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Peter G. Powers, Esquire

Page 2

the Catherine II eighteenth century gold chalice and the Order of the Golden Fleece, in silver, gold and diamonds. These items are discussed below.

As a balancing consideration, the officers and members of the Executive Committee of the Post Foundation would recommend to the full Board of Trustees that the Post Foundation waive any claims to ownership or possession of any other articles. One particular such article is the jade vase. A general category would be the "historical jewels." See paragraph below, "Historical Jewels." The Post Foundation has no claim in ownership of these latter items, but some claim of a "right" to have them displayed, from time to time, at Hillwood. This "right" would be waived, so that any future request to display would have no special footing or entreé. Mrs. Riggs would also execute a waiver, but we cannot speak for Mrs. Barzin.

[[underlined]] Importance of Title to Post Foundation [[/underlined]]

While there may be no practical difference from the standpoint of the Smithsonian Institution between ownership and permanent loan, the distinction is pertinent to the status of the Post Foundation. It is a private Foundation subject to restrictive IRS laws and regulations. Presently it barely qualifies as an "operating" foundation, under the several tests which apply. It soon will receive additional endowment funds from the Executors and Trustees under the Will of Mrs. Post, which receipt will probably cause the scales to tip, resulting in a "non-operating" status. By acquiring assets for Museum display, which qualify as operating in nature because related directly to the purposes of the Museum, the resulting percentage figure probably will sustain the operating status. Thereby, greater flexibility is maintained; for example, any excess income for the calendar year may be retained rather than distributed to outside public charities during the ensuing year.

[[underlined]] Background Data [[/underlined]]

I now refer to our general discussion of the pattern of gifts made by Mrs. Post to the Smithsonian Institution. On December 14, 1968, Mrs. Post transferred title to the real property, "Hillwood," to the Smithsonian Institution, retaining a life estate. She retained title to most of the tangible personal property, including the extensive Russian and French works of art. The latter was to pass under her Will, through the hands of the Executors, destined for the Smithsonian Institution. During the lengthy period of administration of the Estate - just now about to terminate - the Executors held title. On July 1, 1976, when the Smithsonian Institution transferred title to "Hillwood," to the Post Foundation, the Executors transferred title to the tangible personalty to the Foundation.