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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Document Scanning Lead Sheet
Jan-20-2009 3:42 pm
Case Number: PTR-09-292025
Filing Date: Jan-20-2009 3:39
Juke Box: 001 Image: 02376356
SUBSEQUENT PROBATE PETITION
* THE DISCLAIMER TRUST ESTABLISHED UNDER THE PAUL AND RUTH CHRISTN
001P02376356
instructions:
Please place this sheet on top of the document to be scanned,
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RAMSBACHER PROKEY LLP Ne Bod
John W, Prokey, Esq., SBN: 205184 IAN 20 OF Sp
Dennis I. Leonard, Esq., SBN: 216990 Gorn, 2009
125 South Market Street, Suite 1150 by Kel}
San Jose, California 95113 a Li, Clear;
Telephone: (408) 293-3616 OSD Om
Fax: (408) 293-0430
Attorneys for Petitioner,
ELVIRA J. ORLY, Trustee
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
In the Matter of Case No.: 09-292025
PETITION FOR ORDER APPROVING
MODIFICATION AND REFORMATION OF
TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC
PRO TUNC
The DISCLAIMER TRUST,
established under the Paul and Ruth
Christman 2001 Revocable Trust, dated
March 6, 2001
[Probate Code §§ 15409 and 17200(b)(13), Civil
Code §§ 3399-3402]
Date: MAR 18 2009
Time:
Dept: | PROBATE DER,
Judge: $:00A.M., RM aN
Petitioner, ELVIRA J. ORLY, as Trustee of the DISCLAIMER TRUST, established
Ne ee eee ee
under the Paul and Ruth Christman 2001 Revocable Trust, dated March 6, 2001 (the
“Disclaimer Trust”), with a trust administration situs of the City and County of San Francisco,
California, presents her verified Petition for Order Approving Modification and Reformation of
Trust Terms Nune Pro Tunc and Reformation of Disclaimer Nunc Pro Tunc (the “Petition”),
and respectfully requests that the Court enter an order pursuant to its authority under California
Probate Code § 15409 and California Civil Code § 3399 to modify and reform the terms of the
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC
AND REFORMATION OF DISCLAIMER NUNC PRO TUNCCc €
Disclaimer Trust, and reform the terms the Disclaimer of Interest executed by RUTH
CHRISTMAN on December 15, 2001 (the “Disclaimer”).
Petitioner hereby alleges as follows:
BACKGROUND INFORMATION
1. The day-to-day administration of the Disclaimer Trust is conducted in the City and
County of San Francisco, California, making venue in San Francisco County proper under
California Probate Code § 17005,
2. This petition concems the intemal affairs of the Disclaimer Trust, giving this Court
subject matter jurisdiction under Califomia Probate Code § 17000. Petitioner petitions the
Court under California Probate Code § 17200(b)(13) to: (a) modify and reform the provisions
of the Disclaimer Trust pursuant to California Probate Code § 15409 and Califomia Civil Code
§ 3399; and (b) reform the provisions of the Disclaimer pursuant to California Civil Code §
3399,
3. On March 6, 2001, PAUL R. CHRISTMAN, also known as Paul Robert Christman
(hereinafter referred to as “PAUL”), and RUTH R. CHRISTMAN, formerly known as Ruth
Rattan (hereinafter referred to as “RUTH”), in their capacity as settlors and as trustees (referred
to herein as “Settlors” or “Trustees” as the context dictates), executed a written declaration of
trust (hereinafter the “Trust Declaration”) establishing the Paul and Ruth Christman 2001
Revocable Trust (hereinafter the “Trust”). Attached hereto as Exhibit A and incorporated
herein by reference is a true and correct copy of the Trust Declaration.
4. PAUL died on April 22, 2001, in the City of Sacramento, County of Sacramento, State
of California, and was a resident of the County of Sacramento at the time of his death. PAUL
was survived by his spouse, RUTH. RUTH dicd on November 25, 2007, in the City of
Carmichael, County of Sacramento, State of California, and was a resident of the County of
Sacramento at the time of her death.
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND:
REFORMATION OF DISCLAIMER NUNC PRO TUNCCc €
5. Pursuant to the terms of the Trust Declaration, upon PAUL’s death RUTH became the
sole Trustee of the Trust and all trusts created under the Trust Declaration, RUTH accepted her
appointment as sole Trustee as of April 22, 2001, and served in such capacity until her
resignation on May 30, 2007.
6. In accordance with that certain Resignation of Trustee attached as Exhibit B, upon the
resignation of RUTH as sole Trustee, ELVIRA J. ORLY and GENE HUME became the
successor Co-Trustees of the Trust and all trusts created under the Trust Declaration, including
the Disclaimer Trust. ELVIRA J. ORLY and GENE HUME accepted their appointments as
successor Co-Trustees on June 1, 2007. GENE HUME resigned as a Co-Trustee on November
25, 2008 pursuant to that certain resignation attached as Exhibit C. ELVIRA J. ORLY has
served in her capacity first as a Co-Trustee and now is the currently acting sole Trustee of the
Trust and all trusts created under the Trust Declaration.
7. The Trust Declaration provides that, following the death of PAUL, the assets of the
Trust, other than those disclaimed by RUTH, were to be distributed to a new trust created and
administered pursuant to the terms of the Trust Declaration. Such new trust is known as the
Marital Deduction Trust.
8. Section 5.04 of the Trust Declaration provides that if RUTH disclaimed any assets, then
the Trustee was directed to establish the “Disclaimer Trust” and allocate the disclaimed assets
thereto. The Disclaimer Trust is an irrevocable trust.
9 On November 15, 2001, RUTH executed the Disclaimer. Pursuant to the Disclaimer,
RUTH disclaimed all interest in:
“A $372,501 fractional interest of a fifty per cent (50%) undivided
tenancy in common interest in residential real property valued at $1,925,000 on
Paul R. Christman estate tax return and located in the County of Sonoma, State
of California, commonly known as 750 Gull Drive, Bodega Bay, California,
more particularly described as :
Lot 1, Block 41, as numbered and designated upon the map entitled, ‘Bodega
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC PRO TUNC21
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Harbour Unit No. 3, Tract No. 434, ete,’ filed October 30, 1973 in the office of
the County Recorder, in Book 200 of Maps, pages 1 through 22, Sonoma County
Records. Assessor Parcel No. 100-360-03.”
Attached hereto as Exhibit D and incorporated herein by reference is a true and correct copy of
the Disclaimer.
10. The provisions of the Disclaimer Trust are enumerated in Section 5.05 of the Trust
Declaration as follows:
“5.05. Treatment of Disclaimer Trust.
{a)
During the lifetime of the surviving settlor, the trustee shall hold, administer, and
distribute the assets of the disclaimer trust as follows:
(1) The trustee shall pay to or apply for the benefit of the surviving settlor,
for life, all of the net income of the disclaimer trust, in monthly or other
convenient installments as agreed upon by the surviving settlor and the
trustee, but not less often than annually.
(2) The trustee shal! distribute to or apply for the benefit of the surviving
settlor, for life, as much of the principal of the disclaimer trust as the
trustee, in the trustee’s discretion, deems necessary for the surviving
settlor’s health, education, support, and maintenance. All decisions of the
trustee regarding payments under this subparagraph, if any, shall be
within the trustee’s discretion and shall be final and incontestable by
anyone.
(3) From time to time during the lifetime of the surviving settlor, the Trustee
shall distribute all or any part of the disclaimer trust, including accrued
income and undistributed income, to the person or persons appointed by
the surviving settlor from among any one, or more, of the following
children and grandchildren of the settlors: Susan Elizabeth Mounier (nee
Christman), Robert Steven Christman, Cynthia Marie Granade (nee
Christman) or the issue of any such child that has died. This power of
appointment is exercisable by the surviving settlor alone and in all
events, and shall be in the amounts or proportions, on and on such terms
and conditions, as the surviving settlor shall appoint in the last unrevoked
written instrument other than a Will executed and acknowledged by the
surviving settlor and filed with the Trustee, specifically referring to an
exercising this power of appointment. Except to the extent that property
or an interest in property shall previously have been transferred or
become distributable pursuant to an exercise of this power, any such
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC PRO TUNC.Cc C
exercise may be revoked by an instrument other than a Will executed and
acknowledged by the surviving settlor, filed with the Trustee, specifically
referring to this power of appointment and the exercise to be revoked,
and making an alternative exercise of the power. The trustee shall deduct
the early distribution, valued on the date that distribution was made,
without interest, from the share ultimately distributed to that appointee.
If, for any reason, any of the property subject to this power of
appointment is not effectively appointed by the surviving settlor, that
property shall be continue to be held and administered as provided in
subparagraph (b) of this Section 5.05. Nothing contained here shall be
construed to require the surviving settlor to exercise the foregoing power
of appointment on behalf of any one, or more, of the appointees, or to
make appointments in equal shares.
(b) Upon the death of the surviving settlor, the trustee shall divide the remaining
assets of the disclaimer trust into equal shares comprised of one share for each of
the following of settlors’ children then living or children then deceased leaving
issue then living: Susan Elizabeth Mounier (nee Christman), Robert Steven
Christman, Cynthia Marie Granade (nee Christman). The amounts allocated to
each such child’s share and the issue then living of each such deceased child,
including adjustments for early distribution provided for in subparagraph (a)(3)
above, shall be distributed outright to those children and outright by right of
representation to the issue of those predeceased children,
(©) Ifat the time of the surviving settlors’ death all the above-named children of the
settlors and the issue of those children have died, the trustee shall distribute the
balance of the disclaimer trust property outright to the heirs of the settlors.”
SETTLORS’ INTENT AND DEFECTED PURPOSE OF THE DISCLAIMER TRUST
11. The Trust was established by PAUL and RUTH as Settlors for their benefit during their
joint lifetimes and for the benefit of the survivor of them upon the death of the first Settlor to
die. As described more fully in the Declaration of Peggy A. Moger, attached as Exhibit E and
incorporated herein by this reference, the Settlors’ intent was to provide the surviving settlor
with maximum benefit of the scttlors’ assets, while allowing use of the deceased settlor’s
applicable exclusion amount from estate tax (estate tax exemption). Peggy A. Moger was the
Settlors’ estate planning attorney.
12. The disclaimer provision and creation of the Disclaimer Trust was intended to allow the
a
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC PRO TUNCsurviving settlor to: (i) use the deceased spouse’s estate tax exemption; and (ii) exclude the
assets of the Disclaimer Trust from the surviving settlor’s gross estate for estate tax purposes.
See Exhibit E, Paragraph 3. In short, this allowed the surviving settlor to reduce the overall
estate taxes at the death of the surviving settlor.
13. However, Section 5.05(a)(3) of the Trust Declaration applicable to the Disclaimer Trust
granted the surviving settlor (i.e. RUTH) the right to appoint the assets of the Disclaimer Trust
to certain children and grandchildren of the Settlors. Petitioner is concerned that this powcr
may not be limited by an ascertainable standard.
14, Treasury Regulation § 25.2518-2(e)(2) provides as follows:
“Disclaimer by surviving spouse. - In the case of a disclaimer made by a
decedent’s surviving spouse with respect to property transferred by the decedent,
the disclaimer satisfies the requirements of this paragraph (e)(2) if the interest
passes as a result of the disclaimer without direction on the part of the surviving
spouse either to the surviving spouse or to another person. If the surviving
spouse, however, retains the right to direct the beneficial enjoyment of the
disclaimed property in a transfer that is not subject to Federal estate and gift tax
(whether as trustee or otherwise), such spouse will be treated as directing the
beneficial enjoyment of the disclaimed property, unless such power is limited by
an ascertainable standard. See examples (4), (5), and (6) in paragraph (e)(5) of
this section.”
15. If the power of appointment granted to the surviving settlor pursuant to Section
5.05(a)(3) of the Trust Declaration is not limited to an ascertainable standard the Disclaimer
Trust will be includible in the surviving settlor’s estate.
16. Since there is an ambiguity as to whether the terms of the Trust Declaration match the
intent of the Settlors, Petitioner believes the Trust Declaration contains a scrivener’s error and
seeks an Order from this Court to clarify the terms of the Trust Declaration.
17. As stated above, Exhibit E attached hereto is a declaration by the Settlors’ estate
planning attorney, Peggy Ann Moger. In her declaration, submitted under penalty of perjury,
Ms. Moger declares the Settlors’ intent regarding disclaiming assets and creating the Disclaimer
ee
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC PRO TUNCTrust was: (i) to allow use of the deceased spouse’s estate tax exemption; and (if) to exclude the
assets of the Disclaimer Trust from the surviving Settlor’s gross estate for estate tax purposes.
Since the provisions of the Trust Declaration may not accomplish this, specifically Section
5.05(a)(3) applicable to the Disclaimer Trust, Ms. Moger declares that the Trust Declaration
contains a scrivener’s error attributable to the mutual mistake of the Settlors that does not truly
reflect their joint intent. Ms. Moger also declares that the Disclaimer contains a scrivener’s
error because it does not disclaim any power of appointment granted to RUTH in excess of an
ascertainable standard,
18. RUTH, as the surviving Settlor, never exercised the power of appointment granted to
her by Section 5.05(a)(3) of the Trust Declaration applicable to the Disclaimer Trust.
AUTHORITY TO MODIFY AND REFORM
19. Pursuant to California Probate Code § 15409(a), the Court may modify the
administrative or dispositive provisions of a trust if, owing to circumstances not known to the
Settlors and not anticipated by the Settlors, the continuation of the trust under its present terms
would defeat the purpose of the Trust.
20. Pursuant to California Civil Code § 3399 - 3402, the Court, on application of an
aggrieved party, may revise a written contract that does not truly express the intention of the
parties so as to express that intention upon mutual mistake of the parties.
21. The Court has broad statutory and common-law equity authority to modify or reform
documents to accomplish their intended purposes, provided a peculiar or exceptional
circumstance makes such modification or reformation necessary and there is some expression
of the purpose of the document. Moxley v, Title Ins. & Trust Co., 27 Cal.2d 457 (1946); Ike v.
Doolittle, 61 Cal.App.4th 51 (1998).
22. Such modification and reformation are appropriate to effectuate the common intention
of the parties when that intention was incorrectly reduced to writing. Getty v. Getty, 187
a
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC PRO TUNCCal.App.3d 1159 (1986); First Am. Tilte Ins. & Trust Co. v. Cook, 12 Cal.App.3d 592 (1970);
Stafford v. California C.P. Growers, 11 Cal.2d 212 (1938).
23. Petitioner desires to modify and reform the Disclaimer Trust nunc pro tune as provided
herein because Petitioner is concemed that the Settlors’ intent to transfer assets to the
Disclaimer Trust and exclude such assets from the surviving Settlor’s taxable estate may not be
accomplished by the Trust Declaration as currently written. As drafted, it is unclear as to
whether the Trust Declaration adequately reflects the Settlors’ intentions in reducing the Trust
Declaration terms to writing; thus Petitioner believes the Trust Declaration contains a
scrivener’s error. Therefore, owing to circumstances not known to the Settlors and not
anticipated by the Settlors, the continuation of the trust under its present terms may defeat the
purpose of the Disclaimer Trust, i.e.: (i) to allow use of the deceased spouse’s estate tax
exemption; and (ii) to exclude the assets of the Disclaimer Trust from the surviving settlor’s
gross estate for estate tax purposes.
24. Similarly, Petitioner seeks to reform the Disclaimer nunc pro tunc because as it is
written, it may not reflect RUTH’s intent to disclaim in a manner that would: (i) allow use of
PAUL’s estate tax exemption; and (ii) exclude the assets of the Disclaimer Trust from RUTH’s
gross estate for estate tax purposes. The Disclaimer contains a scrivener’s error because, by its
terms, RUTH does not also disclaim the relevant part of the power of appointment over the
Disclaimer Trust granted to her,
REQUESTED RELIEF
25. Petitioner seeks court modification and reformation of the Trust Declaration nune pro
tune in order to correct such scrivener’s error effective as of the date the Trust Declaration was
executed.
26. Petitioner seeks modification of the Trust Declaration as applicable to the Disclaimer
Trust nunc pro tune by adding the following sentence to the end of Section 5.05(a)(3) of the
Trust Declaration:
a
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC PRO TUNC“Notwithstanding the foregoing, the surviving settlor may only exercise this
power of appointment to or for the benefit of the objects of such power for their
health, support, education or maintenance.”
27. Petitioner believes the requested modification and reformation is the least intrusive
means of modifying Section 5.05(a)(3) of the Trust Declaration while still accomplishing the
intent of the Settlors.
28. Petitioner also seeks court reformation of the Disclaimer nunc pro tunc in order to
correct the scrivener’s error effective as of the date the Disclaimer was executed.
29. Petitioner seeks modification of the Disclaimer nunc pro tunc by adding the following
paragraph to the end of the Disclaimer:
“] also disclaim the power of appointment granted to me over the DISCLAIMER
TRUST, established under the Paul and Ruth Christman 2001 Revocable Trust,
dated March 6, 2001, except to the extent it is limited to an ascertainable
standard.”
30. Petitioner believes the requested reformation is the least intrusive means of modifying
the Disclaimer while still accomplishing RUTH’s intent.
NOTICE AND CONSENT,
31. The persons to whom notice of this petition should be provided pursuant to California
Probate Code § 17203 are all trustees and all beneficiaries of the Disclaimer Trust as follows:
Name and Address Age Relationship
Elvira J. Orly, Esq. Adult Successor Trustee
115 Sansome Street
Suite 1400
San Francisco, CA 94104
Se
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC PRO TUNC1||Name and Address . Age Relationship
Susan Elizabeth Christman Adult Daughter of Settlors,
177 Miller Avenue Beneficiary
Mill Valley, CA 94941
Robert Steven Christman Adult Son of Settlors, Beneficiary
1840 Goose Creek Court
lone, CA 95640
Cynthia Marie Granade Adult Daughter of Settlors,
7501 Brandon Road Beneficiary
Shingle Springs, CA 95682
32. Susan Elizabeth Christman, Robert Steven Christman, and Cynthia Marie Granade
constitute all remaining beneficiaries of the Disclaimer Trust.
33. All remaining beneficiaries, current and remainder, of the Disclaimer Trust have
consented to modification and reformation of the Disclaimer Trust and reformation of the
Disclaimer as provided herein, and have consented to this Petition and Waived Notice of
Hearing on this Petition as evidenced by the individual “Consent to Modification and
Reformation of Trust and Reformation of Disclaimer and Waiver of Notice” forms attached
hereto, collectively marked as Exhibit F and made a part hereof.
34. No request for special notice has been filed in this proceeding,
WHEREFORE, Petitioner requests an order of the Court to:
A. Approve modification and reformation of the DISCLAIMER TRUST, established under
the Paul and Ruth Christman 2001 Revocable Trust, dated March 6, 2001, as set forth in this
Petition, and order such modification and reformation nun pro tunc, i.e. effective as of the Trust
Declaration’s execution.
B. Approve reformation of the Disclaimer of Interest executed by RUTH CHRISTMAN
dated December 15, 2001, as set forth in this Petition, and order such reformation nun pro tunc,
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC PRO TUNCie. effective as of the Disclaimer of Interest’s execution.
Cc. Make such other orders that the Court may deem proper.
pwc acy ZO 2009
RAMSBACHER PROKEY LLP
Attorney for Petitioner
a >
1d | Dated: OSA _ 2009 By:_*
DENNIS I. LEONARD, ESQ.
Attorney for Petitioner
a
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC PRO TUNCVERIFICATION
I, ELVIRA J. ORLY, declare:
I am the Petitioner and Successor Trustee of the DISCLAIMER TRUST, established
under the Paul and Ruth Christman 2001 Revocable Trust, dated March 6, 2001; and
I have read the foregoing PETITION FOR ORDER APPROVING MODIFICATION
AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF
matters stated to be on information and belief, and as to those matters I believe them to be true.
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct and that this declaration is executed on the QO day of
Nossa 2009, staan Req acisea_, California.
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PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND
REFORMATION OF DISCLAIMER NUNC PRO TUNC
nS ATT ST TTExhibit ANe
(Cc ae
’
* DECLARATION OF TRUST
ARTICLE: Creation of Trust
1,01. Declaration. PAUL R. CHRISTMAN (also known as Paul Robert Christman) end
RUTH R. CIIRISTMAN (born Ruth Rattan), husband and wife, of 5220 Buena Vista Avenue,
Fair Oaks, California 95628 (the “trustees") hereby declare that they have received certain
property (the "trust estate") from PAULR. CHRISTMAN and RUTH R. CHRISTMAN,
husband and wife, ‘5220 Buena Vista Avenue, Fair Oaks, California 95628 (the "settlors"), end
hold that property in trust, to be held, administered, and distributed according to the terms of this
instrument. _ :
4.02. Name of Trust. The name of the trust created by this instrument shall be the “Paul and *
Ruth Christman 2001 Revocable Trost. ee
1.03. Effective Date. This declaration shall be effective immediately upon execution by all of the
parties. . .
1.04. Children. The settlors have four (4) adult living children, whose names and dates of birth
are as follows: : . .
ame. . : Date of Birth
Paul David Christman - March 17, 1952 t
Susan Elizabeth Mounfer June 27, 1950
(nee Christman) .
Robert Steven Christman October 17, 1958
Cynthia Marie Granade April 18, 1955
(nee Christman) :
Neither settlor hes any deceased children, any adopted children, or any step-children.
ARTICLE 2: Trust Estate
2.01. Definition of Trust Estate. All of the property described in Schedule A, attached to this
instrument, and any other property that may hereafter be subject to this trust, is referred to in this
instrument zs the “trust estate,""and shall be held, administered, and distributed 2s provided in this © -
instrument.
2.02. Character of Trust Assets. All community property of the settlors transferred to this
trust, and thie proceeds of all such property, shall continue to be the community property of the
settlors under the laws of California. All separate property shall remain the separate property, and
all quasi-community property shall remain the quasi-community property, of the contributing
Page 1 of 23 pages.
EXHIBIT A€ 7 at .
gettlor. The settlors declare that all the property described in Schedule A as of the execution of
this instrument is community property end intend to, and do hereby by executing this instrument,
transmute any such identified property to commimity property if the same is held of record in
another form (including but not limited to, tenants {a common, joint tenancy, joint tenancy with
right of survivorship, and so on).or held of record in only one of the two settlors names. Further,
this declaration is, to the extent required by law, intended to change the characterization and
ownership of the property, whether real or person, described in Schedule A pursuant to the
requirements for transmutation set forth in California Family Code Section 852 or any successor
statute thereto. ,
2.03, Additions to Trust. From time to time, the trustee may accept additions to this trust from
any source. Any additions to the trust shall be made by designating in writing the property to be
added, or by titling any account, deed, or similar asset in the name of the trustee, as trustee of this
_ trust, or any alternate or successor trustee acting under this instrument. -During any time that
“neither settlor is serving as trustee or cotmif¢e of this trust, any ‘transfer of property to the trust
under this paragraph shall be effective only upon written acceptance by the trustee. Any
designation by a third party, whether by will, deed, account title designation, or similar transfer,
shall also be a transfer to the trust estate upon written acceptance by the trustee. Any property
added to the trust estate shall be held, administered, and distributed in accordance with the terms”
of this instrument. .
ARRTICLE 3: Rights atid Powers of Settlors
3,01. Powers of Revocation and Amendment While Both Settlors Are Living. During the
joint lifetimes of the settlors, this trust may be revoked or terminated, in whole or in part, by
either settlor as to any separate and quasi-community property of that settlor and any community
property of the settlors, This trust may be modified or amended by either settlor acting alone as
to any separate and quasi-community property of that settlor, end-by both spouses acting jointly
2s to any community property of the settlors. . co
3.02, Revocation and Amendment After Death of Deceased Settlor. Aftér the death of the
deceased settlor, the surviving settlor may at any time zmend, revoke, or terminate any trust
“created by this instrument, other then the Discleimer Trust, which shall bs irrevocable and not
subject to anendment. Upon the death of the surviving settlor, every trust created by this
- instrument shall be irrevocable and not subject to amendment.
3.03. Method of Revocation or Amendment. Any amendment, revocation, or termination shall
be made only by a writing signed by the amending or revoking settlor or settlors and delivered to
the trustee in person or by certified mail. Ifthe writing is signed by only one settlor and the other
settlor is living, a copy of the writing shall also be delivered to the other settlor in person or by
certified mail. . .
3.04, Delivery of Property After Revocation. Promptly upon receipt of eny writing revoking
Page 2 of 23 pages.° €
or terminating the trust as to any community property forming part of the trust estate, the trustee
shall deliver the affected property to the settlors or to a person or persons designated by both -
settlors in that writing to receive the property. Unless otherwise provided in the revocation or
this trust instrument, eny community property so returned shall continue to be the community
property of the settlors, Promptly upon receipt of any writing revoking or terminating the trust as
to any separate or quesi-community property of either settlor, the trustee shall deliver the affected
property to the revoking settlor or to a persoa or persons designated in that writing to rece{ve the
property. | .
3.05. Power to Direct Investments While Both Settlors Are Living. While both settlors are
living, the settlors shall have the power from time to time to direct the trustee to do any or all of
the following:
(a) Invest trust funds in specified secuities, properties, or other forms of investment;
(b) Retain specified sechuites proputies, or other forms of investment held in trust under
this instrament; and
(c) Sell, encumber, lease, abandon, or dispose of any trust property.
Directions with respect to any portion of the trust estate that is the community property of the
settlors may be given only by a writing signed by both settlors. Directions with respect to any
portion of the trust estate that is separate or quasi-community property of one settlor may be
given by a writing signed by that settlor alone. Ifa direction is to remain in effect for a specified
period of time only, or to be subject to any other condition or conditions, the writing must specify
the period of time and the condition or conditions. If trust property is invested in accordance with
any direction given as specified in this paregraph, the trustee shall not be liable for losses sustained
as a direct or indirect result of the trustee's compliance with the direction.
3,06, Power to Direct Investments After Death of Deceased Settlor. After the death of the
deceased settlor and while the surviving settlor is living, the surviving settlor shall have the power
- from time to time to direct the trustee to sell, exchange, or invest property of eny trust created
imder this instrument, except the Disclaimer Trust, No person shall have the power to direct the
trustes to invest property of the Disclaimer Trust. Any direction given to the trustee shall be in
writing and signed by the surviving settlor. Ifa direction is to remain in effect for a specified
period of time only, or to be subject to any other condition or conditions, the writing must specify
the period of time and the condition or conditions. If trust property is invested in accordance with
any direction given es specified in this paragraph, the trustee shall not be liable for losses sustained
25 a direct or indirect result of the trustee's compliance with the direction. After the death of the
surviving settlor, no person shall have the power to direct the trustee to invest any trust property.
3.07. Power to Borrow From Trust Estate While Both Settlors Are Living. While both
settlors are living, the settlors shall have the power to borrow from the income or principal of the
Page 3 of 23 pages.= . (C . a
iiust éstate, with or without security, as provided in this paragraph. Any loan from any portion of
the trust estate that is the community property of the settlors may be made only by a writing
+ signed by both settlors, filed with the trustee, and specifying the emount and terms of the loan.
Any loan from any portion of the trust estate that is the sepzrate or quasi-community property of
one of the settlors may be made only by a writing signed by thet settlor, filed with the trustee, and
specifying the amount and terms of the Ioan. °
3,08. Power to Borrow From Trust Estate After Death of Deceased Settlor. After the death
of the déceased settlor, the surviving settlor shall have the power to borrow from the income or
principal of any trust created under this instrument, except the Disclaimer Trust. Any such loan
may be made only by a writing signed by the surviving settlor, filed with the trustee, and
* specifying the amount end terms of the loan.
3.09. Exercise of Settlors' Rights and Powers by Others. Notwithstanding any other provision
* bf this instrument, zny right or pdwer that either settlor ould exercise personally under the terms
of this instrument, including the power to amend, revoke, or terminate any. trust created by this
instrument, may be exercised for and on behalf of that settlor by any attomey in fact who, at the .
tirne of the exercise, is duly appointed end acting for that settlor under a valid and enforceable
durable power of attomey executed by that settlor ‘under the Uniform Durable Power of Attomey
Act, or any successor statute; or, if there is no such attomey in fect, by a duly eppointed and
acting conservator of that settlor, after petition to the court in accordance with California Probate
Code Section 2580, or any successor statute; provided, however, that the power to amend,
revoke, or terminate any trust created by this instrument, in whole or in part, may be exercised for
or on behalf of that selflor by an attomey in fact or conservator only if, ‘distribution of that settlor’s
estate during that settlor'slifetirne is not substantially altered by the amendment, revocation, or
termination, and the amendment, revocation, or termination does not result in any adverse tax
consequences to that settlor's estate.
ARTICLE 4: Payments and Distributions’
While Both Settlors Are Living
4.01. Payments of Income From Community Property. While both settlors are living, the
trustee shall pay to or apply for the benefit of the settlors, or either of them, 2s much of the net
income of the conunuaity property of the trust as the settlors, or either of them, shall from time to
time request of the trustee in writing. A request pursuant to this paragraph may specify that
payments are to be made periodically.
4,02, Payments of Income From Separate and Quasi-Community Property. While both
settlors are living, the trustee shall pay to or epply for the benefit of a settlor whose separate or
quasi-community property constitutes part of the trust estate as much of the net income of that
property as the settlor shall from time to time request of the trustee in writing. A request
pursuant to this paragraph may specify that payments art to be made periodically.
Page 4 of 23 pages.C t€
4.03. Distributions of Principal From Community Property. ‘While both settlors ars living,
the trustee shall distribute to or apply for the benefit of the settlors, or either of them, 2s much of
-the principal of the community property of the trust, up to the whole thereof, as the settlors, or
either of them, shall ftom time to time request of the trustee in writing. A request pursuant to this
paragraph may specify that distributions ere to be mails periodically. Any money or other
. property paid or distributed to or for the benefit of the settlors, or either of them, from the
community property of the trust shall remain the community property of the settlors. A settlor
who receives any such property shell have the same obligations with respect to that property that
he or she would have with respect to community property generally. .
4.04, Distributions of Principal From Separate and Quasi-Community Property. While
both settlors are living, the trustee shall distribute to or apply for the benefit of a settlor whose
separate or quasi-community property constitutes part of the trust estate as much of the principal
of that property, up to the whole thereof, as the settlor shall from time to time request of the
trustee i writing. - A request ken to this paragraphimay specify that distributions are to be
made periodically. . .
4,05. Requests on Settlor's Behalf, If, at eny time, either settlor is unable personally:to make a
request of the trustee, the settlor's right to make the request may be exercised for or on behalf of,
the settlor’by an attorney in fact who, at the time of the exercise, is duly appointed and acting for
the settlor under a valid and enforceable durable power of attomey executed by the settlor under
the Uniform Durable Power of Attomey Act, or amy successor statute; or, if there is no such
attomey in fact, by the trustee acting for and on behelfof the settlor, The trustee shall have
discretion to determine when the settlor is unable personally to rake a request for purposes of.
this paragraph.
ARTICLE 5: Payments and Distributions
After Death of Deceased Settlor
5.01. Payment of Taxes. All death taxes payable by reason of the deceased settlor's death,
whether attributable to assets of this trust or to assets outside the trust, shall be equitably prorated
and apportioned among the persons interested in the settlor's estate as provided in the California
Probate Code. However, payments under this paragraph shall be made only out of the deceased
settlor's separate property or the deceased settlor's one-half interest in the community or
quasi-community property and shall not be made from the surviving settlor’s property.
5.02. Payment of Debts and Expenses. All debts and expenses attributable to any property in
the trust or the deceased settlor's estate may, in the trustee's discretion, be paid by the trustes out
of the trust estate or equitably prorated and apportioned among the persons interested in the
settlor’s estate in the same manner as the death texes.
5,03. Disposition of Trust Upon Death of Deceased Settlor (to Marital Deduction Trust).
Upon the death of the eseased settlor, and after any distributions or payments under Paragraphs
Page 5 of 23 pages.A , . { (C
5.01 through 5.02 of this instrument have been made, the trustee shall hold, administer, end
distribute the assets of the trust (hereafter called the "marital deduction trust" for e2se of
reference) as follows: "he oo .
(a) The trustee shall pay to or apply for the benefit of the surviving settlor all of the net
income of the marital deduction trust, in monthly or other convenient installments, 2s
agreed upon by the surviving settlor and the trustee, but not less often than ennually. Any
sther provision of this instrument to the contrary notwithstanding, in determining the net
income of the marital deduction trust payable under this paragraph, the trustee shall
include all income that must be considered as income to qualify the marital deduction trust
for the federal estate tax marital deduction, and shall meke no deductions from gross
income that would prevent the marital deduction trust from qualifying for that deduction.
It is the intention of the settlors that the surviving settlor, as the beneficiary of a marital
deduction trust, shall have substantially that degree of beneficial enjoyment ofthe marital
deduction trust during his or her Iifetime thet the principlés of the Iaw of trusts accord to a
person who is unqualifiedly, designated as the life beneficiary of a trust, end the trustee
shall exercise the trustee's discretion in 2 manner that is consistent with this expressed
intention. It is also the intention ofthe settlors that the marital deduction trust produce for
the surviving settlor during his or her lifetime the income, or that the surviving settlor shall
have the benefit of the martial deduction trust property, as is consistent with the value of
the marital deduction trust property and with its preservation; provided, however, the
trustee shall have the power to make gifts as provided in subpzragraph (c) of this Section
5.05.
(b) ‘The trustee shall distribute to or apply for the benefit of the surviving settlor as much
of the principal of the marital deduction trust, up to the whole thereof, as the surviving
settlor shall from time to time request of the trustee in writing, A request pursuant to this
paragreph may specify that distributions are to be made periodically.
(c) If at anytime during the life of the surviving settlor, the trustee, an attorney in fect for
the surviving éettlor or 2 conservator of the estete of the surviving settlor shall determine
that it would be beneficial under the circumstances then existing to make gifts to the
settlors’ children for purposes of taking advantage of the maximum annual gift tax
exclusion provided for in IRC Section 2503, or any successor statute, the trustee, the
attomey in fact, or the conservator may make such gifts on behalf of the surviving settlor
provided:
(1) If such gifts ere madé in any one, or more years, 2n equal amount shall be
given to each of the settlors’ children for the year. A gift to the’spouse ofa child
while the child and the spouse are merried, or to the issue of a child then living or
orto the issue of a child then deceased shall be the same es a gift to the child for
purposes of determining whether the amounts given to each child each year af
equal.
Page 6 of 23 pages.€ , €
(2) The surviving settlor does not object to the gift.
. (3) The gift(s) are made from accumulated income for the year it is made in.
(4) Any distributions made by a frustee, amt attorney in fact, or a conservator under
the provisions of this subparagraph shall be accompanied by a written notice to the
distributes identifying the distribution as "a gift pursuant to Section 5.05(c)" of
this trust. .
So long as the foregoing conditions ere met, any annual gift to a child that is acting 2s
trustee or as the attorney in fact for the surviving settlor under a power of attorney or 25 a
conservator for the surviving settlor shall not be considered self-dealing or in any other
way a violation of the trustee’s, or attomey in facts, or conservator’s fiduciary duties to
the surviving settlor or thé beneficiaries of this marital deduction trust. |
Nothing herein contained shall be construed to apply to the surviving settlor, who may
make such gifts. in such amounts and to such persons 2s the surviving settlor may choose.
Additionally, nothing herein shall be construed to require any trustee, any attomey in fact
for the surviving settlor undera power of attorney or any conservator of for the surviving
- settlor to meke any one, or more, such gifts.
(d) On the death of the surviving settlor, the trustee may pay any death taxes and the
expenses of the last illness and funeral of the surviving settlor out of the principal of the
marital deduction trust, unless the trustee determines that other adequate provisions have
been made for payment of these expenses. . _ ot
(c) Onrthe death of the surviving settlor, the trustee shall distribute the marital deduction’ + |
trust property then remaining, including all principal and undistributed income, to the :
person, persons, or en ities, including the estate of the surviving settlor, on such terms and
conditions, either outright or in trust, or by creating further powers of appointment, as the
surviving settlor shall appoint by his or her valid last will specifically referring to and
exercising this power of appointment. The trustes may rely upon any instrament admitted
to probate es the last will of the surviving settlor in camying out the terms of the power of
“appointment and shall not be liable for any good faith ect in reliance upon thet will, even if
it is later determined to be invalid with respect to its purported exercise of this power of
appointment. In the event the will of the surviving settlor is not offered for probate, the
trustee may make an independent determination with respect to the validity of the will end
whether or not the will has effectively exercised this power of appointment. If the tustes
receives no notice of the existence of a will of the surviving settlor within six months after
the death of the surviving settlor, the trustee mey distribute the marital deduction trust ,
= aggets and income asif this power of appointment had not been exercised, and shallin that
event be conclusively presumed to have acted in good faith, even ifa valid will is leter
discovered. :
Page 7 of 23 pages.Be fC — «
(e) Ifany property subject to the foregoing power of eppointment is not effectively
appointed by the surviving settloz, that property, after any payment of taxes, debts, and
expenses pursuant to the applicable provisions of this instrament, the trustee shall divide
the remaining marital deduction tnist estate into shares the total number of which shares
shall be equal to the total number of children of the settlors then living plus children of the
settlors then deceased leaving issue then living. The trustee shall distribute each child’s
share to that child and each deceesed child’s share to the issue of the deceased child by
right of representation. Lfany distributes has not attained the age of 18 years, the share of
that distributee shall be distributed to his or her legal guardian or to any competent adult
with whom said distributee is living 2s determined by the trustee in the trustee's sole
discretion.
(f If at the time of | the surviving settlors” death all the children of the settlors and issue of
._ deceased children have died, the trustee shall distribute the balance of the marital
deduction trust property outright to the heirs of the'settlors.
5.04. Disclaimer of Property. Any property or portion of property that is discleimed by the
surviving settlor shall be held, administered, and distributed according to the terms of the
Disclaimer Trust. However, if the surviving settlor also disclaims an interest in all or any portion
of the Disclaimer Trust, the disclaimed interest shall be administered and distributed as if the
surviving settlor predeceased the deceased settlor. : :
5.05. Treatment of Disclaimer Trust.
(a) During the lifetime of the surviving settlor, the mistee shall hold, administer, and
distribute the assets of the disclaimer trust as follows:
(1) The trustee shall pay to or apply for the benefit of the surviving settlor, for life,
-all of the net income of the disclaimer trest, in monthly or other convenient
installments as agreed upon by the surviving settlor and the trustee, but not less
often than ennually. .
(2) The trustes shall distribute to or apply for the benefit of the surviving settlor,
for life, as much of the principal of the disclaimer trust as the trustes, in the
trustes's discretion, deems necessary for the surviving settlor's health, education,
support, and maintenance. All decisions of the trustee regarding payments under
this subparagraph, if any, shall be within the trustee's discretion and shall be final
and incontestable by enyone. :
(3) From time to time during the lifetime of the surviving settlor, the Trustee shall
distribute all or any part of the disclaimer trust, including acemed income and
undistributed income, to the person or persons appointed by the surviving settlor
from among any ons, or more, of the following children end grandchildren of the
Page § of 23 pages.” Af . OC
settlors: Susan Elizabeth Mounier (nee Christman), Robert Steven Christman,
Cynthia Marie Granade (nes Christman) or the issue of any such child that has
died. This power of appéintment is exercisable by the surviving settlor alone and
in all events, and shall be in the amounts or proportions, on and on such terms and
conditioné, as the surviving settlor shall appoint in the lest wnrevoked written
Qare instrument other then 2 Will executed and acknowledged by the surviving settlor
and filed with the Trustee, specifically referring to and exercising this power of
xO 9 appointment. Except to the extent that property or en interest in property shall
WPL previously have been transferred or become distributable pursuant to an exercise of
a _ this power, eny such exercise may be revoked by an instrument other than a Will
executed and acknowledged by the surviving settlor, filed with the Trustee,
specifically referring to this power of appointment and the exercise to be revoked,
and making an alternative exercise of the power. ‘The trustee shall deduct the early
distribution, valued on the date that distribution wes. made,-without interest, from
the shere ultimately distiibuted to that apgointee.“If | for’ any reason, any of the
property subject to this power of appointment is not effectively appointed by the
surviving settlor, that property shall be continue to be held and administered as
-provided in subparagraphs (b) of this Section 5.05. Nothing contained here shall
be-construed to require the surviving settlor to exercise the foregoing power of
appointment oxi behalf of any one, or more, of the zppointees, or to make
"appointments in equal shares. . no
(b) Upon the death of the surviving settlor, the trustee shell divide the remaining assets of
the disclaimer trust into equal shares comprised of one shere for each of the following of
settlors’ children then living or children then deceased leaving issue then living: Susan
Elizabeth Mounier (nee Christman), Robert Steven Christman, Cynthia Marie Granade
(nee Christman). The amounts allocated to each such child’s share and the issue then
living of each such. deceased child, including adjustments for early distribution provided
for in subparagraph (a)(3) above, shall be distributed outright to those children and
outright by right of representation to the issue of those predeceased children.
(c) If at the time of the surviving settlors’ death all the above-named children of the
settlors and the issue of those children have died, the-trustee shall distribute the balance of
the disclaimer trust property outright to the heirs of the settlors.
5.06, Release, Disclaimer, or Restriction of Power of Appointment. Notwithstanding any
other provision of this instrament, any power of appointment created by this instrument, whether
exp
Preview
mA SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Document Scanning Lead Sheet Jan-20-2009 3:42 pm Case Number: PTR-09-292025 Filing Date: Jan-20-2009 3:39 Juke Box: 001 Image: 02376356 SUBSEQUENT PROBATE PETITION * THE DISCLAIMER TRUST ESTABLISHED UNDER THE PAUL AND RUTH CHRISTN 001P02376356 instructions: Please place this sheet on top of the document to be scanned, TE SSaft ratte Te RAMSBACHER PROKEY LLP Ne Bod John W, Prokey, Esq., SBN: 205184 IAN 20 OF Sp Dennis I. Leonard, Esq., SBN: 216990 Gorn, 2009 125 South Market Street, Suite 1150 by Kel} San Jose, California 95113 a Li, Clear; Telephone: (408) 293-3616 OSD Om Fax: (408) 293-0430 Attorneys for Petitioner, ELVIRA J. ORLY, Trustee SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO In the Matter of Case No.: 09-292025 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNC The DISCLAIMER TRUST, established under the Paul and Ruth Christman 2001 Revocable Trust, dated March 6, 2001 [Probate Code §§ 15409 and 17200(b)(13), Civil Code §§ 3399-3402] Date: MAR 18 2009 Time: Dept: | PROBATE DER, Judge: $:00A.M., RM aN Petitioner, ELVIRA J. ORLY, as Trustee of the DISCLAIMER TRUST, established Ne ee eee ee under the Paul and Ruth Christman 2001 Revocable Trust, dated March 6, 2001 (the “Disclaimer Trust”), with a trust administration situs of the City and County of San Francisco, California, presents her verified Petition for Order Approving Modification and Reformation of Trust Terms Nune Pro Tunc and Reformation of Disclaimer Nunc Pro Tunc (the “Petition”), and respectfully requests that the Court enter an order pursuant to its authority under California Probate Code § 15409 and California Civil Code § 3399 to modify and reform the terms of the NN $$$ 1 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNCCc € Disclaimer Trust, and reform the terms the Disclaimer of Interest executed by RUTH CHRISTMAN on December 15, 2001 (the “Disclaimer”). Petitioner hereby alleges as follows: BACKGROUND INFORMATION 1. The day-to-day administration of the Disclaimer Trust is conducted in the City and County of San Francisco, California, making venue in San Francisco County proper under California Probate Code § 17005, 2. This petition concems the intemal affairs of the Disclaimer Trust, giving this Court subject matter jurisdiction under Califomia Probate Code § 17000. Petitioner petitions the Court under California Probate Code § 17200(b)(13) to: (a) modify and reform the provisions of the Disclaimer Trust pursuant to California Probate Code § 15409 and Califomia Civil Code § 3399; and (b) reform the provisions of the Disclaimer pursuant to California Civil Code § 3399, 3. On March 6, 2001, PAUL R. CHRISTMAN, also known as Paul Robert Christman (hereinafter referred to as “PAUL”), and RUTH R. CHRISTMAN, formerly known as Ruth Rattan (hereinafter referred to as “RUTH”), in their capacity as settlors and as trustees (referred to herein as “Settlors” or “Trustees” as the context dictates), executed a written declaration of trust (hereinafter the “Trust Declaration”) establishing the Paul and Ruth Christman 2001 Revocable Trust (hereinafter the “Trust”). Attached hereto as Exhibit A and incorporated herein by reference is a true and correct copy of the Trust Declaration. 4. PAUL died on April 22, 2001, in the City of Sacramento, County of Sacramento, State of California, and was a resident of the County of Sacramento at the time of his death. PAUL was survived by his spouse, RUTH. RUTH dicd on November 25, 2007, in the City of Carmichael, County of Sacramento, State of California, and was a resident of the County of Sacramento at the time of her death. NN 2 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND: REFORMATION OF DISCLAIMER NUNC PRO TUNCCc € 5. Pursuant to the terms of the Trust Declaration, upon PAUL’s death RUTH became the sole Trustee of the Trust and all trusts created under the Trust Declaration, RUTH accepted her appointment as sole Trustee as of April 22, 2001, and served in such capacity until her resignation on May 30, 2007. 6. In accordance with that certain Resignation of Trustee attached as Exhibit B, upon the resignation of RUTH as sole Trustee, ELVIRA J. ORLY and GENE HUME became the successor Co-Trustees of the Trust and all trusts created under the Trust Declaration, including the Disclaimer Trust. ELVIRA J. ORLY and GENE HUME accepted their appointments as successor Co-Trustees on June 1, 2007. GENE HUME resigned as a Co-Trustee on November 25, 2008 pursuant to that certain resignation attached as Exhibit C. ELVIRA J. ORLY has served in her capacity first as a Co-Trustee and now is the currently acting sole Trustee of the Trust and all trusts created under the Trust Declaration. 7. The Trust Declaration provides that, following the death of PAUL, the assets of the Trust, other than those disclaimed by RUTH, were to be distributed to a new trust created and administered pursuant to the terms of the Trust Declaration. Such new trust is known as the Marital Deduction Trust. 8. Section 5.04 of the Trust Declaration provides that if RUTH disclaimed any assets, then the Trustee was directed to establish the “Disclaimer Trust” and allocate the disclaimed assets thereto. The Disclaimer Trust is an irrevocable trust. 9 On November 15, 2001, RUTH executed the Disclaimer. Pursuant to the Disclaimer, RUTH disclaimed all interest in: “A $372,501 fractional interest of a fifty per cent (50%) undivided tenancy in common interest in residential real property valued at $1,925,000 on Paul R. Christman estate tax return and located in the County of Sonoma, State of California, commonly known as 750 Gull Drive, Bodega Bay, California, more particularly described as : Lot 1, Block 41, as numbered and designated upon the map entitled, ‘Bodega 3 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNC21 23 28 € C Harbour Unit No. 3, Tract No. 434, ete,’ filed October 30, 1973 in the office of the County Recorder, in Book 200 of Maps, pages 1 through 22, Sonoma County Records. Assessor Parcel No. 100-360-03.” Attached hereto as Exhibit D and incorporated herein by reference is a true and correct copy of the Disclaimer. 10. The provisions of the Disclaimer Trust are enumerated in Section 5.05 of the Trust Declaration as follows: “5.05. Treatment of Disclaimer Trust. {a) During the lifetime of the surviving settlor, the trustee shall hold, administer, and distribute the assets of the disclaimer trust as follows: (1) The trustee shall pay to or apply for the benefit of the surviving settlor, for life, all of the net income of the disclaimer trust, in monthly or other convenient installments as agreed upon by the surviving settlor and the trustee, but not less often than annually. (2) The trustee shal! distribute to or apply for the benefit of the surviving settlor, for life, as much of the principal of the disclaimer trust as the trustee, in the trustee’s discretion, deems necessary for the surviving settlor’s health, education, support, and maintenance. All decisions of the trustee regarding payments under this subparagraph, if any, shall be within the trustee’s discretion and shall be final and incontestable by anyone. (3) From time to time during the lifetime of the surviving settlor, the Trustee shall distribute all or any part of the disclaimer trust, including accrued income and undistributed income, to the person or persons appointed by the surviving settlor from among any one, or more, of the following children and grandchildren of the settlors: Susan Elizabeth Mounier (nee Christman), Robert Steven Christman, Cynthia Marie Granade (nee Christman) or the issue of any such child that has died. This power of appointment is exercisable by the surviving settlor alone and in all events, and shall be in the amounts or proportions, on and on such terms and conditions, as the surviving settlor shall appoint in the last unrevoked written instrument other than a Will executed and acknowledged by the surviving settlor and filed with the Trustee, specifically referring to an exercising this power of appointment. Except to the extent that property or an interest in property shall previously have been transferred or become distributable pursuant to an exercise of this power, any such 4 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNC.Cc C exercise may be revoked by an instrument other than a Will executed and acknowledged by the surviving settlor, filed with the Trustee, specifically referring to this power of appointment and the exercise to be revoked, and making an alternative exercise of the power. The trustee shall deduct the early distribution, valued on the date that distribution was made, without interest, from the share ultimately distributed to that appointee. If, for any reason, any of the property subject to this power of appointment is not effectively appointed by the surviving settlor, that property shall be continue to be held and administered as provided in subparagraph (b) of this Section 5.05. Nothing contained here shall be construed to require the surviving settlor to exercise the foregoing power of appointment on behalf of any one, or more, of the appointees, or to make appointments in equal shares. (b) Upon the death of the surviving settlor, the trustee shall divide the remaining assets of the disclaimer trust into equal shares comprised of one share for each of the following of settlors’ children then living or children then deceased leaving issue then living: Susan Elizabeth Mounier (nee Christman), Robert Steven Christman, Cynthia Marie Granade (nee Christman). The amounts allocated to each such child’s share and the issue then living of each such deceased child, including adjustments for early distribution provided for in subparagraph (a)(3) above, shall be distributed outright to those children and outright by right of representation to the issue of those predeceased children, (©) Ifat the time of the surviving settlors’ death all the above-named children of the settlors and the issue of those children have died, the trustee shall distribute the balance of the disclaimer trust property outright to the heirs of the settlors.” SETTLORS’ INTENT AND DEFECTED PURPOSE OF THE DISCLAIMER TRUST 11. The Trust was established by PAUL and RUTH as Settlors for their benefit during their joint lifetimes and for the benefit of the survivor of them upon the death of the first Settlor to die. As described more fully in the Declaration of Peggy A. Moger, attached as Exhibit E and incorporated herein by this reference, the Settlors’ intent was to provide the surviving settlor with maximum benefit of the scttlors’ assets, while allowing use of the deceased settlor’s applicable exclusion amount from estate tax (estate tax exemption). Peggy A. Moger was the Settlors’ estate planning attorney. 12. The disclaimer provision and creation of the Disclaimer Trust was intended to allow the a 5 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNCsurviving settlor to: (i) use the deceased spouse’s estate tax exemption; and (ii) exclude the assets of the Disclaimer Trust from the surviving settlor’s gross estate for estate tax purposes. See Exhibit E, Paragraph 3. In short, this allowed the surviving settlor to reduce the overall estate taxes at the death of the surviving settlor. 13. However, Section 5.05(a)(3) of the Trust Declaration applicable to the Disclaimer Trust granted the surviving settlor (i.e. RUTH) the right to appoint the assets of the Disclaimer Trust to certain children and grandchildren of the Settlors. Petitioner is concerned that this powcr may not be limited by an ascertainable standard. 14, Treasury Regulation § 25.2518-2(e)(2) provides as follows: “Disclaimer by surviving spouse. - In the case of a disclaimer made by a decedent’s surviving spouse with respect to property transferred by the decedent, the disclaimer satisfies the requirements of this paragraph (e)(2) if the interest passes as a result of the disclaimer without direction on the part of the surviving spouse either to the surviving spouse or to another person. If the surviving spouse, however, retains the right to direct the beneficial enjoyment of the disclaimed property in a transfer that is not subject to Federal estate and gift tax (whether as trustee or otherwise), such spouse will be treated as directing the beneficial enjoyment of the disclaimed property, unless such power is limited by an ascertainable standard. See examples (4), (5), and (6) in paragraph (e)(5) of this section.” 15. If the power of appointment granted to the surviving settlor pursuant to Section 5.05(a)(3) of the Trust Declaration is not limited to an ascertainable standard the Disclaimer Trust will be includible in the surviving settlor’s estate. 16. Since there is an ambiguity as to whether the terms of the Trust Declaration match the intent of the Settlors, Petitioner believes the Trust Declaration contains a scrivener’s error and seeks an Order from this Court to clarify the terms of the Trust Declaration. 17. As stated above, Exhibit E attached hereto is a declaration by the Settlors’ estate planning attorney, Peggy Ann Moger. In her declaration, submitted under penalty of perjury, Ms. Moger declares the Settlors’ intent regarding disclaiming assets and creating the Disclaimer ee 6 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNCTrust was: (i) to allow use of the deceased spouse’s estate tax exemption; and (if) to exclude the assets of the Disclaimer Trust from the surviving Settlor’s gross estate for estate tax purposes. Since the provisions of the Trust Declaration may not accomplish this, specifically Section 5.05(a)(3) applicable to the Disclaimer Trust, Ms. Moger declares that the Trust Declaration contains a scrivener’s error attributable to the mutual mistake of the Settlors that does not truly reflect their joint intent. Ms. Moger also declares that the Disclaimer contains a scrivener’s error because it does not disclaim any power of appointment granted to RUTH in excess of an ascertainable standard, 18. RUTH, as the surviving Settlor, never exercised the power of appointment granted to her by Section 5.05(a)(3) of the Trust Declaration applicable to the Disclaimer Trust. AUTHORITY TO MODIFY AND REFORM 19. Pursuant to California Probate Code § 15409(a), the Court may modify the administrative or dispositive provisions of a trust if, owing to circumstances not known to the Settlors and not anticipated by the Settlors, the continuation of the trust under its present terms would defeat the purpose of the Trust. 20. Pursuant to California Civil Code § 3399 - 3402, the Court, on application of an aggrieved party, may revise a written contract that does not truly express the intention of the parties so as to express that intention upon mutual mistake of the parties. 21. The Court has broad statutory and common-law equity authority to modify or reform documents to accomplish their intended purposes, provided a peculiar or exceptional circumstance makes such modification or reformation necessary and there is some expression of the purpose of the document. Moxley v, Title Ins. & Trust Co., 27 Cal.2d 457 (1946); Ike v. Doolittle, 61 Cal.App.4th 51 (1998). 22. Such modification and reformation are appropriate to effectuate the common intention of the parties when that intention was incorrectly reduced to writing. Getty v. Getty, 187 a 7 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNCCal.App.3d 1159 (1986); First Am. Tilte Ins. & Trust Co. v. Cook, 12 Cal.App.3d 592 (1970); Stafford v. California C.P. Growers, 11 Cal.2d 212 (1938). 23. Petitioner desires to modify and reform the Disclaimer Trust nunc pro tune as provided herein because Petitioner is concemed that the Settlors’ intent to transfer assets to the Disclaimer Trust and exclude such assets from the surviving Settlor’s taxable estate may not be accomplished by the Trust Declaration as currently written. As drafted, it is unclear as to whether the Trust Declaration adequately reflects the Settlors’ intentions in reducing the Trust Declaration terms to writing; thus Petitioner believes the Trust Declaration contains a scrivener’s error. Therefore, owing to circumstances not known to the Settlors and not anticipated by the Settlors, the continuation of the trust under its present terms may defeat the purpose of the Disclaimer Trust, i.e.: (i) to allow use of the deceased spouse’s estate tax exemption; and (ii) to exclude the assets of the Disclaimer Trust from the surviving settlor’s gross estate for estate tax purposes. 24. Similarly, Petitioner seeks to reform the Disclaimer nunc pro tunc because as it is written, it may not reflect RUTH’s intent to disclaim in a manner that would: (i) allow use of PAUL’s estate tax exemption; and (ii) exclude the assets of the Disclaimer Trust from RUTH’s gross estate for estate tax purposes. The Disclaimer contains a scrivener’s error because, by its terms, RUTH does not also disclaim the relevant part of the power of appointment over the Disclaimer Trust granted to her, REQUESTED RELIEF 25. Petitioner seeks court modification and reformation of the Trust Declaration nune pro tune in order to correct such scrivener’s error effective as of the date the Trust Declaration was executed. 26. Petitioner seeks modification of the Trust Declaration as applicable to the Disclaimer Trust nunc pro tune by adding the following sentence to the end of Section 5.05(a)(3) of the Trust Declaration: a 8 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNC“Notwithstanding the foregoing, the surviving settlor may only exercise this power of appointment to or for the benefit of the objects of such power for their health, support, education or maintenance.” 27. Petitioner believes the requested modification and reformation is the least intrusive means of modifying Section 5.05(a)(3) of the Trust Declaration while still accomplishing the intent of the Settlors. 28. Petitioner also seeks court reformation of the Disclaimer nunc pro tunc in order to correct the scrivener’s error effective as of the date the Disclaimer was executed. 29. Petitioner seeks modification of the Disclaimer nunc pro tunc by adding the following paragraph to the end of the Disclaimer: “] also disclaim the power of appointment granted to me over the DISCLAIMER TRUST, established under the Paul and Ruth Christman 2001 Revocable Trust, dated March 6, 2001, except to the extent it is limited to an ascertainable standard.” 30. Petitioner believes the requested reformation is the least intrusive means of modifying the Disclaimer while still accomplishing RUTH’s intent. NOTICE AND CONSENT, 31. The persons to whom notice of this petition should be provided pursuant to California Probate Code § 17203 are all trustees and all beneficiaries of the Disclaimer Trust as follows: Name and Address Age Relationship Elvira J. Orly, Esq. Adult Successor Trustee 115 Sansome Street Suite 1400 San Francisco, CA 94104 Se 9 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNC1||Name and Address . Age Relationship Susan Elizabeth Christman Adult Daughter of Settlors, 177 Miller Avenue Beneficiary Mill Valley, CA 94941 Robert Steven Christman Adult Son of Settlors, Beneficiary 1840 Goose Creek Court lone, CA 95640 Cynthia Marie Granade Adult Daughter of Settlors, 7501 Brandon Road Beneficiary Shingle Springs, CA 95682 32. Susan Elizabeth Christman, Robert Steven Christman, and Cynthia Marie Granade constitute all remaining beneficiaries of the Disclaimer Trust. 33. All remaining beneficiaries, current and remainder, of the Disclaimer Trust have consented to modification and reformation of the Disclaimer Trust and reformation of the Disclaimer as provided herein, and have consented to this Petition and Waived Notice of Hearing on this Petition as evidenced by the individual “Consent to Modification and Reformation of Trust and Reformation of Disclaimer and Waiver of Notice” forms attached hereto, collectively marked as Exhibit F and made a part hereof. 34. No request for special notice has been filed in this proceeding, WHEREFORE, Petitioner requests an order of the Court to: A. Approve modification and reformation of the DISCLAIMER TRUST, established under the Paul and Ruth Christman 2001 Revocable Trust, dated March 6, 2001, as set forth in this Petition, and order such modification and reformation nun pro tunc, i.e. effective as of the Trust Declaration’s execution. B. Approve reformation of the Disclaimer of Interest executed by RUTH CHRISTMAN dated December 15, 2001, as set forth in this Petition, and order such reformation nun pro tunc, 10 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNCie. effective as of the Disclaimer of Interest’s execution. Cc. Make such other orders that the Court may deem proper. pwc acy ZO 2009 RAMSBACHER PROKEY LLP Attorney for Petitioner a > 1d | Dated: OSA _ 2009 By:_* DENNIS I. LEONARD, ESQ. Attorney for Petitioner a 11 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNCVERIFICATION I, ELVIRA J. ORLY, declare: I am the Petitioner and Successor Trustee of the DISCLAIMER TRUST, established under the Paul and Ruth Christman 2001 Revocable Trust, dated March 6, 2001; and I have read the foregoing PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF matters stated to be on information and belief, and as to those matters I believe them to be true. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration is executed on the QO day of Nossa 2009, staan Req acisea_, California. 12 PETITION FOR ORDER APPROVING MODIFICATION AND REFORMATION OF TRUST TERMS NUNC PRO TUNC AND REFORMATION OF DISCLAIMER NUNC PRO TUNC nS ATT ST TTExhibit ANe (Cc ae ’ * DECLARATION OF TRUST ARTICLE: Creation of Trust 1,01. Declaration. PAUL R. CHRISTMAN (also known as Paul Robert Christman) end RUTH R. CIIRISTMAN (born Ruth Rattan), husband and wife, of 5220 Buena Vista Avenue, Fair Oaks, California 95628 (the “trustees") hereby declare that they have received certain property (the "trust estate") from PAULR. CHRISTMAN and RUTH R. CHRISTMAN, husband and wife, ‘5220 Buena Vista Avenue, Fair Oaks, California 95628 (the "settlors"), end hold that property in trust, to be held, administered, and distributed according to the terms of this instrument. _ : 4.02. Name of Trust. The name of the trust created by this instrument shall be the “Paul and * Ruth Christman 2001 Revocable Trost. ee 1.03. Effective Date. This declaration shall be effective immediately upon execution by all of the parties. . . 1.04. Children. The settlors have four (4) adult living children, whose names and dates of birth are as follows: : . . ame. . : Date of Birth Paul David Christman - March 17, 1952 t Susan Elizabeth Mounfer June 27, 1950 (nee Christman) . Robert Steven Christman October 17, 1958 Cynthia Marie Granade April 18, 1955 (nee Christman) : Neither settlor hes any deceased children, any adopted children, or any step-children. ARTICLE 2: Trust Estate 2.01. Definition of Trust Estate. All of the property described in Schedule A, attached to this instrument, and any other property that may hereafter be subject to this trust, is referred to in this instrument zs the “trust estate,""and shall be held, administered, and distributed 2s provided in this © - instrument. 2.02. Character of Trust Assets. All community property of the settlors transferred to this trust, and thie proceeds of all such property, shall continue to be the community property of the settlors under the laws of California. All separate property shall remain the separate property, and all quasi-community property shall remain the quasi-community property, of the contributing Page 1 of 23 pages. EXHIBIT A€ 7 at . gettlor. The settlors declare that all the property described in Schedule A as of the execution of this instrument is community property end intend to, and do hereby by executing this instrument, transmute any such identified property to commimity property if the same is held of record in another form (including but not limited to, tenants {a common, joint tenancy, joint tenancy with right of survivorship, and so on).or held of record in only one of the two settlors names. Further, this declaration is, to the extent required by law, intended to change the characterization and ownership of the property, whether real or person, described in Schedule A pursuant to the requirements for transmutation set forth in California Family Code Section 852 or any successor statute thereto. , 2.03, Additions to Trust. From time to time, the trustee may accept additions to this trust from any source. Any additions to the trust shall be made by designating in writing the property to be added, or by titling any account, deed, or similar asset in the name of the trustee, as trustee of this _ trust, or any alternate or successor trustee acting under this instrument. -During any time that “neither settlor is serving as trustee or cotmif¢e of this trust, any ‘transfer of property to the trust under this paragraph shall be effective only upon written acceptance by the trustee. Any designation by a third party, whether by will, deed, account title designation, or similar transfer, shall also be a transfer to the trust estate upon written acceptance by the trustee. Any property added to the trust estate shall be held, administered, and distributed in accordance with the terms” of this instrument. . ARRTICLE 3: Rights atid Powers of Settlors 3,01. Powers of Revocation and Amendment While Both Settlors Are Living. During the joint lifetimes of the settlors, this trust may be revoked or terminated, in whole or in part, by either settlor as to any separate and quasi-community property of that settlor and any community property of the settlors, This trust may be modified or amended by either settlor acting alone as to any separate and quasi-community property of that settlor, end-by both spouses acting jointly 2s to any community property of the settlors. . co 3.02, Revocation and Amendment After Death of Deceased Settlor. Aftér the death of the deceased settlor, the surviving settlor may at any time zmend, revoke, or terminate any trust “created by this instrument, other then the Discleimer Trust, which shall bs irrevocable and not subject to anendment. Upon the death of the surviving settlor, every trust created by this - instrument shall be irrevocable and not subject to amendment. 3.03. Method of Revocation or Amendment. Any amendment, revocation, or termination shall be made only by a writing signed by the amending or revoking settlor or settlors and delivered to the trustee in person or by certified mail. Ifthe writing is signed by only one settlor and the other settlor is living, a copy of the writing shall also be delivered to the other settlor in person or by certified mail. . . 3.04, Delivery of Property After Revocation. Promptly upon receipt of eny writing revoking Page 2 of 23 pages.° € or terminating the trust as to any community property forming part of the trust estate, the trustee shall deliver the affected property to the settlors or to a person or persons designated by both - settlors in that writing to receive the property. Unless otherwise provided in the revocation or this trust instrument, eny community property so returned shall continue to be the community property of the settlors, Promptly upon receipt of any writing revoking or terminating the trust as to any separate or quesi-community property of either settlor, the trustee shall deliver the affected property to the revoking settlor or to a persoa or persons designated in that writing to rece{ve the property. | . 3.05. Power to Direct Investments While Both Settlors Are Living. While both settlors are living, the settlors shall have the power from time to time to direct the trustee to do any or all of the following: (a) Invest trust funds in specified secuities, properties, or other forms of investment; (b) Retain specified sechuites proputies, or other forms of investment held in trust under this instrament; and (c) Sell, encumber, lease, abandon, or dispose of any trust property. Directions with respect to any portion of the trust estate that is the community property of the settlors may be given only by a writing signed by both settlors. Directions with respect to any portion of the trust estate that is separate or quasi-community property of one settlor may be given by a writing signed by that settlor alone. Ifa direction is to remain in effect for a specified period of time only, or to be subject to any other condition or conditions, the writing must specify the period of time and the condition or conditions. If trust property is invested in accordance with any direction given as specified in this paregraph, the trustee shall not be liable for losses sustained as a direct or indirect result of the trustee's compliance with the direction. 3,06, Power to Direct Investments After Death of Deceased Settlor. After the death of the deceased settlor and while the surviving settlor is living, the surviving settlor shall have the power - from time to time to direct the trustee to sell, exchange, or invest property of eny trust created imder this instrument, except the Disclaimer Trust, No person shall have the power to direct the trustes to invest property of the Disclaimer Trust. Any direction given to the trustee shall be in writing and signed by the surviving settlor. Ifa direction is to remain in effect for a specified period of time only, or to be subject to any other condition or conditions, the writing must specify the period of time and the condition or conditions. If trust property is invested in accordance with any direction given es specified in this paragraph, the trustee shall not be liable for losses sustained 25 a direct or indirect result of the trustee's compliance with the direction. After the death of the surviving settlor, no person shall have the power to direct the trustee to invest any trust property. 3.07. Power to Borrow From Trust Estate While Both Settlors Are Living. While both settlors are living, the settlors shall have the power to borrow from the income or principal of the Page 3 of 23 pages.= . (C . a iiust éstate, with or without security, as provided in this paragraph. Any loan from any portion of the trust estate that is the community property of the settlors may be made only by a writing + signed by both settlors, filed with the trustee, and specifying the emount and terms of the loan. Any loan from any portion of the trust estate that is the sepzrate or quasi-community property of one of the settlors may be made only by a writing signed by thet settlor, filed with the trustee, and specifying the amount and terms of the Ioan. ° 3,08. Power to Borrow From Trust Estate After Death of Deceased Settlor. After the death of the déceased settlor, the surviving settlor shall have the power to borrow from the income or principal of any trust created under this instrument, except the Disclaimer Trust. Any such loan may be made only by a writing signed by the surviving settlor, filed with the trustee, and * specifying the amount end terms of the loan. 3.09. Exercise of Settlors' Rights and Powers by Others. Notwithstanding any other provision * bf this instrument, zny right or pdwer that either settlor ould exercise personally under the terms of this instrument, including the power to amend, revoke, or terminate any. trust created by this instrument, may be exercised for and on behalf of that settlor by any attomey in fact who, at the . tirne of the exercise, is duly appointed end acting for that settlor under a valid and enforceable durable power of attomey executed by that settlor ‘under the Uniform Durable Power of Attomey Act, or any successor statute; or, if there is no such attomey in fect, by a duly eppointed and acting conservator of that settlor, after petition to the court in accordance with California Probate Code Section 2580, or any successor statute; provided, however, that the power to amend, revoke, or terminate any trust created by this instrument, in whole or in part, may be exercised for or on behalf of that selflor by an attomey in fact or conservator only if, ‘distribution of that settlor’s estate during that settlor'slifetirne is not substantially altered by the amendment, revocation, or termination, and the amendment, revocation, or termination does not result in any adverse tax consequences to that settlor's estate. ARTICLE 4: Payments and Distributions’ While Both Settlors Are Living 4.01. Payments of Income From Community Property. While both settlors are living, the trustee shall pay to or apply for the benefit of the settlors, or either of them, 2s much of the net income of the conunuaity property of the trust as the settlors, or either of them, shall from time to time request of the trustee in writing. A request pursuant to this paragraph may specify that payments are to be made periodically. 4,02, Payments of Income From Separate and Quasi-Community Property. While both settlors are living, the trustee shall pay to or epply for the benefit of a settlor whose separate or quasi-community property constitutes part of the trust estate as much of the net income of that property as the settlor shall from time to time request of the trustee in writing. A request pursuant to this paragraph may specify that payments art to be made periodically. Page 4 of 23 pages.C t€ 4.03. Distributions of Principal From Community Property. ‘While both settlors ars living, the trustee shall distribute to or apply for the benefit of the settlors, or either of them, 2s much of -the principal of the community property of the trust, up to the whole thereof, as the settlors, or either of them, shall ftom time to time request of the trustee in writing. A request pursuant to this paragraph may specify that distributions ere to be mails periodically. Any money or other . property paid or distributed to or for the benefit of the settlors, or either of them, from the community property of the trust shall remain the community property of the settlors. A settlor who receives any such property shell have the same obligations with respect to that property that he or she would have with respect to community property generally. . 4.04, Distributions of Principal From Separate and Quasi-Community Property. While both settlors are living, the trustee shall distribute to or apply for the benefit of a settlor whose separate or quasi-community property constitutes part of the trust estate as much of the principal of that property, up to the whole thereof, as the settlor shall from time to time request of the trustee i writing. - A request ken to this paragraphimay specify that distributions are to be made periodically. . . 4,05. Requests on Settlor's Behalf, If, at eny time, either settlor is unable personally:to make a request of the trustee, the settlor's right to make the request may be exercised for or on behalf of, the settlor’by an attorney in fact who, at the time of the exercise, is duly appointed and acting for the settlor under a valid and enforceable durable power of attomey executed by the settlor under the Uniform Durable Power of Attomey Act, or amy successor statute; or, if there is no such attomey in fact, by the trustee acting for and on behelfof the settlor, The trustee shall have discretion to determine when the settlor is unable personally to rake a request for purposes of. this paragraph. ARTICLE 5: Payments and Distributions After Death of Deceased Settlor 5.01. Payment of Taxes. All death taxes payable by reason of the deceased settlor's death, whether attributable to assets of this trust or to assets outside the trust, shall be equitably prorated and apportioned among the persons interested in the settlor's estate as provided in the California Probate Code. However, payments under this paragraph shall be made only out of the deceased settlor's separate property or the deceased settlor's one-half interest in the community or quasi-community property and shall not be made from the surviving settlor’s property. 5.02. Payment of Debts and Expenses. All debts and expenses attributable to any property in the trust or the deceased settlor's estate may, in the trustee's discretion, be paid by the trustes out of the trust estate or equitably prorated and apportioned among the persons interested in the settlor’s estate in the same manner as the death texes. 5,03. Disposition of Trust Upon Death of Deceased Settlor (to Marital Deduction Trust). Upon the death of the eseased settlor, and after any distributions or payments under Paragraphs Page 5 of 23 pages.A , . { (C 5.01 through 5.02 of this instrument have been made, the trustee shall hold, administer, end distribute the assets of the trust (hereafter called the "marital deduction trust" for e2se of reference) as follows: "he oo . (a) The trustee shall pay to or apply for the benefit of the surviving settlor all of the net income of the marital deduction trust, in monthly or other convenient installments, 2s agreed upon by the surviving settlor and the trustee, but not less often than ennually. Any sther provision of this instrument to the contrary notwithstanding, in determining the net income of the marital deduction trust payable under this paragraph, the trustee shall include all income that must be considered as income to qualify the marital deduction trust for the federal estate tax marital deduction, and shall meke no deductions from gross income that would prevent the marital deduction trust from qualifying for that deduction. It is the intention of the settlors that the surviving settlor, as the beneficiary of a marital deduction trust, shall have substantially that degree of beneficial enjoyment ofthe marital deduction trust during his or her Iifetime thet the principlés of the Iaw of trusts accord to a person who is unqualifiedly, designated as the life beneficiary of a trust, end the trustee shall exercise the trustee's discretion in 2 manner that is consistent with this expressed intention. It is also the intention ofthe settlors that the marital deduction trust produce for the surviving settlor during his or her lifetime the income, or that the surviving settlor shall have the benefit of the martial deduction trust property, as is consistent with the value of the marital deduction trust property and with its preservation; provided, however, the trustee shall have the power to make gifts as provided in subpzragraph (c) of this Section 5.05. (b) ‘The trustee shall distribute to or apply for the benefit of the surviving settlor as much of the principal of the marital deduction trust, up to the whole thereof, as the surviving settlor shall from time to time request of the trustee in writing, A request pursuant to this paragreph may specify that distributions are to be made periodically. (c) If at anytime during the life of the surviving settlor, the trustee, an attorney in fect for the surviving éettlor or 2 conservator of the estete of the surviving settlor shall determine that it would be beneficial under the circumstances then existing to make gifts to the settlors’ children for purposes of taking advantage of the maximum annual gift tax exclusion provided for in IRC Section 2503, or any successor statute, the trustee, the attomey in fact, or the conservator may make such gifts on behalf of the surviving settlor provided: (1) If such gifts ere madé in any one, or more years, 2n equal amount shall be given to each of the settlors’ children for the year. A gift to the’spouse ofa child while the child and the spouse are merried, or to the issue of a child then living or orto the issue of a child then deceased shall be the same es a gift to the child for purposes of determining whether the amounts given to each child each year af equal. Page 6 of 23 pages.€ , € (2) The surviving settlor does not object to the gift. . (3) The gift(s) are made from accumulated income for the year it is made in. (4) Any distributions made by a frustee, amt attorney in fact, or a conservator under the provisions of this subparagraph shall be accompanied by a written notice to the distributes identifying the distribution as "a gift pursuant to Section 5.05(c)" of this trust. . So long as the foregoing conditions ere met, any annual gift to a child that is acting 2s trustee or as the attorney in fact for the surviving settlor under a power of attorney or 25 a conservator for the surviving settlor shall not be considered self-dealing or in any other way a violation of the trustee’s, or attomey in facts, or conservator’s fiduciary duties to the surviving settlor or thé beneficiaries of this marital deduction trust. | Nothing herein contained shall be construed to apply to the surviving settlor, who may make such gifts. in such amounts and to such persons 2s the surviving settlor may choose. Additionally, nothing herein shall be construed to require any trustee, any attomey in fact for the surviving settlor undera power of attorney or any conservator of for the surviving - settlor to meke any one, or more, such gifts. (d) On the death of the surviving settlor, the trustee may pay any death taxes and the expenses of the last illness and funeral of the surviving settlor out of the principal of the marital deduction trust, unless the trustee determines that other adequate provisions have been made for payment of these expenses. . _ ot (c) Onrthe death of the surviving settlor, the trustee shall distribute the marital deduction’ + | trust property then remaining, including all principal and undistributed income, to the : person, persons, or en ities, including the estate of the surviving settlor, on such terms and conditions, either outright or in trust, or by creating further powers of appointment, as the surviving settlor shall appoint by his or her valid last will specifically referring to and exercising this power of appointment. The trustes may rely upon any instrament admitted to probate es the last will of the surviving settlor in camying out the terms of the power of “appointment and shall not be liable for any good faith ect in reliance upon thet will, even if it is later determined to be invalid with respect to its purported exercise of this power of appointment. In the event the will of the surviving settlor is not offered for probate, the trustee may make an independent determination with respect to the validity of the will end whether or not the will has effectively exercised this power of appointment. If the tustes receives no notice of the existence of a will of the surviving settlor within six months after the death of the surviving settlor, the trustee mey distribute the marital deduction trust , = aggets and income asif this power of appointment had not been exercised, and shallin that event be conclusively presumed to have acted in good faith, even ifa valid will is leter discovered. : Page 7 of 23 pages.Be fC — « (e) Ifany property subject to the foregoing power of eppointment is not effectively appointed by the surviving settloz, that property, after any payment of taxes, debts, and expenses pursuant to the applicable provisions of this instrament, the trustee shall divide the remaining marital deduction tnist estate into shares the total number of which shares shall be equal to the total number of children of the settlors then living plus children of the settlors then deceased leaving issue then living. The trustee shall distribute each child’s share to that child and each deceesed child’s share to the issue of the deceased child by right of representation. Lfany distributes has not attained the age of 18 years, the share of that distributee shall be distributed to his or her legal guardian or to any competent adult with whom said distributee is living 2s determined by the trustee in the trustee's sole discretion. (f If at the time of | the surviving settlors” death all the children of the settlors and issue of ._ deceased children have died, the trustee shall distribute the balance of the marital deduction trust property outright to the heirs of the'settlors. 5.04. Disclaimer of Property. Any property or portion of property that is discleimed by the surviving settlor shall be held, administered, and distributed according to the terms of the Disclaimer Trust. However, if the surviving settlor also disclaims an interest in all or any portion of the Disclaimer Trust, the disclaimed interest shall be administered and distributed as if the surviving settlor predeceased the deceased settlor. : : 5.05. Treatment of Disclaimer Trust. (a) During the lifetime of the surviving settlor, the mistee shall hold, administer, and distribute the assets of the disclaimer trust as follows: (1) The trustee shall pay to or apply for the benefit of the surviving settlor, for life, -all of the net income of the disclaimer trest, in monthly or other convenient installments as agreed upon by the surviving settlor and the trustee, but not less often than ennually. . (2) The trustes shall distribute to or apply for the benefit of the surviving settlor, for life, as much of the principal of the disclaimer trust as the trustes, in the trustes's discretion, deems necessary for the surviving settlor's health, education, support, and maintenance. All decisions of the trustee regarding payments under this subparagraph, if any, shall be within the trustee's discretion and shall be final and incontestable by enyone. : (3) From time to time during the lifetime of the surviving settlor, the Trustee shall distribute all or any part of the disclaimer trust, including acemed income and undistributed income, to the person or persons appointed by the surviving settlor from among any ons, or more, of the following children end grandchildren of the Page § of 23 pages.” Af . OC settlors: Susan Elizabeth Mounier (nee Christman), Robert Steven Christman, Cynthia Marie Granade (nes Christman) or the issue of any such child that has died. This power of appéintment is exercisable by the surviving settlor alone and in all events, and shall be in the amounts or proportions, on and on such terms and conditioné, as the surviving settlor shall appoint in the lest wnrevoked written Qare instrument other then 2 Will executed and acknowledged by the surviving settlor and filed with the Trustee, specifically referring to and exercising this power of xO 9 appointment. Except to the extent that property or en interest in property shall WPL previously have been transferred or become distributable pursuant to an exercise of a _ this power, eny such exercise may be revoked by an instrument other than a Will executed and acknowledged by the surviving settlor, filed with the Trustee, specifically referring to this power of appointment and the exercise to be revoked, and making an alternative exercise of the power. ‘The trustee shall deduct the early distribution, valued on the date that distribution wes. made,-without interest, from the shere ultimately distiibuted to that apgointee.“If | for’ any reason, any of the property subject to this power of appointment is not effectively appointed by the surviving settlor, that property shall be continue to be held and administered as -provided in subparagraphs (b) of this Section 5.05. Nothing contained here shall be-construed to require the surviving settlor to exercise the foregoing power of appointment oxi behalf of any one, or more, of the zppointees, or to make "appointments in equal shares. . no (b) Upon the death of the surviving settlor, the trustee shell divide the remaining assets of the disclaimer trust into equal shares comprised of one shere for each of the following of settlors’ children then living or children then deceased leaving issue then living: Susan Elizabeth Mounier (nee Christman), Robert Steven Christman, Cynthia Marie Granade (nee Christman). The amounts allocated to each such child’s share and the issue then living of each such. deceased child, including adjustments for early distribution provided for in subparagraph (a)(3) above, shall be distributed outright to those children and outright by right of representation to the issue of those predeceased children. (c) If at the time of the surviving settlors’ death all the above-named children of the settlors and the issue of those children have died, the-trustee shall distribute the balance of the disclaimer trust property outright to the heirs of the settlors. 5.06, Release, Disclaimer, or Restriction of Power of Appointment. Notwithstanding any other provision of this instrament, any power of appointment created by this instrument, whether exp