Petition for Advisory Opinion on Irrevocable Trust Substitution Power

ATTACHMENT TO PETITION FOR ADVISORY OPINION State of New York - Department of Taxation and Finance - Form ATX-1.8

FACTS AS THE BASIS FOR THE ADVISORY OPINION:

Petitioner (the "Settlor") created an irrevocable trust (the "Trust") pursuant to a trust agreement (the "Trust Agreement") between the Trustees and the Settlor. The Settlor is deemed to own the Trust property for Federal and New York State income tax purposes as provided in Sections 671 to 679 of the Internal Revenue Code.

UNDER THE TERMS OF THE TRUST AGREEMENT:

The Settlor has the right to acquire or reacquire trust property at any time (the "Substitution Power"). The provision reads:

"Reacquisition of Trust Assets. The Settlor at any time or from time to time may acquire or reacquire any portion of the Trust Fund of any Trust by substituting therefor other property of an equivalent value, valued on the date of substitution. Notwithstanding any other provision of this Trust Agreement, the Settlor may exercise this power without the consent of the Trustees. Although this power is exercisable by the Settlor in a nonfiduciary capacity without the consent of any of the Trustees, the Trustees, if the Trustees believe that the property the Settlor seeks to substitute for trust property is not in fact property of equivalent value, shall seek a determination by a court of competent jurisdiction to assure that the equivalent value requirement of this provision is satisfied. The Settlor, at any time, may release this power with respect to any Trust. Any release under this section shall be irrevocable and shall be made in writing signed by the Settlor and delivered to each Trustee of the Trust with respect to which the release applies."

SUBSTITUTED PROPERTY SCENARIO:

The Settlor wishes to exercise the Substitution Power by substituting personal property he owns (the "Substituted Property") for property other than tangible personal property (the "Trust Property") having value equivalent to the Substituted Property (the "Exchange"). Upon acquisition of the Substituted Property by the Settlor, the Settlor paid New York sales tax with respect to the Substituted Property. Following the Exchange, the Trustees may allow Trust beneficiaries to use the Substituted Property without charge or other consideration.

APPLICABLE LAW AND REGULATIONS: [Section continues but is partially cut off in document]

NOTE: Document contains handwritten annotations and sticky notes with questions about the advisory opinion request.

Names mentioned: - The Settlor — Creator of the irrevocable trust; retains substitution power over trust assets - The Trustees — Trustees of the irrevocable trust; may challenge property valuations and allow beneficiaries use of substituted property - Trust Beneficiaries — Beneficiaries of the trust; may be allowed to use substituted property