estate tax liability in the absence of the proposed plan, and a projected tax savings of approximately $24,000,000–$30,000,000 under the proposed structure, depending on actual investment returns and valuation discount levels | Sylvia Hartwell, Elliot Nguyen
Target Date | Milestone | Responsible
Mar. 10, 2023 | Transmittal of draft spousal consent documents to Pemberton, Locke & Strauss LLP (attention: Rachel F. Dunlap, Esq.) for Eleanor V. Caldwell's independent review; draft will include spousal consent to the dynasty trust gift, waiver of rights with respect to trust distributions, and acknowledgment of the credit shelter trust / QTIP trust provisions of the restated revocable trust | Victoria Chambers
Mar. 15, 2023 | Caldwell Family Insurance Trust (ILIT) agreement drafted and executed by Mr. Caldwell as grantor; Northgate Trust Company of Delaware designated as sole institutional trustee; Beacon Life Assurance Company second-to-die policy (Policy No. BLA-2023-77419, $15,000,000 death benefit, insuring the joint lives of Jonathan R. Caldwell and Eleanor V. Caldwell) assigned to the ILIT by execution of the policy assignment form; initial premium contribution made by Mr. Caldwell | Monica Reyes
Mar. 20, 2023 | Certificate of Incorporation for The Caldwell Family Foundation filed with the New York Department of State (DOS Filing No. 230320-001847); Employer Identification Number 88-3021547 obtained from the Internal Revenue Service | Monica Reyes, Elliot Nguyen
Mar.–Apr. 2023 | Technical memoranda drafted and circulated for internal review, including: | Sylvia Hartwell, Monica Reyes, Elliot Nguyen
Target Date | Milestone | Responsible
Apr. 1, 2023 | Caldwell Family Dynasty Trust agreement executed (Delaware situs); co-trustees designated as Thomas R. Caldwell (individual co-trustee) and Northgate Trust Company of Delaware (institutional co-trustee); trust protector designated as Victoria Chambers (non-fiduciary capacity); initial funding of $5,000,000 in cash, utilizing a portion of Mr. Caldwell's remaining $6,170,000 lifetime gift tax exemption, leaving $1,170,000 of remaining exemption | Monica Reyes, Sylvia Hartwell
Apr. 1, 2023 | Amended and Restated Caldwell Revocable Trust executed (original trust dated October 3, 2010; restated effective April 1, 2023), incorporating credit shelter trust and marital QTIP trust provisions; revised Schedule A attached; pour-over will executed by Mr. Caldwell (revoking the will dated October 3, 2010); self-proving affidavit signed by witnesses Monica Reyes and Elliot Nguyen; spousal consent and acknowledgment signed by Eleanor V. Caldwell following independent review by Rachel F. Dunlap of Pemberton, Locke & Strauss LLP | Monica Reyes
Apr. 1, 2023 | Foundation Initial Contribution Agreement executed — $10,000,000 cash contribution to The Caldwell Family Foundation ($5,000,000 attributable to each spouse under gift-splitting election); charitable deduction limited to $6,750,000 in 2023 (30% of estimated $22,500,000 adjusted gross income), with $3,250,000 carryforward available for up to five subsequent taxable years under IRC § 170(d)(1) | Monica Reyes
Apr. 1, 2023 | Ancillary documents executed: durable general power of attorney (agent: Eleanor V. Caldwell; successor agent: Thomas R. Caldwell), health care proxy (agent: Eleanor V. Caldwell; successor agent: Katherine C. Hartfield), living will/advance directive, and HIPAA authorization (authorized individuals: Eleanor V. Caldwell, Thomas R. Caldwell, Katherine C. Hartfield, and Olivia G. Caldwell) | Monica Reyes, Elliot Nguyen
Apr. 15, 2023 | GRAT A (Caldwell 2023 Securities GRAT) funded — $60,000,000 in publicly traded securities transferred to the GRAT; 2-year term; annuity payment of $32,195,122 per year; § 7520 rate of 5.0% (March 2023); zeroed-out structure resulting in $0 taxable gift | Sylvia Hartwell, Monica Reyes
Apr. 20, 2023 | Appraisal engagement letter sent to Ashford Valuation Group LLC (attention: Dr. Leonard K. Whitfield, ASA) specifying the assets to be appraised, the applicable valuation dates, the purpose of the appraisals (gift tax reporting), and the required format and standards for the appraisal reports (in compliance with the Uniform Standards of Professional Appraisal Practice and IRC § 170(f)(11)) | Sylvia Hartwell
May 1, 2023 | GRAT B (Caldwell 2023 Realty GRAT) funded — $80,000,000 pre-discount in Stonecrest Realty Holdings LLC me

MEMORANDUM

Record

Parties

Dates

Amounts