Rights and Responsibilities of Charitable Beneficiaries in Death-Related Administration of Estates and Trusts

Presented By:

Fredrick B. Weber Sr. Vice President – Estate Settlement Services The Northern Trust Company 50 S. LaSalle Street, B6 Chicago, IL 60603 312/444-4702 [email protected]

Based on Materials Originally Written By:

Stacy Singer Fredrick B. Weber Sr. Vice President - Fiduciary Practice Leader Sr. Vice President – Estate Settlement Services Northern Trust Company Northern Trust Company 50 S. LaSalle Street B-4 50 S. LaSalle Street, B-6 Chicago, IL 60603 Chicago, IL 60603 312/444-3826 312/444-4702 [email protected] [email protected]

These materials are intended to provide information about the subject matter covered and are designed to serve as a point of reference for conference participants. These materials are distributed and presented with the understanding that the authors and the presenter are not rendering any legal, accounting, financial, or other professional services or advice. Attorneys or other professionals using these materials or any orally conveyed information in dealing with a specific client’s or their own legal or financial matters should research original and fully current sources of authority.

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I. Introduction

In the process of death-related administration of estates and trusts, why is it that transparency often seems so elusive even to those who are entitled to some sort of disclosure by the personal representative and/or the trustee? This is particularly intriguing since the Uniform Probate Code, which has been adopted in Massachusetts, contains at least 40 provisions that require fiduciaries to provide notice of some sort to heirs, legatees, creditors, beneficiaries and other interested persons.1 The

Massachusetts Uniform Probate Code (the “Probate Code”) states that term,

“interested person,” includes “heirs, devisees, children, spouses, creditors, beneficiaries and others having a property right in or claim against a trust estate or the estate of a decedent…”2 This would seem to make it clear that when someone steps up to act as a personal representative, an administrator, a guardian or a trustee, that person (or entity) immediately owes a lot of information to many different “interested persons.” This presentation seeks to clarify for charitable beneficiaries exactly what information is owed to them by personal representatives or trustees of estates and trusts during the period of death-related administration, and when and how that information must be delivered to them. It also seeks to better equip charitable beneficiaries to advocate more effectively on behalf their donors and the public who supports them.

II. Overview of the Settlement of Decedent’s Estates and Trusts

An overview of the process for settling decedents’ estates and trusts provides a helpful framework to illustrate when the interests of certain parties actually vest, whether or not those interests can be immediately satisfied or eliminated and if so,

1 See MA Gen L ch 190B §§ 1-101 – 3-1204. 2 MA Gen L ch 190B § 1-201(24). 2 how? If they cannot be immediately satisfied or eliminated, how does the fiduciary comply with its duty to deliver the information and provide the transparency that is necessary for the effective administration of the estate or trust?

A. Statutory Notice Requirements and Informal Communication

When a person dies, certain statutory responsibilities kick in immediately.

Notably, there is the duty to deliver the original will “within thirty days after notice of death to a person able to secure its probate and if none is known, to an appropriate court.”3 This is the first “notice” requirement and probably the easiest one to satisfy. At death, the original will of the decedent becomes a public document and the whole world is given notice that anything in the will is available for public viewing.

The will identifies the Personal Representative, who, even before being formally appointed, must assess the situation and determine if any issues must be addressed immediately. These issues might include the ongoing management of a closely held business, the initiation of a plan to liquidate concentrated stock positions, the inventorying of the personal property to insure all items are properly accounted for, the securing of any real estate (including changing the locks on a home to prevent unauthorized access) and the termination of any ongoing payments which may not be permissible after death.

Even before a formal probate proceeding begins (assuming a formal proceeding is necessary or desirable), the informal communication and the gathering of information must already be in progress. This typically occurs in an in-person meeting with the fiduciary, the heirs, legatees, beneficiaries, the family attorney, the accountant and any other parties that might be able to provide information about the deceased person, their assets and their liabilities. This meeting is generally arranged within a few

3 MA Gen L ch 190B § 2-516 3 weeks or even a few days following the death. While beneficiaries often think that the initial meeting is for a formal reading of the will (they saw that in a movie, once), the real purpose of this meeting is to gather information about the types of assets, determine the manner in which the assets were titled, assess the estate’s liquidity needs, compile information about the decedent’s debts and expenses, try to understand the family situation, and perhaps most significantly, open the lines of communication between the fiduciary and the beneficiaries. It is also the time to confirm that the fiduciary is in possession of the most recent estate plan documents

(including all amendments and codicils) and to obtain complete contact information for all of the beneficiaries and other parties with a financial interest (real or potential) in the estate or trust.

After obtaining as much information as possible at that first meeting, the “nuts and bolts” of the death-related administration process formally begin and the duty to account to and communicate with all interested persons begins in earnest. If formal probate is necessary, the personal representative must become familiar with the communication requirements contained in the Probate Code. These communication requirements begin with the petition for formal probate of the will. Among the several items that must be contained in the petition for formal probate are a statement of the petitioner’s interest in the estate, the name, birthdate and date of the death of the decedent, the address of the decedent at death, and the names and addresses of the spouse, children, heirs and devisees and the ages of any of those who are minors.4

As the petition for formal probate of the will is a public document, the duty of the personal representative to communicate and share information with the heirs and legatees about the estate seems rather obvious. In addition, the Probate Code

4 MA Gen L ch 190B § 3-301(a)(1) 4 specifically requires that personal representatives to provide formal written notice to all of the heirs and devisees at least 14 days prior to the date set for the hearing on the petition for probate.5 There is also an affirmative duty to provide actual written notice to all of the decedent’s creditors whose names and addresses are known to or reasonably ascertainable by the personal representative or the administrator and to publish notice in a legal newspaper in the appropriate county for at least two consecutive weeks so that unknown heirs and unknown or unascertainable creditors can have an opportunity to present their claims.6

The rights of the residuary takers (those whose shares will be affected by the payment of debts, administrative expenses and taxes) to receive information is paramount as it is those interested persons to whom the personal representative owes the most comprehensive duty to account for all of the assets and liabilities of the estate.7 This is logical because it is the interests of these individuals and charities that will always be directly impacted by the payment of debts, taxes and expenses of administration. However, this is not always obvious to the personal representatives, and on occasion, the interests of charitable beneficiaries are not given as much attention as those of family members and other individuals.

Once the personal representative has formally complied with the notice requirements contained in the Probate Code, the best way to continue the dialogue between the fiduciary and the beneficiaries that began at the first meeting (or to begin that dialogue in the absence of a meeting) is to follow up with a letter from the fiduciary

(or the attorney for the fiduciary) to each of the beneficiaries. For beneficiaries who will receive specific cash or in-kind distributions, the letter need not be lengthy, as long as

5 MA Gen L ch 190B §§ 1-401(a) and 3-403(a) and (b). 6 MA Gen L ch 190B § 3-403(a) and (b). 7 See MA Gen L ch 190B § 3-1001. 5 the estate or trust is solvent and the fiduciary does not anticipate any abatement of the specific devises or distributions. For beneficiaries entitled to a share of the residue after the payment of debts, taxes and expenses of administration, the letter needs to contain a lot more detail because these beneficiaries (sometimes called “residuary beneficiaries” or “residuary takers”) are entitled to complete transparency and a full accounting during death-related administration. Sample letters to specific and residuary beneficiaries and devisees for the same hypothetical estate are attached to these materials at Exhibits A and B, respectively.

B. Compilation and Dissemination of Asset Information

At the same time that the fiduciary is communicating formally and informally with the beneficiaries and other interested parties about their rights and responsibilities, the fiduciary must also be reviewing, collecting and accounting for all of the assets that comprise the decedent’s gross taxable estate. These assets include probate assets

(typically assets titled in the decedent’s own name at death), assets that are payable on death to a specifically named beneficiary or to a surviving joint tenant (these assets typically include life insurance proceeds; IRA or qualified retirement plan assets; joint checking or savings accounts; and residential real estate) and assets that had been assigned to or titled in the name of the decedent’s revocable living trust prior to death.

All the cash in the probate estate should be collected into a single deposit account that is opened using the estate’s tax identification number and titled in the name of the decedent’s estate; all marketable securities should be collected into a similarly titled investment or brokerage account that is also opened under the estate’s tax identification number. All assets titled in the name of the decedent's revocable trust should also be collected into a single trust account under a new tax identification number that should be obtained by the successor trustee as soon after death as

6 possible. (Note: If the decedent has a will that pours over to a qualified revocable trust, a 645 election can be made to combine the estate and revocable trust assets for fiduciary income tax reporting purposes. This then allows the personal representative and the trustee to consolidate the estate and trust assets into a single account using the tax identification number for the estate or the trust).8

Assets owned in the decedent’s individual name are subject to the probate process and disposed of in accordance with the terms of the decedent's will9 or by the rules of intestate succession.10 Even though all of the decedent's assets (other than those with a joint tenant or named beneficiary) may ultimately end up in the decedent's revocable trust, only those assets that were titled in the name of the decedent's revocable trust at death will escape the probate process. If the total value of the probate assets turns out to be nominal, then a small estate affidavit can be used in lieu of a formal probate court proceeding.11 However, for reasons that will be discussed later in the outline, probate may still be advisable even in certain cases where the probate estate holds little or even no assets.

Assets held jointly with another person or payable on death to a named beneficiary (life insurance policies; transferrable-on-death accounts; IRA’s; and qualified retirement plan assets, etc.) may also escape probate, but they still need to be valued and the surviving joint tenants and/or the named beneficiaries must be advised of the existence of such assets. Note that retirement benefits and IRA assets must also be carefully reviewed before they are distributed because improper

8 Pursuant to Sec. 645 of the Internal Revenue Code, if both the personal representative (if any) of an estate and the trustee of a qualified revocable trust so elect, the "electing" trust--a qualified revocable trust (QRT) that makes the Sec. 645 election--will be included for income tax purposes as part of the estate, and not as a separate trust, during the election period. For a revocable trust to qualify for a 645 election, it must have been fully revocable by the decedent prior to death, the personal representative and the trustee must agree upon the election and the election must be made using IRS Form 8855 prior to the date upon which the electing trust’s first trust income tax return (Form 1041) is due. 9 See MA Gen L ch 190B §§ 3-901 through 3-916. 10 See MA Gen L ch 190B §§ 2-101 through 2-114. 11 See MA Gen L ch 190B §§ 3-1201 through 3-1204. 7 distributions can result in significant negative income tax consequences for the beneficiaries in the absence of proper planning.

Ownership interests in closely held business entities present a separate set of challenges. The ability or need to continue an ongoing business must be evaluated immediately following the death of the owner of such an interest. The interest also needs to be formally appraised with appropriate discounts taken in order to obtain an accurate value for estate tax purposes. The proper disposition of these interests also needs to be determined, particularly if the interest is subject to a buy-sell agreement that contains restrictions on the sale or other disposition of the interest. In other words, the fiduciary must determine whether the ownership interest in the business entity can be distributed to a charitable beneficiary, if it must be sold or if ownership must be retained by the decedent’s family.

Real estate should also be appraised for estate tax purposes, and a determination regarding its disposition made. If the property is to be sold, several broker’s opinions should be obtained to determine the appropriate list price for the property. Note that for charitable beneficiaries who will share in the proceeds from the sale of real estate or a closely held business interest, it will be critical to scrutinize the terms of these transactions in order to ensure that such assets are being sold in at arm’s length, at their fair market value, and in a manner that maximizes the value to all of the beneficiaries. Charities need to make sure that these assets are not disposed of via “sweetheart” deals for below market prices to family members who may also be beneficiaries and who may be less concerned about how such transactions may impact a charitable beneficiary.

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The value of all marketable securities (valued at the average of the high and low on the date of death) and bank accounts (valued after deducting outstanding checks and including accrued but unpaid interest) must also be determined.

Throughout the process of the collection and valuation of the assets that comprise the decedent’s gross taxable estate, the fiduciary must be cognizant of all of the beneficiaries to whom information is owed. The fiduciary must also be thinking about satisfying the financial interests of certain beneficiaries in order to reduce the number of persons or entities to whom further information will be owed. According to the Probate Code, the term “beneficiary” is defined as “a person who has any present or future interest, vested or contingent,” including “an owner of an interest by assignment or other transfer; and as it relates to a charitable trust, includes any person entitled to enforce the trust.” (Emphasis added).12 This tells us that once a person or entity no longer has a financial interest in the estate or trust, the fiduciary no longer has a duty to account to that person or entity or provide them with any additional information. Simply put, to the extent that there is sufficient liquidity in the estate or trust to pay debts and expenses and satisfy the specific and pecuniary distributions under the will or trust, the fiduciary should pay administrative expenses as they arise, pay off all the legitimate debts of the decedent as soon as possible, and immediately satisfy specific distributions of cash or property because once the financial interests of these parties have been eliminated, they will no longer meet the definition of

“interested persons” and there is no further duty to account to or communicate with them.

During the period of death-related administration, the fiduciary should consolidate the assets as much as possible, either into a single trust investment

12 MA Gen L ch 190B §§ 1-201(3) and 1-201(33). 9 account (if applicable) or into a single deposit account and/or a single brokerage account both titled in the name of the estate. The purpose of this consolidation is two- fold. First, if the fiduciary can pay all of the debts, expenses and taxes out of a single account, it will streamline the asset collection process, make the preparation of the trust and estate income tax returns (Form 1041) more efficient, and consolidate all of the information that is necessary for the preparation of the accountings that the fiduciary must provide on an annual basis to the interested persons. Secondly, it can enhance the process for communicating with the residuary beneficiaries, and the co- fiduciaries (those parties who are entitled to total transparency), as well as the attorney and the accountant by setting all of them up to receive monthly or quarterly account statements so that they can monitor the activity in the estate or trust in real time.

While this practice of consolidation of assets and information is fairly standard when a corporate fiduciary is acting (mainly because fiduciaries are required to take custody or control of the assets),13 it is surprising that more individual executors and trustees either do not adopt this approach or are not advised by their attorneys to adopt this approach.

In general, creditors are not set up for regular statements, even though they may be entitled to “enforce the trust.” Even with an insolvent estate or trust, it is preferable to provide a single accounting to a creditor showing all receipts and disbursements at the time that the request to discharge the claim is made, rather than providing monthly statements. However, it is advisable to set up residuary trust and estate beneficiaries to receive monthly account statements as the Trustee and the

Personal Representative must account to those beneficiaries prior to the completion of death-related administration, and monthly statements are generally deemed to meet

13 MA Gen L ch 8 § 809. 10 that requirement. In addition, monthly statements provide the beneficiaries with the opportunity to monitor the financial activity in the trust or estate in real time or at least within 30 days of real time.

C. Information about Estate and Income Tax Compliance

After the assets have been collected, consolidated and valued, and the cost basis of the capital assets has been stepped up to their date-of-death or alternate valuation date values, the Federal Estate Tax Return (and associated state returns) must be prepared and filed. The estate tax return presents a snapshot of all assets owned on the decedent’s date of death (or on the six month anniversary of the date of death, if the cumulative value on that date is lower) and all debts and expenses. For

U.S. residents who die in 2018, Federal Estate Tax is assessed on the net estate, at a rate of 40% on amounts in excess of $11.2 million.14 For Massachusetts residents who die in 2018, Massachusetts Estate Tax is assessed on the net estate, at rates between

0.08% and 16% (depending upon the size of the gross taxable estate) on the net value of assets in excess of $1 million.15

After the Federal Estate Tax and State Estate Tax Returns are filed, partial distributions can and often should be made to residuary beneficiaries, including charitable beneficiaries and/or following trusts that are to be created and funded as a result of the death. Partial distributions and partial funding of trusts allow for the distribution of a portion of the remaining assets to the beneficiaries (or to their trusts) while still retaining sufficient assets to pay any additional liabilities that may arise from

14 See 26 U.S. Code §2001 and IRS Publication 559. 15 See MA St 65C §§2A. Note that local estate and inheritance taxes vary widely from state to state. Typically, the state estate tax laws of the state in which the decedent was domiciled at death will apply, but if the decedent has property, such as real estate, that is physically located in another state, it is possible that state estate or inheritance tax returns will have to be filed in multiple states. There are currently 14 states plus the District of Columbia that impose a state estate tax and 6 states that levy taxes on an inheritance. Curiously, of the 6 states that comprise the Planned Giving Group of New England, five of them, Connecticut, Maine, Massachusetts, Rhode Island and Vermont all impose a state estate tax. New Hampshire is the only state in New England that no longer imposes a state estate tax on its residents. 11 an IRS audit or due to some previously unknown liability. From a communication standpoint, the Federal Estate Tax Return and all of the documents that are attached to it (will, trust, appraisals, closing statements, schedules, explanations, etc.) paint the most comprehensive and consolidated picture of everything in the taxable estate

(which includes probate assets, revocable trust assets, payable-on-death assets and any other assets the decedent owned or controlled at death) and everything that has occurred during the administration process. As a practical matter, we would not necessarily recommend that the fiduciary send each residuary beneficiary a complete copy of the federal estate tax return as filed, but to the extent that a residuary beneficiary requests a copy, there is no reason why it should not be provided. A complete copy of the return should simply serve to reinforce the accountings and the inventory that have been provided to the residuary beneficiaries throughout the administration process. It will also provide the residuary beneficiaries with information about payable on death assets that were subject to estate tax, but which may not have been a part of the probate estate or the trust. That said, to the extent that copies are circulated to individual beneficiaries, the fiduciary should redact the social security numbers, tax identification numbers and other personal identifiable information for the other beneficiaries, as residuary beneficiaries are not entitled to that information about other beneficiaries.

If a beneficiary’s share is impacted by the amount of estate tax that is paid, the legal fees, the personal representative’s fees and any other expenses that might be offensive to the beneficiary, then a complete copy of the estate tax return must be made available to the beneficiary and the personal representatives, trustees and attorneys who received those fees must be prepared to defend them. The same requirement would hold true for access to back-up documentation used to support a

12 position taken on a federal estate tax return. In most cases, we would not recommend providing such detailed information to residuary beneficiaries as a matter of course, but every fiduciary and every attorney who represents a fiduciary should be prepared to turn over this information if a beneficiary with the appropriate standing requests it. III.

Wills v. Trusts

The document in which an individual or a charity is named as a beneficiary can impact both the timing and the information available to the beneficiary. As an initial matter, it is helpful to understand the difference between the rights of a beneficiary under a Will (in probate) and the rights of a trust beneficiary.

As noted above, the Will governs the disposition of property owned in an individual’s name as of the date of death. It does not govern the disposition of those assets with a beneficiary designation, held in joint tenancy or with a payable on death

(POD) designation. These assets typically pass by operation of law to the named beneficiary, and are not governed by the decedent’s Will, even if the decedent may have intended for the Will to govern them.

A Will also does not govern the disposition of assets titled in the name of a trust.

The legal owner of those assets is the trustee, and the death of the grantor will not change the ownership.

This means that if there are no assets in the probate estate, then any bequests under that Will are going to fail, as there will be no assets available to fund the bequests. In most cases, if the Will directs all assets to be added to the trust (a so- called “pour over Will”), the trust itself may provide that the trustee is to pay any lapsed bequests in the Will. However, absent this provision, a bequest in a Will fails if there are no assets with which to fund it.

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After an individual dies, a Will becomes a public document.16 Once the Will is filed, anyone can request a copy and review its contents. In addition to the filing requirement, the will is typically presented for informal probate unless there is a reason for the Personal Representative to present it for formal probate or if the petition for informal probate is denied.17 If formal probate of the Will is not necessary or desirable, the Personal Representative still has to comply with the notice requirements of informal probate, which may include, among other things, providing written notice to any individual or entity with a financial interest in the estate.18 Note, however, that while a formal probate proceeding may not be necessary, formal probate can sometimes be used to shorten the claims period for unknown creditors, heirs and potential will contestants and it can be used to effect the exercise or non-exercise of power of appointment contained in the decedent’s Will. This is particularly important if the decedent was in a risky business such as law or medicine, or if the personal representative has reason to believe that someone may initiate a proceeding to contest the will or the trust.

If an individual or organization is named in a Will, and the Will is presented for formal or informal probate, the Personal Representative must provide notice to all of the heirs and legatees that the Will has been admitted to probate.19 The Personal

Representative is not required to provide a copy of the Will itself, although a copy can be requested from the Personal Representative or the court. Going forward, the rights of the estate beneficiaries are protected by the probate court, which will require that

16 MA Gen L ch 190B § 2-516. 17 MA Gen L ch 190B §§ 3-301 and 3-302. 18 MA Gen L ch 190B §3-1204. 19 Id. 14 the beneficiaries be provided with notice prior to the closing of the estate, and will ensure that they receive their bequest before the estate is closed.20

In contrast to a will, a trust is a private document that never needs to be filed with or provided to anyone other than those with a vested interest. Its terms are confidential, and only those beneficiaries who take the residue are entitled to see the complete document. The beneficiaries must rely on the trustee to advise them of its existence and their interest, and until the trustee does so, the beneficiaries may be unaware of the existence of the trust, its terms or their interest. The trustee has a fiduciary duty to contact the beneficiaries, provide them with the necessary information and ensure they receive their proper share, but no external party is readily available to ensure that this takes place. Of course, if the trustee fails to do so, he can be subject to a claim for breach of fiduciary duty, and be held personally liable for the breach.

There can also be a timing difference between a Will and a trust. Typically, a

Personal Representative should not pay any bequests under a Will until the period for filing claims against the estate and the will contest period have both run. Because it may take several weeks or more after a death occurs to initiate a formal and informal probate proceedings and provide notice to all of the interested parties, it could easily be 8-9 months after the death before the claims and contest periods expire. This time period can be even longer if the personal representative fails to provide or publish notice or if there are any contested claims. Until this process is complete, it is not advisable to make any distributions. The disadvantage of delaying distributions is that beneficiaries entitled to specific distributions or devises will continue to have a financial interest until their distributions or devises have been paid in full.21

20 MA Gen L ch 190B §3-1001 and §3-1204. 21 MA Gen L ch 190B §§ 1-201(3) and 1-201(24). 15

By contrast, a trustee can make payments at any time. While most prudent trustees will wait until they have a handle on the assets and liabilities, many will pay out small specific distributions relatively soon after the death occurs. There is no requirement that any trust distributions be made early, but, unlike personal representatives, the trustee of a solvent trust with sufficient liquidity has the flexibility to make partial distributions much earlier on in the administration process, particularly if no formal probate proceeding is required for the will. As a practical matter, the flexibility to make early partial distributions can give a trustee a very powerful tool to appease a difficult beneficiary who is anxious for an immediate distribution.

IV. Types of Gifts

There are several different types of interests that a beneficiary may have in an estate or trust. The beneficiary may be entitled to a specific devise—for example, a specific item of real property (land), a specific item of tangible personal property or specifically identifiable intangible property such as a fixed number of shares of stock in a particular company. Where this type of devise is made, the beneficiary will only receive its devise or distribution if the asset is owned by the estate or trust at the time of death. If the specific asset or interest is not owned, the devise fails and the beneficiary receives nothing. If the specific asset is owned by the estate or trust, the beneficiary must receive it, together with any income earned by the asset between the date of death and the date of payment or distribution.

A beneficiary may also be entitled to a pecuniary devise or distribution—a specific amount of money. Such a devise will be paid as long as there are sufficient funds to provide for its payment. The bequest may be funded with cash or (in certain circumstances) with other assets equal in value to the specific amount. In general, pecuniary bequests (unless paid to a surviving spouse) do not carry out any income

16 generated between the date of death and the date of the actual payment. It should be noted that some states do provide for statutory interest on pecuniary devises that are not paid within a specified period of time (usually one year).

A beneficiary may also receive a residuary devise or distribution—a portion of what is left after all of the expenses, debts, taxes and specific or pecuniary devises have been paid. Residuary devises and distributions are most often expressed as a fraction or a percentage of the residue of the estate or trust. Residuary gifts are entitled to their proportionate share of the remaining income and they are reduced by any payments made for administrative expenses or taxes. This can sometimes make it difficult to estimate the value of the residuary gift until close to the end of death-related administration as the amount will vary based on the fees, expenses and taxes paid out during the estate settlement process.

V. Beneficiary’s Right to Information

A. Prior to Death

During the lifetime of the testator/grantor, she is under no obligation to advise any beneficiary as to the terms of her estate plan or to reveal a beneficiary’s interest under the plan. This makes sense, since the plan may change many times over the years, and the individual may not wish to set an expectation that may not ultimately be met. As such, many beneficiaries, including charities, are unaware that they are named in a will or trust and/or have unrealistic expectations about their interests may be. Until the death occurs and the interests in the estate or trust become vested and irrevocable, no person or organization named in an estate planning document has any right to any information or to copies of any documents. In addition, during life, the testator and the grantor have no duty to account to anyone whose name happens to appear in their will or in their revocable trust. This may seem obvious to estate

17 planning and planned giving professionals, but it is not always obvious to beneficiaries, especially if they think they are or should be named as a beneficiary of someone’s will or trust.

B. After Death

After death, the right to receive information changes dramatically because the documents come to life and the interests of the beneficiaries can no longer be changed

(for better or for worse). As noted above, the amount and type of information that must be made available will be impacted by the document that creates the beneficiary’s interest and the type of gift to which the beneficiary is entitled.

1. Gift Under Will

If the bequest is in a Will, the entire document is public, and therefore available to anyone who wishes to see it. However, if the gift is a specific or pecuniary devise, the right to any further information ceases as soon as the devise has been paid in full.

A beneficiary whose interest has been satisfied is no longer an interested person. In addition, there is no right to review or approve fees or other payments, so long as the devise has been fully satisfied.

By contrast, if the interest is a part of the residue, the beneficiary has the right to see all information, and to review and approve all payments (although such approval is generally requested just prior to the closing of the probate estate, rather than as the administration is occurring). If any significant claims are filed or litigation takes place, it is appropriate for the Personal Representative to advise and perhaps even consult with the residuary beneficiaries prior to acting or proposing settlements, as the residuary beneficiaries are the ones who are in essence “paying” to settle the claim. In addition, because of the court involvement, there is much more public scrutiny, and a great deal

18 more oversight of the process, with the judge often requiring notice to the residuary beneficiaries with regard to any issues that may arise and that affect their interests.

2. Gift under Trust

The rules are different with trusts because they are private documents. As an initial matter, if the distribution is specific or pecuniary, the beneficiary is generally only entitled to see the specific language in the document that governs the distribution

(which may be only a line or two) as well as the first page and the signature page of the trust. In most states, there is no right to see the entire document, and indeed the trustee has an obligation not to share the entire document in order to keep the information private as to the other beneficiaries who may be named in the document.

Note that this is not the case in every state. In some jurisdictions, if your name appears anywhere in the document, you are entitled to see the entire document. In addition, there are judges who are either not familiar with this rule or not comfortable with it and have ordered trustees to turn over the entire document to a beneficiary with a specific or pecuniary interest. While this may be disconcerting to practitioners and their grantor clients, trusts are still much more private than wills, but they are only private as to the world outside the four corners of the trust document. For the group of individuals and entities whose names appear in the document, they will certainly be known to the residuary takers and often to those entitled to specific or pecuniary distributions.

Accordingly, planners may want to advise their clients as such, especially if they are planning to include unequal specific or pecuniary distributions in their revocable trusts.

If a beneficiary’s interest is in the residue of the trust, then the trustee has an obligation, upon request, to provide a complete copy of the trust agreement to the beneficiary. In addition, and as noted above, it is appropriate for a residuary beneficiary to receive regular statements as to the activity in the trust, including

19 payments made, income received and similar information. In other words, a residuary beneficiary is entitled to see every nickel that comes into the trust and every nickel that goes out, and has standing to question the trustee about it. It is also appropriate for the trustee to consult with the residuary beneficiary where a decision by the trustee will significantly impact the amount that the residuary beneficiary will receive. This would be appropriate where a significant settlement is proposed, a contested claim is presented, an IRS audit is about to be settled, etc. It may also be appropriate where a questionable payment is requested, and the trustee is making a judgment call regarding the appropriateness of the payment. In other words, the residuary beneficiary of a trust is entitled to a full accounting of the assets and liabilities in the trust and total transparency in the administration process.22

VI. Charitable Gifts

In many cases, a gift to a charitable beneficiary simply requires that the organization is a charity, without further restrictions. However, it is becoming more and more common to see gifts that include restrictions as to the use of the money or its proper destination within the organization. The trustee has a duty to ensure that the organization is in fact a charity, and to ensure that if the gift is restricted in some manner, the organization agrees to comply with the restriction. In most cases, this will be done by asking the organization to provide a copy of its letter of determination of exempt status under Section 501(c)(3) of the Internal Revenue Code, and to have the appropriate officer sign and attest to a corporate resolution. A sample corporate resolution from a charity is attached to these materials as Exhibit C.

The determination of exempt status letter provides clear documentation as to the charitable status of the organization, and allows the trustee to ensure that the

22 See MA Gen L ch 8 § 803. 20 distribution is being made to a qualified charitable organization. While it is also possible to check the IRS website for this information, personal representatives and trustees should still obtain a copy of the letter for their files.

The corporate resolution serves several purposes. First, it is a statement that the correct organization is receiving the bequest. It also reflects an agreement to use the bequest in the manner provided for in the will or trust, and it clarifies which individuals are authorized to sign on behalf of the charitable organization. The resolution therefore protects the fiduciary by allowing the fiduciary to rely on the signature as being that of a person or persons authorized to bind the charity.

The Massachusetts Uniform Trust Code defines a “charitable trust” as any “a trust, or portion of a trust, created for a charitable purpose.”23 A “charitable purpose” means “relief of poverty, the advancement of education or religion, and the promotion of health, governmental or municipal purposes, or other purposes which are beneficial to the community.”24 In other words, pretty much any estate or trust that includes a bequest or devise to a charitable beneficiary, be it specific, pecuniary or residuary, appears likely to meet the statutory definition of a “Charitable Trust” under the

Massachusetts Uniform Trust Code.

For the most part, estates and trusts in Massachusetts that include bequests or devises to charitable beneficiaries will not be subject to the registration and filing requirements that govern charitable organizations in the Commonwealth of

Massachusetts.25 However, the Massachusetts Attorney General’s office is responsible for the regulation of public charities and non-profits that conduct business in the Commonwealth of Massachusetts, and would be the best resource for the

23 MA Gen L ch 1 § 103. 24 MA Gen L ch 4 § 405. 25 MA Gen L ch 12 § 8E(a). 21 fiduciary of a charitable estate or trust in need of information about any local charities or non-profits that may be entitled to distributions due to the death of a grantor or testator. Note that in just about every state, whether or not there is a filing or reporting requirement for charitable estates and trusts, the Office of the Attorney General is typically the state agency with jurisdiction over estates and trusts that include beneficial interests for charitable organizations. Accordingly, if a charitable beneficiary or its attorney is working with a personal representative or trustee that is being less than cooperative, it may be advisable to contact the Office of the Attorney General for guidance on how best to ensure that the charitable interest in the estate or trust is being properly protected by the personal representative or the trustee. If nothing else, a consultation with the Attorney General may provide the charitable beneficiary with just the right amount of leverage needed to get the personal representative or trustee to be more forthcoming with the information to which the charitable beneficiary is entitled.

VII. Timing of Distributions

Just to be clear, it is not entirely unusual for beneficiaries (charitable and non- charitable alike) of decedents’ estates and trusts to have wait at least a year following the death of the grantor/testator before they receive even a partial distribution of their bequest or devise. As noted above, the timing for payment of a specific or pecuniary bequest devise can be impacted by the document that directs the bequest or devise

(i.e. Will or trust). If the estate is large enough to require the filing of a federal or state estate tax return, it may be reasonable for the Personal Representative or trustee to delay payment of even specific and pecuniary bequests until a clear sense of cash needs can be determined, which may not occur until after the return is filed (9 months from the date of death if filed on time and 15 months if the filing of the return is

22 extended). However, in most circumstances, the payment of specific bequests will occur within the first six to eight months (for a trust) or shortly after the claims period expires (for a Will), assuming the amount of the bequest does not represent a significant percentage of the overall estate. However, the exact percentage that arises to the level of “significant” level will be determined on a case-by-case basis.

The timing for residuary devises and bequests is much more difficult to generalize or predict. In many cases, it will be possible for a significant distribution to be made after the estate tax returns have been filed and any estate tax has been paid.

However, in some cases, it will not be prudent or responsible for the fiduciary to make payment to the residuary beneficiaries at that time due to significant unresolved tax issues, ongoing litigation, or a lack of liquidity. Where that is the case, it would be appropriate for the fiduciary to fully explain the reasons for the delay, as well as provide an estimate as to when distribution may be possible, or what events need to occur prior to a distribution. Such an explanation should be in writing and accompanied by regular accounting to the beneficiaries who are impacted by the delay. It is precisely in situations such as this where it can be very helpful if the beneficiaries are receiving monthly account statements that show all of the financial activity in the estate or trust.

VIII. Final Distribution and Closing

Prior to making distributions, most fiduciaries will request a receipt and/or release of some sort. If the beneficial interest is in the residue of the estate or trust, the receipt will likely include both release and refunding language as well as an approval of the accounts of personal representative or fiduciary. Sample Distribution, Release and

Refunding Agreements are attached to these materials as Exhibit D. The Distribution,

Release and Refunding Agreement is important because most fiduciaries do not typically wait until all statutes of limitations have run prior to making final distributions

23

(because in some cases, such a delay would be unreasonable, especially if the IRS has issued a federal estate tax closing letter). To induce the fiduciary to distribute prior to the running of all statues of limitations, the beneficiaries agree to refund any assets that may be needed to pay claims or expenses that were not known to or anticipated by the fiduciary at the time of the distribution. While this rarely occurs, most prudent fiduciaries will not distribute funds without such an agreement and some more risk- averse fiduciaries (Read: Corporate Fiduciaries!) may even request refunding agreements from those beneficiaries who receive specific or pecuniary bequests or devises. As for the post-distribution liability that is most likely to arise, namely a payment owed to the IRS, this is probably a bit of a belt-and-suspenders approach since the obligation of the beneficiary to repay the IRS already exists. The Internal

Revenue Code provides for transferee liability with respect to any assets that should have been used to satisfy an obligation to the IRS but are instead distributed to a beneficiary.26 Therefore, with respect to any federal tax liability, the refunding agreement may not be absolutely necessary because at the end of the day, the IRS is usually going to get their money.

Receipts are important in probate situations because if a bequest is made under a Will that is subject to a formal probate proceeding, the beneficiary will have to sign a probate court receipt before the probate proceeding can be completed. For a specific or pecuniary bequest, the receipt simply acknowledges that the beneficiary has received the bequest to which it was entitled. For a bequest from the residue of the estate, the beneficiary who signs the receipt must also approve the personal representative’s fees and the attorney fees paid out of the estate and consent to the completion of the administration. From a communication standpoint, it is best if the

26 See IRC §20.2002-1. 24 residuary beneficiaries are not seeing the amount of the personal representative’s fees and the legal fees for the first time when they are being asked to sign a receipt in order to terminate the probate proceeding. This is further evidence in support of sending monthly account statements to the residuary beneficiaries throughout the period of death-related administration along with detailed written communication and frequent informal communication with them. In other words, frequent, regular and automated communication will almost always make the process of terminating a formal probate proceeding and the delivery of the final distributions from an estate or trust go much more smoothly.

IX. Conclusion

In many ways, the relationship between charitable beneficiaries and fiduciaries

(personal representatives, trustees, etc.) during death-related administration and estate settlement needs to be about communication in both directions. The fiduciary must provide the same level of transparency to charitable beneficiaries that it is required to provide for beneficial interests passing to individuals and to non-charitable trusts. Charitable beneficiaries in turn, must hold fiduciaries accountable for that transparency in order to insure that they receive everything to which they are entitled and that no waste, fraud or abuse has occurred in the process of death-related administration. While it can sometimes be awkward for a charitable beneficiary to “go after” or “make demands on” the personal representative of the estate of a generous donor, the “political” risk of being assertive must be balanced against the fiduciary duty that the charity owes to its donors, its board and to the public that supports it.

25

EXHIBIT A

NTAC:3NS-20 February 16, 2018

Mr. H.R. Haldeman Director of Planned Giving Nixon Presidential Library and Museum 18001 Yorba Linda Boulevard Yorba Linda, CA 92886

Re: Estate of Archibald Bunker, Deceased

Dear Mr. Haldeman:

As you may know, Archibald Bunker, of Queens, New York, died on January 13, 2018. Mr. Bunker was the grantor of the Archibald Bunker Revocable Living Trust (the “Trust”), and The Northern Trust Company (“Northern Trust”) is acting as Trustee. Under the terms of the Trust, Mr. Bunker directed that upon his death, the Trustee is to make a one-time gift of $100,000 to the Nixon Presidential Library and Museum (the “Library”).

When there is a death of the grantor of a trust that Northern Trust administers, our Estate Settlement Services team handles the administration of the account. Accordingly, I will be working with the Library and the other beneficiaries to complete the death-related administration of the Trust.

In order to make the distribution to the Library, we will need you or the appropriate representative of the Library to complete and sign the enclosed IRS Form W-9 and return it to me in the enclosed envelope. We will also need a copy of the Library’s “Determination of Exempt Status” letter. The purpose of IRS Form W-9 is to advise the Library that if any portion of the distribution it receives from the Trust is somehow taxable income to the Library, the Trust is not obligated to withhold or pay any income tax on the Library’s behalf. Please review the form, verify that all of the information we have is correct, insert the Library’s federal tax identification number, have the appropriate representative of the Library sign where indicated and return it to me along the Determination of Exempt Status letter in the envelope provided. As soon as we receive the signed paperwork back from all of the beneficiaries, we will arrange for the delivery of the full amount of the funds to which the Library is entitled.

Should you have any questions or if you require additional information, please do not hesitate to call me at any time.

Kind regards,

Fredrick B. Weber Enclosures Cc: Stretch Cunningham, Esq.

NTAC:3NS-20

EXHIBIT B

NTAC:3NS-20

March 16, 2018

Mr. Leon Panetta Director of Planned Giving William J. Clinton Presidential Library 1200 President Clinton Avenue Little Rock, AR 72201

Re: Estate of Michael Stivic, Deceased

Dear Mr. Panetta:

I am writing to advise you of the recent passing of Michael Stivic, who died on January 13, 2018. Mr. Stivic was the grantor of the Michael Stivic Revocable Trust (the “Trust”), which he established on September 8, 2014. The Northern Trust Company (“Northern Trust”) is the sole Trustee of the Trust. As the William J. Clinton Presidential Library (the “Library”) is named as a beneficiary of the Trust, I am enclosing a complete copy of the Trust agreement for your records.

In addition to the Trust, Mr. Stivic had a will dated September 8, 2014 (the “Will”) in which he named Northern Trust as the sole personal representative. To the extent that Mr. Stivic’s assets were not already in the Trust when he died, his will directs the personal representative to distribute all of his remaining assets (including his personal property) to the Trust for distribution pursuant to the terms of the Trust. For your reference, I also enclose a copy of Mr. Stivic’s will, which was admitted to probate in Suffolk County Probate Court in Boston, MA on February 28, 2018.

The terms of the Trust are relatively straightforward. Mr. Stivic’s personal property is to be distributed to his son, Joseph Stivic. Further, Mr. Stivic directed that after the payment of debts, taxes and expenses of administration, the remaining assets in the Trust are to be distributed in equal shares to the Library, and to Mr. Stivic’s son, Joseph Stivic.

While it is still too early for us to determine the total value of all of the assets in the Trust, we estimate the value (before debts, expenses and taxes) to be around $20 million, including the value of Mr. Stivic’s banking and investment accounts, his residence, the personal property in his residence and his 401(k) plan, which is payable on death to the Trust. Please note, however, that this is a very preliminary estimate as we are still in the process of gathering asset information and collecting additional assets into the Trust. The Trust assets that were housed at Northern Trust as of Mr. Stivic’s date of death are currently being held in a single account here at Northern Trust which is titled in the name of the Michael Stivic Revocable Trust. We have also begun the process of collecting the outside assets into that account and paying bills from that account. As a beneficiary entitled to full accounting of the assets and liabilities of the Trust, the Library will soon begin receiving account statements from the Trust account so that you can monitor all of the financial activity in the Trust since Mr. Stivic’s death, and until such time as the death-related administration has been completed and all of the assets have been distributed.

With respect to the personal property contained in Mr. Stivic’s residence, we have had the items of significant value inventoried and appraised, and I am enclosing a copy of that inventory. As noted above, the personal property is to be distributed outright to Mr. Stivic’s son, Joseph. As you can see from the inventory, however, the value of the personal property is nominal relative to the other assets in the Trust.

NTAC:3NS-20 William J. Clinton Presidential Library March 16, 2018 Page 2

I have also enclosed IRS Form W-9 for review and signature by the appropriate representative of the Library. The purpose of Form W-9 is to advise the Library that if any portion of the distributions it receives from the Trust is subject to income tax, the Trust is not obligated to withhold or pay income tax on behalf of the Library. Please review the form, complete the highlighted information, including the Library’s federal tax identification number, and have the appropriate representative of the Library sign where indicated and return the form to me in the envelope provided.

In addition to the executed Form W-9, we will also need to obtain a copy of the Library’s IRS “Determination of Exempt Status” letter for our files. Accordingly, please include a copy of that document in the envelope along with the signed W-9 and Beneficiary Information Form.

While at this point, we cannot provide a definite timeline for final distributions from the Trust, we have indicated to Mr. Stivic’s son that we would try to make modest partial cash distributions in the next few weeks in proportion to each beneficiary’s overall percentage interest in the Trust. However, we cannot make a partial distribution until we have the signed Form W-9’s and Beneficiary Information Forms back from both beneficiaries as well as the Determination of Exempt Status letter from the Library. Accordingly, the sooner you can have the enclosed documents reviewed, signed and returned to me, the sooner we will be able to get modest cash distributions out to Mr. Stivic’s son and to the Library. We typically try to make substantial partial distributions from a trust such as this around 9-10 months after the death (around October of 2018 if all goes as planned) because that is when the federal estate tax return is due, and it is not until that point that we know for sure what the full extent of our estate tax liability will be. Final distributions are typically made after the Trust receives a federal estate tax closing letter, which typically occurs within 6-9 months after the filing of the federal estate tax return. Accordingly, it will likely take 18-24 months to complete the administration of the Trust so the Library should not expect to receive its final distribution before then.

Finally, Northern Trust, in its capacity as Personal Representative and Trustee, is represented by attorney Lionel Jefferson, of the law firm of Jefferson & Bentley in Boston. Mr. Jefferson was also Mr. Stivic’s attorney and drafted Mr. Stivic’s estate plan documents. Accordingly, Mr. Jefferson will be copied on all correspondence between Northern Trust and the Library and you are welcome to contact Mr. Jefferson directly if you feel it necessary to do so.

Thank you in advance for your prompt attention to this correspondence. If you have any questions or require additional information from Northern Trust, please feel free to call me directly at (312) 444-4702.

Kind regards,

Fredrick B. Weber

Enclosures Cc: Lionel Jefferson, Esq.

NTAC:3NS-20

EXHIBIT C

NTAC:3NS-20 RESOLUTION ACCEPTING GIFT FROM THE MICHAEL STIVIC REVOCABLE TRUST

MICHAEL STIVIC, a resident of Boston, MA, died on January 13, 2018, leaving a trust known as the Michael Stivic Revocable Trust (the “Trust”), under which The Northern Trust Company is a fiduciary, and which provides for a gift to this organization as follows:

Cash in the amount of $______

Therefore, it is resolved that the gift is hereby accepted by this organization (for the uses and purposes set forth above.) It is further resolved that ______(name or names), acting as the ______(office or title) of this organization is authorized, on behalf of this organization, to: (1) accept payment, (2) execute receipts and other documents, and (3) receive notices, make and communicate decisions as necessary to facilitate administration of the Trust.

***********************

CERTIFICATION

(TO BE EXECUTED BY THE PERSON IN CHARGE OF THE ORGANIZATION RECORDS. IT MUST ALWAYS BE EXECUTED BY SOMEONE OTHER THAN THE OFFICER NAMED ABOVE.)

I, ______(name), certify that I am the______(office or title) of this organization, a corporation under the laws of the State of ______, and that I am responsible for keeping the organization records. I further certify that the above is a correct and complete copy of a resolution properly adopted by the governing body of this organization on ______, 20__ , and that this resolution appears in the organization records.

I further certify that gifts to this organization qualify for treatment as charitable gifts for income and estate tax purposes under the United States Internal Revenue Code, and that the correct tax identification number is shown below.

Certified, under the penalties of perjury,______, 20___ .

TAX I.D. NUMBER______

______Corporate Seal Signature Address:______

NTAC:3NS-20

EXHIBIT D

NTAC:3NS-20 Jane Doe Trust dated January 1, 2018

Partial Distribution of Trust to Beneficiary

DISTRIBUTION, RELEASE AND REFUNDING AGREEMENT

To: The Northern Trust Company, as Trustee of the Trust for the benefit of the ABC Charity

The Northern Trust Company ("Northern Trust") is the Trustee of the above-captioned trust (the “Trust”) which benefits ABC Charity, as beneficiary. Northern Trust is prepared to distribute to ABC Charity, cash in the amount of $______from the trust assets. In consideration of the distribution of cash in the amount of $______from the trust assets to ABC Charity:

(a) ABC Charity, agrees to assume and pay all taxes and other liabilities for which the Trustee may hereafter be personally liable, to the extent that the Trustee would have been entitled to be reimbursed from the distributed property had such property remained in the possession of the Trustee.

(b) If it is determined at a later date that a part or all of this distribution should have been paid to a person or entity other than the ABC Charity, ABC Charity agrees to refund that property (including the earnings and appreciation on it) to the Trustee.

(c) ABC Charity agrees to reimburse the Trustee for its expenses of recovery, including reasonable attorneys’ fees, and any additional expenses of administration, which may arise out of or in connection with this partial distribution.

This agreement shall benefit not only Northern Trust but also any co-trustees or prior trustees at any time acting under the Trust.

Dated this ______day of ______, 2018.

ABC Charity

By:

Its: (title) As Beneficiary of the Trust

NTAC:3NS-20 Jane Doe Trust dated January 1, 2018

Total Distribution of Trust to Beneficiary

DISTRIBUTION, RELEASE AND REFUNDING AGREEMENT

To: Northern Trust, as Trustee of the Jane Doe Trust

Northern Trust is the Trustee of the above-captioned trust (the “Trust”) which benefits ABC Charity as beneficiary. Northern Trust is prepared to distribute to ABC Charity the property listed on the attached schedule of trust assets

Sequence of Events. ABC Charity will sign and deliver this Distribution, Release and Refunding Agreement to Northern Trust, and then Northern Trust will distribute the trust property to ABC Charity; provided, however, that this Agreement shall not become effective until Northern Trust has in fact distributed the trust property to ABC Charity.

Accounts. In connection with this settlement and distribution, ABC Charity acknowledges that (a) the Trustee has given ABC Charity accounts during its trusteeship of the Trust and (b) copies of prior accounts not previously furnished to ABC Charity have been made available upon request. The Trustee will not give ABC Charity any further trust accountings with respect to this distribution.

In consideration of the distribution of the property listed on the attached schedule of trust assets to ABC Charity, and to induce Northern Trust not to require a court proceeding in which a judge approves its accounts and grants it a discharge, ABC Charity states as follows:

(1) Full Distribution. ABC Charity agrees that the distribution of the property listed on the attached schedule of trust assets, is in full satisfaction, distribution and settlement of all property which is now due to ABC Charity, as beneficiary, pursuant to the provisions of the Trust.

(2) Release. ABC Charity releases and discharges Northern Trust, both individually and as Trustee, from any and all claims, demands, lawsuits, actions, and liabilities or responsibilities of whatsoever kind or nature, which may arise out of or in connection with the trusteeship of the Trust.

(3) Refunding. (a) ABC Charity agrees to assume and pay all taxes and other liabilities (in excess of any Reserve provided for on the schedule of trust assets and still retained by the Trustee) for which the Trustee may hereafter be personally liable, to the extent that the Trustee would have been entitled to be reimbursed from the property listed on the schedule of trust assets had such property remained in the possession of the Trustee.

The schedule of trust assets may provide for a Reserve. When all taxes and other liabilities for which the Trustee or the Trust may hereafter be liable shall have been determined and paid, then the Trustee shall deliver to ABC Charity any portion of the Reserve which has not been required to discharge or secure the payment thereof.

(b) If it is determined at a later date that a part or all of this distribution should have been paid to someone else rather than ABC Charity, ABC Charity agrees to refund that property (including the earnings and appreciation on it) to the Trustee.

(c) ABC Charity agrees to reimburse the Trustee for its expenses of recovery, including reasonable attorneys’ fees, and any additional expenses of administration, which may arise out of or in connection with this Section (3).

NTAC:3NS-20 This agreement shall benefit not only Northern Trust but also any co-trustees or prior trustees at any time acting under the Trust.

Dated this ______day of ______, 2018.

ABC Charity

By:

Its: (title) As Beneficiary of the Trust

NTAC:3NS-20

EXHIBIT E

SIMPLE CASE STUDY

NTAC:3NS-20 5 Jfk Street, Suite 304 Cambridge, MA 02138 (617) 555-1000 www.dewey-cheatham-howe.com Eric Stratton, Esq. Attorney at Law Direct Dial: (617) 555-1001 Email: [email protected] April 16, 2018

Ms. Tara Goodman, JD Gift Planning Office Dartmouth College Hanover, NH 03755-3555

Re: Estate of John Blutarsky, Deceased Dear Ms. Goodman:

As legal counsel for the executors of the estate of the late John Blutarsky, it is my pleasure to enclose a check payable to Dartmouth College in the amount of $250,000. The enclosed check represents a full and complete distribution of Dartmouth’s one percent (1%) share of the residue of Mr. Blutarsky’s estate. By way of background, Mr. Blutarsky died a resident of Boston, MA on April 1, 2015. His executors, who wish to remain anonymous, have completed the death-related administration of his estate and are now in the process of distributing the remaining assets to various individuals and charities that Mr. Blutarsky named as beneficiaries in his will. While he never actually graduated, Mr. Blutarsky was a proud alum of Dartmouth. He also had a particular affinity for the Dartmouth chapter of the Delta Tau Chi fraternity, where he spent most his seven years in Hanover. While Mr. Blutarsky’s relationship with Dartmouth did not end well (his words, not mine), he remained loyal and grateful to his Delta Tau Chai brothers. As such, Mr. Blutarsky directed that all of the funds to which Dartmouth is entitled under the terms of his will are to be used exclusively for the benefit of the Dartmouth chapter of Delta Tau Chi. Mr. Blutarsky was very concerned about his legacy, and felt very strongly that the success he achieved following his “departure” from Dartmouth was largely attributable to the lifelong friendships he formed with the men of Delta Tau Chi. Those who knew Mr. Blutarsky know that he was not exactly a model student. They are also likely to be surprised at the wealth that Mr. Blutarsky accumulated given his less-than-mediocre academic performance. As his long-time attorney, friend and Delta Tau Chi brother of more than 30 years, you have my personal assurance that all of Mr. Blutarsky’s wealth, including funds represented by the enclosed check, was amassed via moral, ethical and completely legal business endeavors. Pardon my digression, but if you could please sign the enclosed receipt and release, acknowledging the full and complete distribution of all amounts owed to Dartmouth College by the Estate of John Blutarsky, and return it to me in the enclosed envelope, my clients would greatly appreciate it.

Kindest Personal Regards,

Eric Stratton, Esq.

Enclosures

NTAC:3NS-20