Estate of Claude C. Focardi, Deceased, Nina M. Focardi, Personal Representative - Page 6

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          shares by the value of a single-life annuity; i.e., the present             
          value of the annuity payable until the earlier of (1) the end of            
          the applicable 2- or 4-year term or (2) the death of Focardi.               
          Respondent also determined a gift tax deficiency for 1997 due to            
          the increase in prior year gifts as a result of his determination           
          for 1996.                                                                   
          4.  Relevant Trust Provisions                                               
               Each of the instruments establishing the decedent GRATs                
          states in relevant part as follows:                                         
                    ARTICLE FOUR:  Irrevocable Provision.  This                       
               agreement and the trust it creates are irrevocable, and                
               neither all nor part can be altered, amended, revoked,                 
               or terminated prior to the time specified in this                      
               agreement, by me, Trustee, or anyone else.  * * *                      
                    ARTICLE FIVE:  Administration of Trust Estate.                    
               Trustee shall hold, administer, and distribute the                     
               trust estate as follows:                                               
                    A.  Annuity Term.  During the period beginning on                 
               the date of this agreement and ending on the date [“2"                 
               in the case of the decedent 2-year GRAT and “4" in the                 
               case of the decedent 4-year GRAT] years thereafter (the                
               “Annuity Term”), Trustee shall pay to me from the net                  
               income, or (to the extent that net income is                           
               insufficient) from the principal, of the trust an                      
               annuity (the “Annuity”) in an amount equal to                          
               [“51.2535" in the case of the decedent 2-year GRAT and                 
               “22.9876" in the case of the decedent 4-year GRAT]                     
               percent of the initial fair market value of the assets                 
               contributed to the trust as finally determined for                     
               federal tax purposes.  The annuity will increase by                    
               twenty percent (20%) each year during the Annuity Term,                
               * * *  If I die before the expiration of the Annuity                   
               Term, the Trustee shall pay to my estate any part of                   
               the Annuity that is accrued and undistributed at my                    
               death, based on a daily proration through the date of                  
               my death.  * * *  The remaining trust assets are to be                 






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