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KEVIN URBATSCH, SBN 168380 a AUG 1.
JESSICA FARINAS, SBN 313766 Seay Oe CB a
THE URBATSCH LAW FIRM, P.C. Superior Court of cA Ay
3478 Buskirk Ave, Suite 300 County of Stanislaus
Pleagaivt Hill, CA 94523 Clerk of the Court
Tel.: (415) 593-9944 By: Juan Medina, Deputy
Fax: (925) 940-9588 .
jfarinas@Urbatsch.com $200.00pd
Attorneys for Martin Guzman Villalovos,
Petitioner and an Interested Person “Ths ease as been assaned to Juoge Stacy P Speiller _
epartment,22 tor an purposes inelusig Tia
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF STANLISLAUS
”
PTIR-20-3035 20
In re the Matter of CASE NO.: PR-20-000205
PETITION FOR ORDER ESTABLISHING
THE MARTIN GUZMAN SPECIAL { SPECIAL NEEDS TRUST; SETTING BOND;
AUTHORIZING INVESTMENT IN
NEEDS TRUST MUTUAL FUNDS AND BONDS WITH
MATURITY DATES GREATER THAN FIVE
YEARS; FOR INTERIM TRUSTEE FEES;
AND FOR ATTORNEYS FEES AND COSTS
(Probate Code §§ 3600, 3604)
DATE: April 9, 2020
TIME: 8:30 a.m.
DEPT: 22
LO
L INTRODUCTION
1. Petitioner, Martin Guzman, through his father, Martin Guzman Villalovos, seeks
to establish a special needs trust as authorized by 42 U.S.C. §1396p(d)(4)(A) to hold
the funds from his settlement. California law sets forth the procedure to establish a
special needs trust with séttlement proceeds. Pursuant to California Probate Code
§§3600-3613, Petitioner seeks the establishment of the Martin Guzman Special
Petition to Est
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Needs Trust (hereinafter referred to as the “Trust”) with Martin Guzman as the
primary beneficiary.
Il. FACTUAL BACKGROUND AND RELEVANT LAW
. Standing. Pursuant to Probate Code §3602(d), upon petition of a guardian,
conservator, or any person interested in the guardianship or conservatorship estate,
the Court may order that money or property paid pursuant to a compromise or
judgment may be paid to a special needs trust for the benefit of the minor or person
with a disability. Petitioner Martin Guzman Villalovos is the Guardian ad Litem of
Martin Guzman in the underlying lawsuit that is funding the trust at Guzman v.
Commercial Install, et al., Stanislaus County Superior Court, Case Number 2027691.
A copy of the Order Approving Compromise of the Claim is attached as Exhibit A.
. Venue. The principal place of administration of the proposed special needs trust
will be in San Francisco County as this is the county in which the Beneficiary resides
and thus will be the principal place of administration of the Trust. Petitioner
requests that venue be transferred to San Francisco County Superior Court for
ongoing court jurisdiction.
. Petitioner’s Personal Information and Disability. Martin Guzman (hereinafter
referred to as “Martin” or the “Beneficiary”) is 33 years old, born on September 17,
1986. Martin was involved automobile versus pedestrian collision in which he
sustained a traumatic brain injury and broken neck. In addition, Martin has been
diagnosed with paranoid schizophrenia. He lives in Richmond with his mother and
father. -
. Underlying Lawsuit. On March 2, 2017, Martin was struck by a vehicle on East
Whitmore Avenue and 6" Street in Ceres, California. A potential lawsuit was
settled and the terms of the settlement were approved in the civil department of this
Court. Martin will receive a net amount of approximately $227,135.07. Due to
Martin’s disabling condition, he i$ receiving Medicaid, known in California as
Petition to Establish Special Needs Trust
Stanislaus County Superior Court
Martin Guzman Special Needs Trust
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Medi-Cal, and is eligible to receive Supplemental Security Income (hereinafter
referred to as “SSI”) in order to meet his basic needs. Because SSI and Medi-Cal are
“needs-based,” outright distribution of assets to Martin or to a conservatorship
estate will result in his losing eligibility for this vital public benefit, unless the assets
are directed to a qualifying special needs trust (hereinafter referred to as a “SNT”).
. SSI and Medi-Cal Eligibility. The maximum cash resources an individual is
permitted to retain and remain eligible for SSI and Medi-Cal is $2,000.00. See Cal.
Code Reg,, tit. 22 §§50513, 50515, and 50517; 20 CFR §416.202(c)-(d). When an
SSI or Medi-Cal beneficiary's cash resources exceed the resource limit, his or her
benefits are suspended until the resources are spent down to below the resource
limit. ACWD Letter No. 92-30 (Apr. 16, 1992); 20 CFR §416.420.
. Effect of Receiving Assets. The settlement proceeds, if provided directly to Martin
or to a conservatorship estate, would eliminate his eligibility for SSI or Medi-Cal
because it exceeds $2,000. Martin would have to spend down the assets to below
$2,000 before he would be eligible for SSI and Medi-Cal. The only way to preserve
eligibility for SSI and Medi-Cal and to preserve the assets for his future needs is to
direct the assets to a SNT. Such a trust is recognized under federal law in 42 U.S.C.
§1396p(d)(4)(A) as a “safe harbor” trust. Without the SNT, Martin’s special needs
for supportive services, supplemental medical services, and other palliative care will
not be met. Thus, the establishment:of the SNT is necessary to provide for Martin’s
current and future needs while maintaining his eligibility for public benefits.
. Special Needs Trust Is Safe Harbor Trust. Title 42 U.S.C. §1396p(d)(4)(A)
provides that funds transferred to and held in a special needs trust are an “exempt
resource” for Medi-Cal if the trust meets the following criteria:
A trust containing the assets of an individual under age 65 who is
disabled (as defined in section 1382c(a)(3) [42 U.S.C. §1382c(a)(3)])
and which is established for such individual by the individual, parent,
grandparent, legal guardian of the individual, or a Court if the State
Petition to Establish Special Needs Trust
Stanislaus County Superior Court
Martin Guzman Special Needs Trust
~3-will receive all amounts remaining in the trust upon the death of such
individual up to an amount equal to the total medical assistance paid
on behalf of the individual under a State plan under this title [42
US.C. §§1396-1396v].
The SSI program applies the same criteria for exempt trusts. See 42 U.S.C.
§1382b(e)(1)(5), which refers to 42 U.S.C. §1396p(d)(4)(A). A trust meeting these
requirements is often referred to as a “(d)(4)(A) SNT.”
9. Relief Sought. Petitioner seeks the Court’s authority to establish an SNT for
Martin. Under California law, a person with a disability is authorized to seek an
order under California Probate Code §§3600-3613 to establish an SNT.
California’s procedure for managing the proceeds of a compromise on a disputed
claim of a minor or person with a disability can be found in Probate Code §§3602-
3613. Under these procedures, the Court may direct that the proceeds of an award
for a minor or person with a disability be placed into a SNT. Probate Code §§3604,
3611. Further, as described in the preceding paragraph, federal law authorizes a
person like Martin to have his assets transferred into a qualifying SNT and preserves
eligibility for both SSI and Medi-Cal.
Ill. THE PROPOSED SPECIAL NEEDS TRUST COMPLIES WITH ALL
FEDERAL AND STATE LAW REQUIREMENTS
10.Compliance With 42 U.S.C. §1396p(d)(4)(A). The proposed SNT is to be
established pursuant to the provisions of 42 U.S.C. §1396p(d)(4)(A), which states
that a trust meeting certain criterion will be disregarded (considered an “exempt
resource”) for purposes of determining eligibility for needs-based public benefits
such as SS] and Medi-Cal. A true and correct copy of the proposed Trust is attached
hereto as Exhibit B and is incorporated in this petition by reference.
1
- Proposed Beneficiary is Disabled; SNT Has Payback Provision. Martin meets the
eligibility requirements of 42 U.S.C. §1396p(d)(4)(A). He is “an individual under
age 65.” Martin is “disabled” as defined in 42 U.S.C. §1382c(a)(3) because he has a
Petition to Establish Special Needs Trust
County Superior Court
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disabling condition that is likely to remain for twelve or more months and will affect
his ability to earn a living, and thus he is “disabled” for purposes of 42 U.S.C.
§1396p(d)\(4)(A). Finally, the proposed trust provides, in Article Seven, that on
Martin’s death or on termination of the trust, if earlier, the state Medicaid agency
(in California, the Department of Health Care Services) will receive reimbursement
for all medical assistance provided to him.
12. Establishment of SNT by Court. The Court is one of the entities allowed to
establish an SNT under 42 U.S.C. §1396p(d)(4)(A).
13. Compliance with Probate Code §3604(b). In addition to the federal requirements,
California’s procedure for managing litigation settlement proceeds of a minor or
person with a disability is described in Probate Code §§3600-3613. Pursuant to
Probate Code §3604(b), the Court must make the following three findings before
establishing the SNT:
a. That the minor or person with a disability has a disability that substantially
impairs the individual’s ability to provide for the individual’s own care or
custody and constitutes a substantial handicap.
Martin is disabled. He has been diagnosed with paranoid schizophrenia.
Martin will need care for the remainder of his life. His condition has
impaired, and will impair, his ability to provide for his basic daily living
needs and support for the rest of his life.
b. That the minor or person with a disability is likely to have special needs that
will not be met without the trust.
Martin is likely to have special needs that will not be met without the trust.
Without the trust in place, Martin’s special needs, which include payments
for personal care assistance, supportive services, supplemental medical
services, and other palliative care will not be met. Such services would be
Petition to Establish Special Needs TrustCOMO NIN DH PB wWN
characterized as special needs that Medi-Cal either would not pay for, or for
which only limited Medi-Cal services would be available.
c. That money to be paid to the trust does not exceed the amount that appears
reasonably necessary to meet the special needs of the minor or person with
a disability.
In view of Martin’s disability and lack of other resources to pay for specialized
care, the funds that will form the corpus of the trust appear reasonably
necessary for Martin’s special needs. The cost of Martin’s future care is far
greater than the amount of assets being funded to the SNT. For example,
the cost to provide for Martin’s caregiving expenses, home costs,
transportation, and other palliative care would deplete the assets very
quickly. Finally, this provision of California law violates federal law. The
federal statutes do not limit funds that can be placed in a trust pursuant to
42 U.S.C. §1396p(d)(4)(A) and because federal law preempts state law in this
area, this portion of California’s law is unenforceable. See, Lewis v. Alexander
(3" Cir 2012) 685 F.3d 325.
14.Compliance with Probate Code §3604(d) - Medi-Cal Lien. A court order under
Probate Code §§3602 or 3611 for payment of money to a special needs trust shall
include a provision that all statutory liens in favor of the State Department of
Health Services, the State Department of State Hospitals, the State Department of
Developmental Services, and any county or city and county in this state shall first
be satisfied.
15. Compliance with California Rules of Court 7.903. The proposed SNT is required
to and does comply with California Rules of Court 7.903(c) as follows (except for
those provisions that for good cause should be waived):
a. It does not contain a “no-contest” provision; see Exhibit B.
Petition to Establish Special Needs Trust
Stanislaus County Superior Court
Martin Guzman Special Needs Trust
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It prohibits modification or revocation without Court approval; see Exhibit
B, Article One, Section 5.
It clearly identifies the trustee and any other person with authority to direct
the trustee to make disbursements; see Exhibit B, Article Five.
. As explained below, Petitioner requests that the Court for good cause
expand the Trustee’s investment powers beyond those in Probate Code
§2574 (investment powers available to guardians and conservators without
Court order).
It requires the persons identified in California Rules of Court 7.903(c)(3)
(e.g. “trustee and any other person with authority to direct the trustee to
make disbursements”) to post bond in the amount required under Probate
Code §§2320-2335; see Exhibit B, Article Eight, Section 1.
It requires the trustee to file accounts and reports for Court approval in the
manner and frequency required by Probate Code §§1060- 1064 and 2620-
2628; see Exhibit B, Article Eight, Section 3.
It requires Court approval of changes in trustees and a court ‘order
appointing any successor trustee; see Exhibit B, Article Five, Section 5.
. It requires that compensation of the trustee, members of any advisory
committee, or the attorney for the trustee, to be in just and reasonable
amounts that must be fixed and allowed by the Court. See Exhibit B, Article
Eight, Section 4.
16. Authority to Invest in Mutual Funds and Bonds with Maturity Dates Greater
than Five Years. Pursuant to California Rule of Court 7.903(c)(4), for good cause
shown, and pursuant to Probate Code §2574(c), Petitioner requests that the
investment standard set forth in Probate Code §2574(a) be modified so that the
Trustee has the authority to purchase mutual funds and United States government
bonds with maturity dates later than 5 years. California Rule of Court 7.903(c)(4)
Peticion co Establish Special Needs Trust
Stanislaus County Superior Court
Martin Guzman Special Needs Trust
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17.
18.
provides that the Trustee shall have the authority to make only those investments
that are allowed under Probate Code §2574, ie, the guardianship and
conservatorship rules. These rules do not permit investment in mutual funds or in
United States government bonds with maturity dates later than 5 years unless
specifically authorized by the Court. Probate Code §2574(c) provides that the
guardian or conservator may seek Court authorization to make investments not
otherwise permitted under that section of the Probate Code.
Mutual Investments. Investment in mutual funds permits investment across several
asset classes, subclasses and sectors, while avoiding high transaction costs. Thus,
because they are highly diversified, mutual funds are inherently less risky than
individual securities listed on an established stock or bond exchange in which a
conservator may invest as authorized by Probate Code §2574(a)(3) without Court
authorization. The ability to invest in mutual funds will permit the Trust to hold
individual securities across several asset classes, while at the same time providing the
flexibility to cost-effectively change its investment position in response to shifts in
the market.
Bond Investments. The ability to invest in United States government bonds with
maturity dates later than 5 years will provide better diversification of investments
because it will permit the investment of trust assets in more than the limited
government bond funds otherwise available. To the knowledge of petitioner’s
counsel, there are very few bond funds that are restricted to United States
government bonds with a maturity date not later than 5 years. If investments in
bonds were restricted to these few funds, it would necessarily hinder the ability ro
diversify. A portfolio which includes United States government bond funds without
restriction of maturity date will provide better diversification and is expected to
receive higher total returns along with the minimal risk associated with such funds.
Petition co Establish Special Needs Trust
Stanislaus County Superior Court
Martin Guzman Special Needs Trust
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IV. TRUSTEE, INTERIM FEES, AND BOND
19. Initial Trustee. Petitioner proposes that Daniel Cunnigham be named the initial
Trustee of the Trust, and shall be responsible for all investments and general
management. Daniel Cunnigham is a private professional fiduciary familiar with
the administration of special needs trusts. A true and correct copy of the Trustee’s
consent to serve is attached hereto as Exhibit C.
20. Interim Fees. Petitioner seeks authority for the Trustee to take fees on an interim
basis as authorized by Rule of Court 7.903(c)(8). The amount of the fees will be
based on his then currently hourly rates, now currently $145, and the hours spent.
The reason interim fees are necessary is to provide monthly reliable funds to provide
trustee services in a timely manner. Further, paying the trustee’s fees on an interim
basis is tax efficient, because otherwise, trustee’s fees cannot be deducted to offset
trust income during years there are no court accountings. The Trustee’s fees shall
be confirmed by the Court during the court accountings.
21.Bond. Based on the market value of the personal property of the estate
($227,135.07), the estimated annual income to be earned ($4,542.70), and the
reasonable amount for the cost of recovery on the bond ($22,713.50), rounded to
the next thousand, Petitioner requests that the amount of bond be set in the
amount of $255,000. Prob. Code §2320(c)(4); Calif. Rule of Court 7.207.
V. NOTICE
22. Notice to Government Entities. The directors of certain state agencies are entitled
to notice of the time and place of the hearing on this petition and a copy of this
petition. Probate Code §3602(f). The directors of agencies entitled to notice are as
follows: Department of Health Care Services, Department of State Hospitals, and
Department of Developmental Services at the office of each director in Sacramento.
23.Notice. Notice of the hearing and a copy of the petition and the trust will be
provided as follows:
Petition co Establish Special Needs Trust
Stanislaus County Superior Court
Martin Guzman Special Needs Trust
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Martin Guzman, Beneficiary
726 22™" Street
Richmond, CA 94801
Martin Guzman Villalovos, Proposed Trust Protector
726 22™ Street
Richmond, CA 94801
Daniel Cunningham, Proposed Trustee
PO Box 330
San Francisco, CA 94104
Piering Law Firm, Attorney in Underlying Lawsuit
Attn: Robert A. Piering
775 University Avenue
Sacramento, CA 95825
Department of Health Care Services, Director’s Office
MS 4720, P.O. Box 997413
Sacramento, CA 95899-7413
Department of State Hospitals, Director’s Office
1600 9th Street
Sacramento, CA 95814
Department of Developmental Disabilities, Director's Office
1600 9th Street
Sacramento, CA 95814
VI. ATTORNEY FEES
24.Request for Authorization to Pay Petitioner’s Attorneys. During the period
covered by this petition, Petitioner retained the services of Kevin Urbatsch to:
a) Determine whether a First-Party Special Needs Trust is appropriate;
b) Assist in identifying an appropriate trustee;
c) Counsel family members and trustee(s) on establishment of Special Needs Trust,
funding, administration, and distributions;
d) Draft Special Needs Trust;
Petition tw Establish Special Needs Trust
Stanislaus County Superior Cours
‘Martin Guzman Special Needs Trust
10 =e) Draft Petition to create a special needs trust;
f) Counsel family members and trustee(s) as appropriate with respect to public
benefit programs that the person with disability is receiving or may be entitled to
receive;
g) Advise appropriate parties with respect to trust funding; and
h) Assist personal injury attorney, settlor and trustee in funding the trust.
The services provided by The Urbatsch Law Firm, P.C. in connection with the
foregoing matters are more fully described and itemized in the Declaration in Support
of the Petition to Establish the Martin Guzman Special Needs Trust, attached as
Exhibit D and incorporated herein by reference. Attorney’s fees of $4,465.50 and costs
of $435. Petitioner is informed and believes that such fees and costs are reasonable and
customary in this community and requests Court approval for payment to The
Urbatsch Law Firm, P.C. of this amount.
WHEREFORE, Petitioner Martin Guzman, through his Guardian ad Litem, Martin
Guzman Villalovos, prays that the Court make the following findings and orders:
1. That all notices have been given as required by law;
2. That the Court establishes the Martin Guzman Special Needs Trust and Martin
Guzman Villalovos, is directed to execute on behalf of the Settlor;
3. That after payment of the personal injury Medi-Cal lien, the payment of all monies
due plaintiff in the settlement shall be paid directly to the Trustee of the Martin
Guzman Special Needs Trust;
4. That the Court directs that Daniel Cunningham serves as initial Trustee of the
Martin Guzman Special Needs Trust with bond set in the amount of $255,000;
5. That Daniel Cunnigham is allowed to be paid on an interim basis and that the
amount of the fees will be based on his then current hourly rate and hours spent,
shall be reviewed by the Court with the approval of each account;
Periciun co Establish Special Needs Trust
Scanislaus County Superior Court
juzman Special Needs Trust
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. That Daniel Cunnigham is allowed to be paid on an interim basis and that the
amount of the fees will be based on his then current fee schedule and shall be
reviewed by the Court with the approval of each account;
. That venue is transferred to San Francisco County Superior Court for ongoing
jurisdiction over the Trust;
. That the Trustee of the Martin Guzman Special Needs Trust file an account and
report one year after establishment and every two years thereafter as required by
Probate Code §§1060-1064 and 2620-2628;
. That Martin Guzman has a disability that substantially impairs his ability to provide
for his own care or custody, and constitutes a substantial handicap;
. That Martin Guzman is likely to have special needs that will not be met without the
trust;
10.That money to be paid to the Trust does not exceed the amount that appears
reasonably necessary to meet Martin Guzman’s special needs;
11. That the Trustee of the Martin Guzman Special Needs Trust is authorized to invest
in mutual funds and bonds with maturity dates greater than five years;
12. That the Court approve and direct the payment of $4,465.50 to The Urbatsch Law
Firm, P.C., for the legal services rendered to Petitioner and payment of $435 to The
Urbatsch Law Firm, P.C., for costs advanced; and
13. For such other and further orders, be issued by the Court as it may deem just and
proper.
Date: February 26, 2020 wtf Rn uv
7
Martin Guzmah Villalovos,
Petiti .
Date: February 26, 2020 i
Jessica Farinas,
Attorney for Petitioner
Petition to Establish Special Needs Trust
Stanislaus County Superior Court
Martin Guzman Special Needs Trust
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19
VERIFICATION
1, Martin Guzman Villalovos, declare that I am the Petitioner in the above-entitled
matter and I declare that I have read the PETITION FOR ORDER ESTABLISHING
SPECIAL NEEDS TRUST; SETTING BOND; AUTHORIZING INVESTMENT IN
MUTUAL FUNDS AND BONDS WITH MATURITY DATES GREATER THAN
FIVE YEARS; FOR INTERIM TRUSTEE FEES; AND-FOR ATTORNEYS FEES AND
COSTS, and the requests designated therein, and know its contents. The petition is true of
my own knowledge, except for the matters stated therein on my. 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. Executed in Pleasant Hill, California.
Date: February 26, 2020 L274, LEZ. Vv
Martin Guzman Villalovos,
Petitioner
Petition to Establish Special Needs Trust
Stanislaus County Superior Court
Martin Guzman Special Needs Trust
-13-MC-351
LRobert A. Piering, Esq.
ATTORNEY OR PARTY WITHOUT ATTORNEY (Nema, Stale Ber number, and eddresa); SBN: 166858 FOR COURT USE ONLY
Piering Law Firm
775 University Avenue, Sacto, CA 95825
teLePHoneno: 916 446 1944 Faxno.(optionay: 916 446 1222 _,
NAIL ADORESS (Option ”
ATTORNEY FOR (Namo: Petitioner
SUPERIOR COURT OF CALIFORNIA, COUNTY OF Stanislaus
street aporess: 801 10th Street
{MALING ADRESS:
cyano ze cone: Modesto, CA 95354
srancunawe: Civil
CASE NAME:
Guzman vs. Commercial Install, et al.,
ORDER APPROVING: (CASE NUMBER:
C2] ComMPROMISE OF DISPUTED CLAIM
2027691
(J COMPROMISE OF PENDING ACTION
[] DISPOSITION OF PROCEEDS OF JUDGMENT HEARINGDATE, any: | DEPT:
[=] Minor [7 Person With a Disability 18/28/19 23
1.
Petitioner (name): Martin Villalovos has petitioned for court approval of a
proposed compromise of a disputed claim of a minor or a pending action involving a minor or a person with a disability or a
proposed disposition of the proceeds of a Judgment for a minor or a person with a disability,
Hearing
a. [—) No hearing was held. The petition Is an expedited petition under rule 7.9805 of the California Rules of Court.
Date: 8/27/19 Time: 8:30 opt: 23
¢, Judicial officer:
Relationship to claimant
Petitioner has the following relationship or relationships to claimant (check all applicable boxes):
a. Parent
b, Guardian ad litem
ce. (_) Guardian se
d.
6.
f.
. (J Conservator
(J Claimant, an adult person with a disability, is the petitioner.
C1 other (specify):
Claimant (name):
a, (J tse minor.
b, is a “person with a disability” within the meaning of Probate Code section 3603 who is:
(1) [2] an adult. Claimant's date of birth is (specify): 9/17/86
(2) (J without a conservator. Claimant has capacity to consent to this order, within the meaning of
Probate Code section 812, and has consented to this orcler.
(©) [1 A conservates; a person for whom a conservator maybe appointed; or without capacity to
consent to this order, within the meaning of Probate Code section 812,
(2) [2] Aminor described in Probate Code section 3603(b)(3).
. Defendant
The claim or action to be compromised is asserted, or the judgment is entered, against (nema of settling or judgment defendant or
defendants (the "payer")):
Commercial Install, Inc, and Ricardo Andrade
Page tof 4
Code of Gl Procedure
rormasenecreuonsaeaius* ORDER APPROVING COMPROMISE OF DISPUTED CLAIMOR PENDING edichiperniys 637
N@!361 Fav. dary 1, 2010) ACTION OR DISPOSITION OF PROCEEDS OF JUDGMENT FOR cal Ful of Cou rules 3.13847.
MINOR OR PERSON WITH A DISABILITY . ° “Pogo
(Miscellansous)MC-351
‘CASE NUMBER:
CASE NAME:
Guzman vs. Commercial Instaill, et al., 2027691
6, THE COURT FINDS that all notices raquired by law have been given,
7, THE COURT ORDERS
a. The petition is granted and the proposed compromise of claim or action or the proposed disposition of the proceeds of the
, Judgment is approved, The gross amount or value of the settlement or judgmentin favor of clalmant is $
b. [J] Until fusther order of the court, jurisdiction Is reserved to determine a claim fora reduction of a Medi-Cal lien under
Welfare and Institutions Code section 14124.76, The amount shown payable to the Department of Health Care Services
- In item 7c(1)(d) of this order is the full amount of the lien clalmed by the department but Is subject to reduction on further
order of the court upon determination of the claim for reduction.
c. The payer shall disburse the proceeds of the settlement or judgment approved by this order in the following manner:
(1) Payment of fees and expenses
Fees and expenses shall be paid by one or more checks or drafts, drawn payable to the order of the petitioner and the
petitioner's attorney, if any, or directly to third parties entitled to receive payment identified in this order for the following
items of expense or damage, which are hereby authorized to be paid out ofthe proceeds of the settlement or judgment:
(a) Attorney's fees in the total amount of: $ 200,000.00 payable to (spscify):
(b) ~) Reimbursement for medical and all other expenses paid by the patilioner or the
petitioner's attorney in the total amount of: $61,594.49
(c) [2] Medical, hospital, ambulance, nursing, and other like expenses payable directly to
providers as follows, in the total amount of: $
() Payee (name):Dept. of Health Care Services
(A) Address: PO Box 997425, Sacramento, CA95899
(8) Amount: $ 21,270.44
(ii) Payee (name):
(A) Address:
(B) Amount: $
[5 Continued on Attachment 7o{1)(0). (Provide Information about additional payees In the above format.)
{d) [J Other authorized disbursements payable directly to third parties in the total amount of: $
(Describe and state the amount of each tem and provide the name and address of each payee):
(©) Continued on Attachment 7¢(1X¢).
{e) [4] Total allowance ior fees and expenses from the settlement or judgment: $ (272,86:
MO-361 Rev. Janvery*.20101 ORDER APPROVING COMPROMISE OF DISPUTED CLAIM OR PENDING Page 2ot4
ACTION OR DISPOSITION OF PROCEEDS OF JUDGMENT FOR
MINOR OR PERSON WITH A DISABILITY
(Miscellaneous)MC~351
CASE NAME: ‘CASE NUMBER:
Guzman vs. Commercial Install, et al., 2027691
7, THE COURT ORDERS (cont.)
c. The payer shall disburse the proceeds of the settlement or Judgment approved by this order in the following manner:
(2) Balance
The balance of the settlement or judgment available for claimant after payment of all allowed
fees and expenses is; $ 227,135.07
The balance shall be disbursed as follows:
(a) (J By one or more checks or drafts in the total amount of (specify): $
drawn payable to the order of the petitioner as trustee for the claimant Each such check or draft must bear an
endorsement on the face or reverse that It Is for deposit in one or more interest-bearing, federally insured
accounts In the name of the petitioner as trustee for the claimant, and no withdrawals may be made from the
accounts except as provided In the Order to Deposit Money Into Blocked Account (form MC-365), which is
signed contemporaneously with this order ("blocked account").
By the following method(s) (describe each method, including the amount to be disbursed ):
The net $227,135.07 due Martin Guzman be held in trust in the Piering Law Firm
attorney-client trust account. Upon approval of the special needs trust for Martin
Guzman, the Plering Law Firm shall transfer the netproceeds due to Martin
Guzman to the trustee of his special needs trust.
1} continued on Attachment 7o(2)(b).
If money Is to be paid to a spacial needs trust under Probate Code section 3604, all statutory liens in favor
of the state Department of Health Care Services, the state Department of Mental Health, the state
Department of Developmental Services, and any city and county in California must first be satisfied by the
following method (specify):
See section 7c(1)(c) above.
()
[J Continued on Attachment 7o(2\(c).
8. C1 Further orders of the court concerning blocked accounts
The court makes the following additional orders concerning any part of the balence ordered to be deposited in a blocked
account under item 70(2)(a):
a, Within 48 hours of receipt of a check or draft described in item 7o(2)(a), the petitioner and the petitioner's attorney, if
any, must deposit the check or draft in the petitioner's name as trustee for the claimant in ons or more blocked accounts
at (specify name, branch, and address of each depository, and the amount of each account):
[1 Continued on Attachment 8a.
ME-364 Rav. January 1.2010; ORDER APPROVING COMPROMISE OF DISPUTED CLAIM OR PENDING
ACTION OR DISPOSITION OF PROCEEDS OF JUDGMENT FOR
MINOR OR PERSON WITH A DISABILITY
(Miscellaneous)
Pago dofMC~3541
CASE NAME: CASE NUMBER;
Guzman vs. Commercial Install, et al., 2027691
8. Further orders of the court concerning blocked accounts
The court makes the following additional orders concerning any part of the balance ordered to be deposited in a blocked
account under item 7¢(2)(a):
b. The petitioner and the petitioner's attorney, if any, must deliver to each depository at the time of deposit three copies of
‘ the Order to Deposit Money Into Blocked Account {form MC-355), which is signed contemporaneously with this order,
and three copies of the Recsipt and Acknowledgment of Order for the Deposit of Money into Blocked Account (form
MC-356). The petitioner or the petitioner's attorney must file a copy of the receipt with this court within 15 days of the
deposit, The sole responsibilities of the petitioner and the petitioner's attomey, if any, are to place the balance in a
blocked account or accounts and to timely file a copy of the receipt.
¢, The balance of the proceeds of the settlement or judgment deposited in a blocked account or accounts under item
7c(2)(@) may be withdrawn only as follows (check (1) or (2):
(1) 2] No withdrawats of principal or interest may be made from the blocked account or accounts without a further
written order under this case name and number, signed by a judge, and bearing the seal of this court. The
money on deposit is not subject to escheat.
(2) [1] The blocked account or accounts belong to a minor. The minorwas bom on (date): .
No withdrawals of principal or interest may bs made from the blocked account or accounts without a further
written order under this case name and number, signed by a judicial officer, and bearing the seal of this
Court, until the miner attains the age of 18 years. When the minor allains the age of 18 years, the depository,
without further order of this court, is authorized and directed to pay by check or draft directly to the former
minor, upon proper demand, all moneys including Interest deposited under thls order. The money on deposit
Is not subject to escheat.
Authorization to execute settlement documents
‘The petitioner is authorized to execute settlement documents as follows (check only one):
Upon receipt of the full amount of the settlemant sum approved by this order and the deposit of funds, the
petitioner is authorized and directed to execute and deliver to the payer a full, complete, and final release and
discharge of any and all claims and demands of the claimant by reason of the accident or incident described in
the petition and the resultant injuries to the claimant and a Proparly executed dismissal with prejudice.
b. (2) The petitioner is authorized and directed to execute any and all documents reasonably necessary to carry out
the terms of the settlement,
c. (1 The petitioner is authorized and directed (specify):
[1 Continusd on Attachment 9c,
10. Bond is [_] ordered and fixed in the amount of: $ () not required,
11, A copy of this order shall be served on the payer forthwith.
12. ] Additionat orders
The court makes the following additional orders (specify):
(J Continued on Attachment 12.
Date: _e
AUG 28 2018 “NGI OFFICER
[J siowature Fowows Last aTracHMENT
MO-35% (Rev. Jonvay 1,200, ORDER APPROVING COMPROMISE OF DISPUTED CLAIM OR PENDING Page dof 4
ACTION OR DISPOSITION OF PROCEEDS OF JUDGMENT FOR
MINOR OR PERSON WITH A DISABILITY
(Miscellaneous)EXHIBIT BMARTIN GUZMAN
SPECIAL NEEDS TRUST
Prepared by
Kevin Urbatsch, Esq.
Urbatsch Law Firm, P.C.
3478 Buskirk Avenue, Ste. 300
Pleasant Hill, CA 94523
(415) 593-9944
*
Kevin@Urbatsch.com * www.UrbLaw.comTable of Contents
ARTICLE ONE Establishment of Trus'
Section 1: Establishment of Trust:...
Section 2: Initial Trustee ...
Section 3: Primary Beneficiary of the Trust is Disabled ...
Section 4: Name of Trust...
Section 5: Irrevocability of Trust...
ARTICLE TWO Funding and Intent of the Trust
Section 1: Description of Trust Estate ...
Section 2: No Trust Augmentation after Beneficiary’s 65th Birthday ...
Section 3: No Commingling....
Section 4: Trust Purpose ...
ARTICLE THREE Distribution for Special Needs...
Section 1: Distribution Standard.
Section 2: Distribution Guidelines...
Section 3: Distribution Methods ....
Section 4: Definition of “Special Needs”...
Section 5: Medicare Set Aside Arrangement Sub Trust...
A. Distributions During Beneficiary's Lifetime:...
B. Engagement of Experts and Consultants
ARTICLE FOUR Trust Meets Public Benefit Legal Requirements ..
Section 1: Medicaid or Medi-Cal...
A. Not Available Property.
B, Exemption from Transfer Disqualification ...Section 2: Supplemental Security Income...
» A. Not an Available Resource.....
B. Exemption from Transfer Disqualification ..
C. Resources Otherwise Unavailable...
ARTICLE FIVE Trustee Provisions ..
Section 1: Initial Trustee...
Section 2: Successor Trustee ..
Section 3: Resignation of Trustee....
Section 4: Removal of Trustee.
Section 5: Replacement of Trustee ....
Section 6: Notice Requirements
ARTICLE SIX Trust Protector.
Section 1: Designation of Trust Protector...
Section 2: Power to Remove and Appoint Trustees.
Section 3: Right to Examine .
Section 4: Role in Distributions...
section 5: Resignation of Trust Protector .
Section 6: Authority to Appoint a Successor Trust Protector...
section 7: Default of a Designated Trust Protector.
Section 8: Good Faith Standard Imposed .....
Section 9: No Duty to Monitor.
ARTICLE SEVEN Adininistration upon Beneficiary’S Death...
Section 1: Remainder Beneficiaries
A. Special (or Limited) Power of Appointment...
B, Distribution of Assets Not Appointed ...Section 2: Remainder Beneficiary Either a Minor or Person with a Disability.....
» Section 3: Notice and Payback Provisions ...
A. Notices.
B. Payback Provision.
ARTICLE EIGHT Trustee Powers...
Section 1: Trustee Powers...
Section 2: Reliance by Third Parties...
Section 3: Cooperation in Obtaining and Maintaining Public Benefits...
Section 4: Investment Authority .....
ARTICLE NINE General Matters
Section 1: Bond .....
Section 2: Spendthrift..
Section 3: Duty to Account...
Section 4: Compensation and Costs of Trustee and Attorney...
Section 5: Income Tax Liability...
Section 6: Choice of Law...
Section 7: Severability .
Section 8: Gender and Number...
Section 9: Duplicate Originals...MARTIN GUZMAN SPECIAL NEEDS TRUST
ARTICLE ONE
ESTABLISHMENT OF TRUST
SECTION 1: ESTABLISHMENT OF TRUST:
This trust is established by the Stanislaus Superior Court as a special needs trust for
the sole benefit of Martin Guzman, an individual with disabilities, born September 17,
1986.
The trust agreement is established in accordance with the Omnibus Budget
Reconciliation Act of 1993 (OBRA 1993), codified under 42 United States Code
§1396p(d)(4)(A) (§1917(d)(4)(A) of the Social Security Act) as well as by the Social
Security Programs Operations Manual System (POMS) POMS SI 01120.203, and in
accordance with California state law as found in Probate Code §§3600-3613 and 22
California Code of Regulations §50489.9. These laws provide that an irrevocable trust
meeting certain requirements may be established for the benefit of an individual with a
disability and the assets directed to the trust should not be deemed to have been owned
by, or to be available to, the beneficiary for public benefit eligibility purposes. Pursuant
to federal law, Medicare’s interests must be considered in a personal injury award
because Beneficiary is entitled to Medicare. In reasonable consideration of Medicare’s
interests and to meet the criteria under Medi-Cal laws regarding the exemption of self-
settled trusts from countable resources, Settlor intends to create an Irrevocable Medicare
Set-Aside Subtrust as part of this trust agreement.
This trust agreement is established for the specific purpose of receipt, management,
and disbursement of settlement proceeds in Guzman v. Commercial Install, et al, County of
Stanislaus, State of California, Case Number 2027691.
The Stanislaus Court in the State of California established this trust. The Court
directed that in place of delivery of the settlement assets to Martin Guzman, the assets
were instead to be delivered to Daniel Cunningham in his role as Trustee of this trust
and funded into this trust. The court further directed that Martin Guzman Villalovos
shall execute the trust document as Settlor.SECTION 2: INITIAL TRUSTEE
* Daniel Cunningham has been appointed to serve as the initial Trustee. The term
“Trustee” or “Trustees” refers to the initial trustee or any successor trustee.
SECTION 3: PRIMARY BENEFICIARY OF THE TRUST IS DISABLED
The sole life beneficiary of the Martin Guzman Special Needs Trust will be Martin
Guzman, who will be referred to as the “Beneficiary” in this document.
The Beneficiary is disabled. His disability substantially affects his ability to take care of
himself safely.
\
SECTION 4: NAME OF TRUST
For convenience, this trust shall be known as:
The Martin Guzman Special Needs Trust, dated
For purposes of beneficiary designations and initial transfers to the trust, the trust
shall be referred to as:
Daniel Cunningham , Trustee of the Martin Guzman Special Needs Trust, dated
SECTION 5: IRREVOCABILITY OF TRUST
This trust shall be irrevocable and not subject to amendment except on application of
any interested party with the approval of a court of competent jurisdiction; provided,
however, that any such amendment shall be consistent with, and in furtherance of, the
purpose and intent of this trust and under applicable laws, and no amendment shall
change the duties and obligations of the Trustee without its prior written consent.
Further, consistent with the intent of this trust to maintain eligibility for essential public
benefits, the trust may be amended in order to comply with 42 USC §1396p(d)(4)(A), or
with any other state or federal law or regulation governing eligibility for essential public
benefits, including any update to the POMS or other Medi-Cal provisions.Under no circumstances does the Beneficiary have the legal authority to revoke the
trust and then use the funds to meet his food or shelter needs, or to direct the use of the
trust principal or income for his support and maintenance under the terms of the trust.
(See POMS SI 01120.200). The Beneficiary has no such right to revoke this trust under its
express terms and also has no such right implied by law because:
¢ Continuation of this trust is necessary to carry out a material purpose of this
trust even if the Beneficiary were sole beneficiary and attempted to revoke it
(Probate Code §15403(b)); and
¢ This trust is subject to a restraint on transfer (spendthrift provision) of the
Beneficiary's interest as provided by Probate Code §§15300, et seq., and, for this
additional reason, may not be revoked (Probate Code §15403(b)).ARTICLE TWO
FUNDING AND INTENT OF THE TRUST
SECTION 1: DESCRIPTION OF TRUST ESTATE
The Beneficiary is the recipient of a lawsuit settlement titled Guzman v. Commercial
Install, et al, County of Stanislaus, State of California, Case Number 2027691 which is the
initial funding of the trust as identified in Schedule A to this trust agreement.
It is the intent of this trust agreement that the Beneficiary is the legal grantor and
settlor of the trust even though the Stanislaus County Superior Court is establishing the
trust.
SECTION 2: NO TRUST AUGMENTATION AFTER BENEFICIARY’S 65TH
BIRTHDAY
Notwithstanding anything else stated in this agreement, the Trustee is directed to
refuse any additions to or augmentation of the trust after the Beneficiary’s 65th birthday.
This provision does not include interest, dividends, annuity payments directed to the
trust that were established prior to the Beneficiary’s 65th birthday, or other earnings of
trust assets received after the Beneficiary’s 65th birthday.
SECTION 3: NO COMMINGLING
The Trustee shall not permit any person, including the beneficiary, to commingle
funds not belonging to the trust with trust property. Specifically, the Trustee shall not
accept or commingle any earnings or public benefits payable to the Beneficiary.
SECTION 4: TRUST PURPOSE
This trust is established in conformity with the requirements of 42 U.S.C.
§1396p(d)(4)(A). This trust is being established to receive the Beneficiary’s litigation
assets and is to be managed for the Beneficiary’s sole benefit as set forth in this trustdocument. This section covers the general intent concerning the trust’s establishing and
ongoing administration.
Trust assets should be used in combination with public benefits to extend the amount
of available funds to assist in paying for Beneficiary’s lifetime care. The Beneficiary has a
significant and profound disability that impairs (and will impair) his ability to provide
for his own care and custody. The Beneficiary receives public benefits because of his
disabilities. In general, the purpose of this trust is to supplement, and not supplant the
Beneficiary’s public benefits. The Beneficiary has living needs that include goods and
services that public benefits may not allow or only pays for a small portion. The
Beneficiary requires these goods and services to receive humane care and to maintain a
level of human dignity. Trust assets should also be utilized to enhance the Beneficiary’s
quality of life. This means that the Trustee in its sole and absolute discretion will
determine the best options for how trust assets are to be utilized to provide the
Beneficiary the highest quality of life under the unique facts and circumstances of the
Beneficiary’s condition and the amount held in trust.
Trust assets are to be utilized for the Beneficiary’s sole benefit. If the trust estate were
to be invaded by creditors, subjected to any liens or encumbrances, or counted as
available resources by public benefit programs, the trust estate would likely be depleted
before the Beneficiary's death; especially because the cost of care for persons with
disabilities is so high and the Beneficiary is unable to find meaningful work.
The trust provisions should be interpreted considering these stated concerns and
general intent.ARTICLE THREE
DISTRIBUTION FOR SPECIAL NEEDS
SECTION 1: DISTRIBUTION STANDARD
The Trustee shall hold, administer, and distribute all property allocated to this trust,
and all income therefrom, for the sole benefit of the Beneficiary during the Beneficiary's
lifetime. The Trustee shall pay to or apply for the Beneficiary as much of the net income
and principal, up to the whole thereof, as the Trustee in the Trustee's sole and absolute
discretion considers necessary or advisable to meet the Beneficiary's special needs in
order to enhance the quality of life of the Beneficiary. Any income not distributed shall
be accumulated and added to principal.
Because the Beneficiary is disabled, the Trustee shall, in the exercise of the Trustee's
best judgment and fiduciary duty, administer this trust so as to encourage support and
maintenance for the Beneficiary from all available public resources, including
Supplemental Security Income (SSI), Medi-Cal, Temporary Assistance to Needy Families
(TANF), Federal Social Security Disability Insurance (SSDI), In-Home Supportive
Services (IHSS), Regional Center Services, Public Housing and Housing Choice Voucher
Program (Section 8), and any and all successor programs, and any other appropriate
federal, state, or local agency serving persons with disabilities. All references in this
instrument to "Medi-Cal" shall include any other state's Medicaid program equivalent.
In addition, in making distributions to or on behalf of the Beneficiary, the Trustee shall
take into consideration the applicable resource and income limitations of the public
benefit programs for which the Beneficiary is eligible. However, the Trustee is not bound
by such limitations in making distributions if such distributions would be in the best
interests of the Beneficiary as determined in the Trustee's sole and absolute discretion.
Specifically, if it is in Beneficiary's best interest, as determined in the Trustee's sole and
absolute discretion, the Trustee may make a distribution that results in a permanent or
temporary, (partial or total) loss of Beneficiary's public benefits, (¢.g., payment of
Beneficiary’s rent).
Although the Trustee's responsibility to administer this trust so as to encourage
payment of public benefits is an element of its fiduciary duty under the terms of this
trust, the Trustee shall be exempted and held harmless from liability for failure toadminister this trust so as to allow the Beneficiary to obtain public benefits, or for loss of
such benefits (partial or total), except in cases of gross negligence or willful misconduct.
SECTION 2: DISTRIBUTION GUIDELINES
In making any distribution from this trust, the Trustee shall, in the exercise of the
Trustee’s best judgment and fiduciary duty:
A. Consider any other of Beneficiary’s known or reasonably available income or
resources;
B. Consider all the Beneficiary’s available benefits from any government agency,
such as Supplemental Security Income (SSI), Social Security Disability Insurance
(SSDI), Medi-Cal, Medicare, Section 8 (or other housing benefits), and any other
public benefits for which the Beneficiary is eligible;
C. Consider resource and income limitations of each public benefit program;
D. Not be bound by public benefit program limitations in making distributions if
such distributions would be in the best interests of the Beneficiary as determined
in the Trustee's sole and absolute discretion;
E. Not be obligated to or be compelled to make any payments; and
F.