[ ], 2023
EQ Advisors Trust
EQ Premier VIP Trust
1290 Avenue of the Americas
New York, New York 10104
| | Re: | Reorganizations to Combine Series of Delaware Statutory Trusts |
Ladies and Gentlemen:
EQ Advisors Trust, a Delaware statutory trust (“EQAT”), on behalf of each of its segregated portfolios of assets (“series”) listed on Schedule A attached hereto (“Schedule A”) (each, an “Acquiring Portfolio”),1 and EQ Premier VIP Trust, a Delaware statutory trust (“VIP”), on behalf of each of its series listed on Schedule A, have requested our opinion as to certain federal income tax consequences of each Acquiring Portfolio’s proposed acquisition of the Target listed on Schedule A opposite its name (each, a “corresponding Target”) pursuant to an Agreement and Plan of Reorganization and Termination adopted by the Boards of Trustees of EQAT and VIP at a joint meeting thereof held on July 18-19, 2023 (“Agreement”). The Agreement contemplates (1) each Acquiring Portfolio’s acquisition of all its corresponding Target’s Assets2 in exchange solely for the issuance to that Target of voting shares of beneficial interest (“shares”) in that Acquiring Portfolio and that Acquiring Portfolio’s assumption of all that Target’s Liabilities, followed by (2) that Target’s distribution of those shares pro rata to its Shareholders in complete liquidation thereof (for federal tax purposes), and (3) Target’s termination as a series of VIP and dissolution under Delaware law, all on the terms and conditions set forth in the Agreement (all the foregoing transactions involving each Acquiring Portfolio and its corresponding Target being referred to herein collectively as a “Reorganization”).
In rendering this opinion, we have examined (1) the Agreement, (2) the Combined Proxy Statement and Prospectus dated [ ], 2023 (“Proxy/Prospectus”), regarding the Reorganizations that was furnished in connection with the solicitation of voting instructions by
| 1 | Each series listed under the heading “Targets” on Schedule A is referred to herein as a “Target,” each series listed under the heading “Acquiring Portfolios” thereon is referred to herein as an “Acquiring Portfolio,” and each Target and Acquiring Portfolio is sometimes referred to herein as a “Portfolio.” Each of EQAT and VIP is sometimes referred to herein as an “Investment Company” and, together, as the “Investment Companies.” |
| 2 | Each capitalized term that is not defined herein has the meaning ascribed thereto in the Agreement. |
K&L GATES LLP
STATE STREET FINANCIAL CENTER ONE LINCOLN STREET BOSTON MA 02111
T +1 617 261 3100 F +1 617 261 3175 klgates.com
EQ ADVISORS TRUST
EQ PREMIER VIP TRUST
[ ], 2023
PAGE 2
the Board of Trustees of VIP, on behalf of the Targets, for use at a joint special meeting of the shareholders of the Targets that was held on October [ ] 2023, (3) the letter dated [ ], 2023 (which accompanied the Proxy/Prospectus) to owners of variable life insurance policies and/or variable annuity contracts or certificates (“Contract Owners”) who participate in a Target through the investment divisions of a separate account or accounts established by Equitable Financial Life Insurance Company, Equitable Financial Life Insurance Company of America, or one or more other insurance companies (each, an “Insurance Company”) regarding instructing the relevant Insurance Company how to vote the Target Shares related to those owners’ interests in those accounts as of the close of business on [ ], 2023, (4) the Notice of Joint Special Meeting of Shareholders, dated [ ], 2023, and Contract Holder Voting Instructions dated [ ], 2023, which also accompanied the Proxy/Prospectus, and (5) other documents we have deemed necessary or appropriate for the purposes hereof (collectively, “Documents”). We have assumed, for those purposes, the accuracy and completeness of the information contained in all the Documents. As to various matters of fact material to this opinion, we have relied, exclusively and without verification (with your permission), on the representations and warranties made in the Agreement (as contemplated in paragraph 5.4 thereof) (each, a “Representation”) and on the Certificates delivered at the Closing pursuant to paragraph 2.5(a) thereof (which certify that each Investment Company’s respective Representations are true and correct at the Effective Time (as defined in the Agreement) with respect to the applicable Reorganizations). We have assumed that any Representation made “to the knowledge and belief” (or similar qualification) of any person or party is, and as of the Effective Time with respect to each Reorganization, will be, correct without that qualification. We have also assumed that as to all matters for which a person or entity has represented that the person or entity is not a party to, does not have, or is not aware of any plan, intention, understanding, or agreement, there is and was no such plan, intention, understanding, or agreement. Finally, we have assumed that the Documents and the Representations present all the material and relevant facts relating to the Reorganizations.
OPINION
With respect to each Reorganization and the Portfolios participating therein and the Shareholders thereof, it is our opinion that, based solely on the facts set forth in the Documents and the assumptions described above and conditioned on (1) all the Representations’ being true and complete at the Effective Time with respect to such Reorganization and (2) the Reorganization’s being consummated in accordance with the Agreement (without the waiver or modification of any terms or conditions thereof and without taking into account any amendment thereof that we have not approved), for federal income tax purposes:
(1) Target’s transfer of the Assets to Acquiring Portfolio in exchange solely for Acquiring Portfolio Shares and Acquiring Portfolio’s assumption of the Liabilities, followed by Target’s distribution of those shares pro rata to the Shareholders actually or constructively in exchange for their Target Shares and in complete liquidation of Target, will qualify as a “reorganization” (as defined in section 368(a)(1)(F)3), and each Portfolio will be “a party to a reorganization” (within the meaning of section 368(b));
| 3 | All section references are to the Internal Revenue Code of 1986, as amended (the “Code”). |
EQ ADVISORS TRUST
EQ PREMIER VIP TRUST
[ ], 2023
PAGE 3
(2) Target will recognize no gain or loss on the transfer of the Assets to Acquiring Portfolio in exchange solely for Acquiring Portfolio Shares and Acquiring Portfolio’s assumption of the Liabilities or on the subsequent distribution of those shares to the Shareholders in exchange for their Target Shares;
(3) Acquiring Portfolio will recognize no gain or loss on its receipt of the Assets in exchange solely for Acquiring Portfolio Shares and its assumption of the Liabilities;
(4) Acquiring Portfolio’s basis in each Asset will be the same as Target’s basis therein immediately before the Reorganization, and Acquiring Portfolio’s holding period for each Asset will include Target’s holding period therefor (except where Acquiring Portfolio’s investment activities have the effect of reducing or eliminating an Asset’s holding period);
(5) A Shareholder will recognize no gain or loss on the exchange of all its Target Shares solely for Acquiring Portfolio Shares pursuant to the Reorganization;
(6) A Shareholder’s aggregate basis in the Acquiring Portfolio Shares it receives in the Reorganization will be the same as the aggregate basis in its Target Shares it actually or constructively surrenders in exchange for those Acquiring Portfolio Shares, and its holding period for those Acquiring Portfolio Shares will include, in each instance, its holding period for those Target Shares, provided the Shareholder holds those Target Shares as capital assets at the Effective Time; and
(7) For purposes of section 381, Acquiring Portfolio will be treated just as Target would have been treated if there had been no Reorganization. Accordingly, the Reorganization will not result in the termination of Target’s taxable year, Target’s tax attributes enumerated in section 381(c) will be taken into account by Acquiring Portfolio as if there had been no Reorganization, and the part of Target’s last taxable year that began before the Reorganization will be included in Acquiring Portfolio’s first taxable year after the Reorganization.
Notwithstanding anything herein to the contrary, we express no opinion as to the effect of a Reorganization on either Portfolio participating therein or any Shareholder with respect to any Asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes on the termination or transfer thereof under a mark-to-market system of accounting.
EQ ADVISORS TRUST
EQ PREMIER VIP TRUST
[ ], 2023
PAGE 4
Our opinion is based on, and is conditioned on the continued applicability of, the provisions of the Code and the Regulations, judicial decisions, and rulings and other pronouncements of the IRS in existence on the date hereof. All the foregoing authorities are subject to change or modification that can be applied retroactively and thus also could affect the conclusions expressed herein; we assume no responsibility to update our opinion after the date hereof with respect to any such change or modification. Our opinion represents our best judgment regarding how a court would decide the issues addressed herein and is not binding on the IRS or any court. Moreover, our opinion does not provide any assurance that a position taken in reliance thereon will not be challenged by the IRS, and although we believe that our opinion would be sustained by a court if challenged, there can be no assurances to that effect.
Our opinion addresses only the specific federal income tax consequences of the Reorganizations set forth above and does not address any other federal, or any state, local, or foreign, tax consequences of the Reorganizations or any other action (including any taken in connection therewith). Our opinion also applies only to the extent each Portfolio is solvent, and we express no opinion about the tax treatment or consequences of a Reorganization if either Portfolio participating therein is insolvent. Finally, our opinion is solely for the information and use of the addressees, the Shareholders and the Contract Owners and may not be relied on for any purpose by any other person without our express written consent.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement on Form N-14 of EQAT (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “Commission”) in connection with the Reorganizations. Further, we hereby consent to the references to our firm and the discussion of this opinion in the Registration Statement under the Proxy/Prospectus heading “Federal Income Tax Consequences of the Reorganizations.” In giving this consent, we do not thereby admit that we are experts with respect to any part of the Registration Statement within the meaning of the term “expert” as used in Section 11 of the Securities Act of 1933, as amended (the “Securities Act”) or the rules and regulations promulgated thereunder by the Commission, nor do we admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.
|
Very truly yours, |
|
K&L GATES LLP |
SCHEDULE A
| | |
TARGETS (All Series of VIP) | | ACQUIRING PORTFOLIOS (All Series of EQAT) |
| EQ/Conservative Allocation Portfolio | | EQ/Conservative Allocation Portfolio |
| |
| EQ/Conservative-Plus Allocation Portfolio | | EQ/Conservative-Plus Allocation Portfolio |
| |
| EQ/Moderate Allocation Portfolio | | EQ/Moderate Allocation Portfolio |
| |
| EQ/Moderate-Plus Allocation Portfolio | | EQ/Moderate-Plus Allocation Portfolio |
| |
| EQ/Aggressive Allocation Portfolio | | EQ/Aggressive Allocation Portfolio |
| |
| EQ/Core Plus Bond Portfolio | | EQ/Core Plus Bond Portfolio |
| |
| Target 2015 Allocation Portfolio | | Target 2015 Allocation Portfolio |
| |
| Target 2025 Allocation Portfolio | | Target 2025 Allocation Portfolio |
| |
| Target 2035 Allocation Portfolio | | Target 2035 Allocation Portfolio |
| |
| Target 2045 Allocation Portfolio | | Target 2045 Allocation Portfolio |
| |
| Target 2055 Allocation Portfolio | | Target 2055 Allocation Portfolio |
[ ], 2023
EQ Advisors Trust
1290 Avenue of the Americas
New York, New York 10104
EQ Premier VIP Trust
1290 Avenue of the Americas
New York, New York 10104
Equitable Financial Life Insurance Company
1290 Avenue of the Americas
New York, New York 10104
Equitable Financial Life Insurance Company of America
1290 Avenue of the Americas
New York, New York 10104
| | Re: | Reorganizations to Combine Series of Delaware Statutory Trusts |
Ladies and Gentleman:
You have requested our opinion regarding certain federal income tax consequences to the holders (“Contract Owners”) of certain variable annuity contracts and variable life insurance policies (collectively, the “Contracts”) that are issued or administered by Equitable Financial Life Insurance Company (“Equitable”) or Equitable Financial Life Insurance Company of America (“Equitable of America”) or one or more other life insurance companies (together with Equitable and Equitable of America, the “Insurance Companies”) and funded by separate accounts of the Insurance Companies for which separate series of EQ Advisors Trust (“EQAT”), a Delaware statutory trust, and of EQ Premier VIP Trust (“VIP”), a Delaware statutory trust, as listed on Schedule A attached hereto (“Targets” and “Acquiring Portfolios,” respectively and, together, the “Portfolios”), serve as underlying investment vehicles.
Pursuant to an Agreement and Plan of Reorganization and Termination (the “Agreement”) dated as of [ ], 2023, entered into by EQAT and VIP, each Target will transfer all of its assets to the Acquiring Portfolio set forth opposite its name on Schedule A, in
K&L GATES LLP
STATE STREET FINANCIAL CENTER ONE LINCOLN STREET BOSTON MA 02111
T +1 617 261 3100 F +1 617 261 3175 klgates.com
[ ], 2023
PAGE 7
exchange solely for voting shares of beneficial interest of such Acquiring Portfolio (“Acquiring Portfolio Shares”) and the assumption by such Acquiring Portfolio of all of the liabilities of such Target and the distribution of the Acquiring Portfolio Shares to the shareholders of such Target in complete liquidation of such Target (each, a “Reorganization” and, together, the “Reorganizations”).
For purposes of this opinion, we have examined and rely upon (1) the Agreement, (2) the Combined Proxy Statement and Prospectus dated [ ], 2023 (the “Proxy/Prospectus”), (3) the facts and representations contained in the letter dated as of this date, addressed to us from Equitable and Equitable of America, and (4) such other documents and instruments as we have deemed necessary or appropriate for purposes of rendering this opinion.
For purposes of this opinion, we are assuming that:
(1) each of the Contracts is and, at the time of a Reorganization, will be treated as a “variable contract” within the meaning of Section 817(d) of the Internal Revenue Code of 1986, as amended (the “Code”);
(2) the ownership of shares in the Targets and Acquiring Portfolios, and access to such Portfolios satisfies the requirements and limitations set forth in Treas. Reg. Section 1.817-5(f); and
(3) under the so-called investor control rules, Equitable, Equitable of America and any other Insurance Companies, and not the Contract Owners, have been and are treated for federal income tax purposes as the owners of the shares in the Targets and Acquiring Portfolios that underlie the Contracts.
This opinion is based upon the Code, United States Treasury regulations, judicial decisions and administrative rulings and pronouncements of the Internal Revenue Service, all as in effect on the date hereof. This opinion is conditioned upon (a) the Reorganizations taking place in the manner described in the Agreement, (b) the information provided in the Proxy/Prospectus referred to above, and (c) the facts and representations contained in the letter dated as of this date, addressed to us from Equitable and Equitable of America and the above assumptions being true and accurate as of the closing date of each Reorganization.
Based upon the foregoing, it is our opinion that, for federal income tax purposes, the Contract Owners will not recognize any taxable income, gains or losses as a result of a Reorganization.
[ ], 2023
PAGE 8
We express no opinion as to the federal income tax consequences of the Reorganizations except as expressly set forth above, or as to any transaction except those consummated in accordance with the Agreement, and the representations made to us. Our opinion addresses only the specific federal income tax consequences of the Reorganizations set forth above and does not address any other federal, or any state, local, or foreign tax consequences of the Reorganizations or any other action (including any taken in connection therewith). Finally, our opinion is solely for the information and use of the addressees and the Contract Owners and may not be relied on for any purpose by any other person without our express written consent.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement on Form N-14 of EQAT (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “Commission”) in connection with the Reorganizations. Further, we hereby consent to the references to our firm and the discussion of this opinion in the Registration Statement under the Proxy/Prospectus heading “Federal Income Tax Consequences of the Reorganizations.” In giving this consent, we do not thereby admit that we are experts with respect to any part of the Registration Statement within the meaning of the term “expert” as used in Section 11 of the Securities Act of 1933, as amended (the “Securities Act”) or the rules and regulations promulgated thereunder by the Commission, nor do we admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
K&L Gates LLP
[ ], 2023
PAGE 9
SCHEDULE A
| | |
TARGETS (All Series of VIP) | | ACQUIRING PORTFOLIOS (All Series of EQAT) |
EQ/Conservative Allocation Portfolio | | EQ/Conservative Allocation Portfolio |
| |
EQ/Conservative-Plus Allocation Portfolio | | EQ/Conservative-Plus Allocation Portfolio |
| |
EQ/Moderate Allocation Portfolio | | EQ/Moderate Allocation Portfolio |
| |
EQ/Moderate-Plus Allocation Portfolio | | EQ/Moderate-Plus Allocation Portfolio |
| |
EQ/Aggressive Allocation Portfolio | | EQ/Aggressive Allocation Portfolio |
| |
EQ/Core Plus Bond Portfolio | | EQ/Core Plus Bond Portfolio |
| |
Target 2015 Allocation Portfolio | | Target 2015 Allocation Portfolio |
| |
Target 2025 Allocation Portfolio | | Target 2025 Allocation Portfolio |
| |
Target 2035 Allocation Portfolio | | Target 2035 Allocation Portfolio |
| |
Target 2045 Allocation Portfolio | | Target 2045 Allocation Portfolio |
| |
Target 2055 Allocation Portfolio | | Target 2055 Allocation Portfolio |
