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HomeMy WebLinkAbout09-09-10 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA IN RE: ORPHANS' COURT DIVISION DAMON BRYAN IRREVOCABLE TRUST AGREEMENT No. PETITION FOR APPROVAL TO MODIFY REAL ESTATE The Huntington National Bank (the "Bank"), by and through its counsel of record, Tucker Arensberg, P.C., files this Petition for Approval to Modify Real Estate and states as follows: Background 1) The Huntington National Bank (the "Bank") serves as Trustee of the Damon Bryan Irrevocable Trust Agreement dated March 15, 2007 (the 'Trust"). A true and correct copy of the Trust is attached hereto as Exhibit "A". 2) The Honorable J. Wesley Oler, Jr. of this Court established the Trust to hold certain settlement proceeds due to Damon Bryan ("Damon") as a result of a personal injury settlement at No. 04-3252. 3) Damon is a minor born on May 23, 2001 who is disabled as a result of severe mental retardation. 4) The Trust is drafted as a Special Needs Trust under 42 U.S.C. § 1396p(d)(4)(A) to preserve Damon's eligibly for means-tested public benefits including Medical Assistance ("MA") and Supplemental Security Income ("SSI"). 5) As a Special Needs Trust, the Trust provides for "payback" to State MA Agencies that have provided benefits to Damon, which at this time includes only the Pennsylvania Department of Public Welfare ("DPW"). w 0 6) The Trust is currently valued at approximately $400,000, c ing of o -~, -p c.- .u marketable securities. ~ ca ~` c:~ °~~ ~ ~:~'=Jr o "~ ~; BF-376714.1:01868&143399 Jurisdiction 7) This Court has jurisdiction over this matter pursuant to 20 Pa.C.S. § 711 and 62 P.S. § 1414. The Residence 8 Reaussted Modification 8) Damon resides with his Parents and Natural Guardians, Darren and Jennifer Bryan (Damon's "Parents") in their residence at 1024 Mayapple Drive, Shippensburg, Franklin County, Pennsylvania (the "Residence"). 9) The Residence is believed to have a fair market value of approximately $120,000 and is subject to two (2) senior mortgages dated May 2, 1991 in the principal amount of $30,000 and November 20, 2003 in the principal amount of $66,950 each granting Fanners and Merchants' Trust Co. of Chambersburg mortgage liens. 10) Damon's Parents have requested that the Bank make a distribution from the Trust to their Residence to enable them to add an integral two-car garage, bedroom and bathroom and the widening of certain hallways and entryways to better provide for Damon's care (the "Proposed Modification") 11) Specifically, Damon's conditions have permanently left him with severely limited mobility and in need of assistance with all activities of daily living. As Damon matures, the ability to adequately care for him and his mobility will become increasingly more restricted without an appropriate special needs living space. 12) Damon's Parents have informed the Bank that the family plans to permanently remain. in the Residence and that they intend for and. will cause Damon to reside there for the remainder of his lifetime to the extent he is able. 13) The Bank and Damon's Parents have determined that the Proposed Modification would provide him a stable, safe environment that would enhance his care, comfort and overall well-being. -2- 14) The Bank obtained estimates for the Proposed Modification, which established a construction budget totaling approximately $135,000, made up of the following: Permit fees Drawing fees Addition construction Sub total Contingency 10% Total $1,500.00 $2,000.00 $102,500.00 Average of bids $106,000.00 $10,600.00 $116,600.00 Ceiling Track $11,000.00 Assuming inst. of full track system Est. Consultant Fees 7$ .500.00 Grand Total $135,100.00 15) Article 3.1 of the Trust provides in pertinent part that: The Trustee may contribute to, or pay the full cost of (i) the purchase, remodeling or expansion of a home owned by a relative or guardian of Damon with whom Damon resides, so long as the Trustee's investment is maintained as an asset of the Trust (whether by a judgment lien, secured note, or otherwise)... See Exhibit A. 16) In order to comply with the Trust's requirement that a modification to a third party's home be maintained as an asset for the Trust, the Bank proposes to require Damon's Parents to grant it a Security Interest in the Residence that would be secured by a Mortgage junior to all senior lien-holders. 17) The proposed Security Agreement and Mortgage would grant the Bank, as Trustee, a security interest in the Residence equal to the amount by which the Proposed Modification increases its fair market value, which the Bank would determine based on pre- and post-mod cation appraisals or assessments performed by a real estate professional. -3- 18) In light of Damon's minority and the reality that the Proposed Modification will deplete the fair market value of the Trust and could therefore cause its assets to be exhausted during Damon's lifetime, the Bank has approved the Proposed Modification subject to Court approval. 19) The Bank therefore seeks the Court to approve and authorize it to expend up to $135,000 in its discretion for the Proposed Modification. WHEREFORE, The Huntington National Bank, Trustee of the Damon Bryan Irrevocable Trust Agreement, requests the Court enter an Order substantially in the form as that attached hereto approving the Proposed Modification on the terms set forth herein. Respectfully Submitted, TUCKER ARENSBERG, P.C. i~ I.D. No. 1 Nora E. Gieg Pa. LD. No.: -4- i ;' ,. DAMON BRYAN IRREVOCABLE TRUST AGREEMENT This irrevocable trust agreement ("Agreement") is made March 15, 2007, pursuant to and as a part of the Order of The Honorable J. Wesley Oler. Jr. of the Court of Common Pleas of Cumberland County, Pennsylvania, entered on 15~ day of March, 2007 at No. 04-3252, approving settlement of a personal injury claim for and on behalf of DAMON BRYAN ("Litigation"). DAMON BRYAN ("DAMON") was born on May 23, 2001. The primary and express purpose of this irrevocable trust is to serve as a special needs trust, pursuant to 42 U.S.C. § 1396 p(d)(4)(A) and other applicable federal and state law, for the benefit of DAMON, who is disabled. In that regard, the trust is to provide care 4 Y and benefit for DAMON which is supplemental to any parental legal obligation of support and that otherwise provided by government programs or benefits, without adversely affecting DAMON's entitlement to receive such benefits or participate in such programs. In that regard, this irrevocable trust is for the sole benefit of DAMON during DAMON's lifetime and shall be administered consistent therewith. During DAMON's lifetime, this Agreement shall be deemed to authorize only disbursements and distributions which are reasonable in light of the express intent and purpose of this trust to serve as a special needs trust for the benefit of DAMON. Further, any obligation to make reimbursement, at DAMON's death, for medical assistance paid on DAMON's behalf shall be entitled to such disbursement priority as required by applicable law so that this trust may achieve its intended purpose as set forth above. ARTICLE ONE FUNDING At the direction of the Court, the property listed in Schedule "A" attached hereto and incorporated herein is irrevocably transferred, assigned, conveyed and delivered to SKY TRUST, N.A., IN TRUST (said trustee and any successor trustee are hereinafter referred to as "Trustee"). The Trustee shall invest and reinvest said property, shall hold said property and all investments and reinvestments thereof as a trust estate ("Trust Estate"), and shall distribute the Trust Estate's net income ("Income") and principal as set forth in this Agreement. ARTICLE TWO TRUST NAME The trust hereby created may be designated the "DAMON BRYAN IRREVOCABLE TRUST". ARTICLE THREE DISTRIBUTION DURING DAMON'S LIFETIME AND THEREAFTER (A) During the lifetime of DAMON, the Trustee shall pay so much of the Income and principal of the trust as it considers advisable in its discretion to, or for the benefit of, DAMON consistent with the trust's purpose and administration provisions. Without limiting the Trustee's discretion, the Trustee is specifically authorized to use Income or principal, to the extent it determines appropriate consistent with the trust's purpose and administration provisions, for DAMON's comfortable support, welfare, complete education, and personal development, including, but not limited to, supplemental medical -2- and dental expenses, social services expenses and transportation costs. The Trustee may pay any income tax liability of DAMON which results from income received by the trust which is properly reported on an income tax return of DAMON, and such liability may be computed based on DAMON's highest applicable marginal rate not DAMON's average tax rate, given the filing status. elected on such return. The funds used to pay any such income tax liability shall be paid directly to the appropriate tax authority and shall not be available to DAMON. Any undistributed Income shall be added to principal no less often than annually. Without limiting the foregoing provisions of this Article, the following shall apply. (1) The Trustee is specifically authorized to purchase or assist in the purchase of reasonable housing for DAMON, considering DAMON's special needs, and may pay the full cost thereof and/or the full monthly mortgage, tax, insurance, utility, maintenance or other payments therefor. However, the Trustee shall require a contribution, consistent with ability to pay, from any member of DAMON's family who resides, with DAMON, in a home owned by the trust. The Trustee may fund any such purchase by cash or financing. The Trustee is specifically authorized to hold such residence as an asset of this trust. Also, the Trustee may contribute to, or pay the full cost of, (i) the purchase, remodeling or expansion of a home owned by a relative or guardian of DAMON's with whom DAMON resides, so long as the Trustee's investment is maintained as an asset of the trust (whether by judgment lien, -3- (2) It is specifically acknowledged that DAMON suffers from certain handicaps and disabilities. The Trustee is specifically authorized to retain and pay from the Trust Estate a case manager, ("Trust Consultant"), to (i) determine what social services, educational enrichment and other programs would benefit DAMON and are reasonable for DAMON to obtain, and (ii) to provide ongoing consultation in such regard, including, without limitation, to arrange DAMON's participation in, and acquisition of, such services or programs. Further, considering the bust's purpose and administration provisions, Trustee is authorized, in its discretion, to pay the expenses of such services and programs fiom the Trust Estate. (3) It is further specifically acknowledged that DAMON requires, and may require for DAMON's lifetime, residential care and assistance on a consistent basis. The Trustee is specifically authorized, in its discretion, to hire such caregivers, giving such preference as the Trustee determines to be appropriate (including, without limitation, considering the tax consequences thereof) to relatives or guardians of DAMON willing and able to provide such care, and to pay reasonable compensation for such services, or, to pay a reasonable stipend to any such relative in recognition thereof, upon proof satisfactory to the Trustee that such care and assistance have been rendered and were required. (4) It is also specifically acknowledged that relatives or guardians of DAMON with whom DAMON resides may require a special or other motor vehicle in order to transport DAMON and, if so, the Trustee is authorized, in its discretion, to pay for their acquisition of such vehicle, as well as their expenses for maintaining, insuring and timely replacing such vehicle. The Trustee shall take a perfected -4- discretion, to pay for their acquisition of such vehicle, as well as their expenses for maintaining, insuring and timely replacing such vehicle. The Trustee shall take a perfected security interest in any such vehicle consistent with its contribution to the acquisition thereof. (B) If DAMON dies before the complete termination of the trust, the Trustee shall first make any reimbursement of medical assistance paid on DAMON's behalf which is required for the trust to be a special needs trust as set forth in the second paragraph of this Agreement and, thereafter, may pay the expenses of DAMON's funeral and burial, if not prepaid. Further, the Trustee may pay to DAMON's personal representative or, in the case of taxes, directly to the taxing authorities, such amount, if any, as said personal representative certifies to be (i) the additional death taxes, including. interest and penalties, resulting from the inclusion of the Trust Estate, or any portion thereof, in DAMON's estate for such tax purposes, as well as (ii) the expenses of administering DAMON's estate. DAMON shall have a special testamentary power to appoint the remaining principal and any accrued or undistributed Income outright to, or on further trust for, anyone other than DAMON, DAMON's estate, or the creditors of either, or a spouse of DAMON's who is not a Qualified Spouse, as DAMON shall direct by specific reference to this trust in DAMON's Will. Any unappointed portion shall be distributed to those individuals who would have been DAMON's intestate heirs (in the shares provided under Pennsylvania intestate law) if DAMON had died at that time intestate, unmarried, domiciled in Pennsylvania and owning outright such property and no other property. If no such intestate heir is then living, such distribution shall be to one or more Charities selected by the Trustee• For purposes of this -5- paragraph, the Commonwealth of Pennsylvania shall not constitute an intestate heir. Each individual entitled to take a share of said unappointcd portion upon the death of DAMON is hereinafter referred to as a "Beneficiary". The share for each Beneficiary shall not be paid outright but, rather, shall be held as a separate trust ("Beneficiary's Trust") on the following terms. The Trustee shall pay to said Beneficiary, to the person having physical custody of such Beneficiary, to such Beneficiary's natural guardian or to the guardian of such Beneficiary's person or estate, in any of such cases without liability on the part of the Trustee to see to the application thereof, unless the Trustee is the distributee, or expend. for such Beneficiary's benefit, so much of the Income and principal as the Trustee considers advisable in its discretion, for any reason or purpose whatsoever, and shall add any undistributed Income to principal, at least annually, and invest it as such. Such Beneficiary may also withdraw portions of the principal in accordance with the following schedule: (1) after such Beneficiary's twenty-sixth (26th) birthday, not more than one-quarter (1/4) of the principal on the date of such Beneficiary's twenty-sixth (26th) birthday; and (2) after such Beneficiary's thirtieth (30th) birthday, not more than two- thirds (2/3) of the principal, on the date of such Beneficiary's thirtieth (30th) birthday, not already subject to withdrawal; and (3) after such Beneficiary's thirty-fifth (35th) birthday, any or all of the principal and any accrued or undistributed Income. Should the Trust for such Beneficiary be initially funded after said Beneficiary's twenty- sixth (26th) birthday, said Beneficiary's initial withdrawal right shall be based on the -6- principal of the trust at funding and shall be one-quarter (1/4) of such principal if such Beneficiary has not yet attained thirty (30) years of age, three-quarters (3/4) of such principal if such Beneficiary has then attained thirty (30) years of age but not thirty-five {35) years of age and all of such principal if such Beneficiary has then attained thirty-five (35) years of age. If such Beneficiary dies before the complete termination of the Trust, such Beneficiary shall have a special testamentary power to appoint the principal and any accumulated or undistributed Income remaining at the Beneficiary's death in the Beneficiary's Trust outright to, or on further trust for, anyone other than said Beneficiary, said Beneficiary's estate, or the creditors of either, or a spouse of such Beneficiary who is not a Qualified Spouse, as such Beneficiary shall direct by specific reference to this Trust in Beneficiary's Will; provided, however, that any portion such Beneficiary could have withdrawn before death such Beneficiary may appoint, by specific reference to this Trust in such Beneficiary's Will, in favor of anyone. Upon the death of a Beneficiary, any unappointed portion shall be paid to those individuals who would have been the Beneficiary's intestate heirs (in the shares provided under Pennsylvania intestate law) if the Beneficiary had died at that time intestate, married, if such Beneficiary has a Qualified Spouse, otherwise unmarried, domiciled in Pennsylvania and owning outright the property constituting such unappointed portion and no other property. Por purposes of this paragraph, the Commonwealth of Pennsylvania shall not constitute an intestate heir. If no such intestate heir is then living, the unappointed portion shall be distributed to one or more Charities selected by the Trustee. Any distribution for an individual for whom a trust is then in existence pursuant to the other provisions of this Agreement may, iu the discretion of the Trustee, be added to such trust. -7- (C) If, upon the termination or partial termination (which shall include a Beneficiary's exercise of a right of withdrawal) of any of the trusts under this Article, a share of unappointed principal is directed to be paid, outright, to any individual who is then under the age of twenty-one (21) years, or, in the opinion of the Trustee, is incapable of properly managing his or her financial affairs, such share shall not be paid out, but shall be retained by the Trustee in a separate trust. Until the beneficiary attains such age or, if later, such capability, the Trustee shall pay to said beneficiary, to a Section 529 plan for the benefit of such beneficiary, to the person having physical custody of such beneficiary, to such beneficiary's natural guardian or to the guardian of such beneficiary's person or estate, in any of such cases without liability on the part of the Trustee to see to the application thereof, or expend for such beneficiary's benefit so much of the Income and principal as it considers advisable to provide for the health, maintenance, support and education, including without limitation college and graduate school, of the beneficiary, and shall add the rest of the Income to principal, at least annually, and invest it as such. When said beneficiary attains such age or, if later, such capability, the beneficiary shall have the right to withdraw all the principal and accrued and undistributed Income, upon which event the trust shall terminate. If suoh beneficiary dies before such time, the Trustee is authorized in its discretion to pay part or all of the beneficiary's funeral expenses and the remaining principal and any accrued or undistributed Income shall be distributed, outright or on further trust, to anyone other than said beneficiary, said beneficiary's estate, or the creditors of either, or a spouse of such beneficiary who is not a Qualified Spouse, as such beneficiary directs by specific reference to such beneficiary's trust under this -8- paragraph in such beneficiary's Will, and any unappointed portion shall be paid to such beneficiary's then living issue, per stirpes, or, if none, to those individuals who would have been such beneficiary's intestate heirs (in the shares provided under Pennsylvania intestate law) if such beneficiary had died at that time intestate, married, if such beneficiary has a Qualified Spouse, otherwise unmarried, domiciled in Pennsylvania and owning, outright, the property constituting such trust estate and no other property or, if none, to one or mote Charities selected by the Trustee. For purposes of this paragraph, the Commonwealth of Pennsylvania shall not constitute an intestate heir. Any distribution for an individual for whom a trust is then in existence pursuant to other provisions of this Agreement may, in the discretion of the Trustee, be added to such trust. ARTICLE FOUR TRUST ADMINISTRATION (A) If the Trustee considers the principal of any trust under this Agreement to be insufficient to warrant establishing or continuing the trust, subject to any obligation to reimburse medical assistance paid on DAMON's behalf, the Trustee may (but, during DAMON's lifetime, only with the approval of a court of competent jurisdiction) pay the principal and any accrued or undistributed Income to DAMON, or acourt-appointed guardian of the estate for DAMON, or, if DAMON is under the age of twenty-one (21) years, to a Custodian, to be selected by the Trustee, for DAMON under an appropriate Uniform Gifts or Transfers to Minors Act or to a Section S29 plan, for the benefit of DAMON, or if DAMON is not then living to any other beneficiary or beneficiaries entitled to the Income of the terminated trust, or guardian or Custodian or Section S29 plan (as -9- above provided for DAMON) on their behalf. If the Trustee acts under the immediately foregoing sentence, the receipt and release of the distributee will terminate absolutely the rights of all persons who might otherwise have an interest in such trust, whether vested or contingent, without notice to them and without the necessity of filing an account to the court. (13) Income allocated to DAMON or a minor may be expended fox her/his benefit or may be paid to her/his natural guardian, to the guardian of her/his person or estate or to a Custodian, to be selected by the Trustee, for her/him under an appropriate Uniform Gifts or Transfers to Minors Actor to a Section 529 plan for her/his benefit, without liability on the part of the Trustee to see to the application thereof. The Trustee may also deposit amounts in an interest bearing account in DAMON's or the minor's name in its own banking department or elsewhere. (C) The income and principal of any trust as shall or may become distributable (whether the interest therein be present or future, vested ar contingent, direct or indirect) in accordance with the provisions of this Agreement shall not, uirtil the actual distribution thereof to the person or entity entitled thereto, be subject to the debts, obligations, liabilities or engagements of such person or entity, or to execution, attachment or other judicial process of whatsoever character and howsoever termed, or be assignable voluntarily, involuntarily or by operation of law or otherwise howsoever, and the distribution thereof shall not be anticipated. Nothing in this paragraph shall be construed or deemed to curtail to any extent any power of appointment provided for in this -10- Agreement or any power, authority or discretion given to or vested in the Trustee by the provisions of this Agreement or by law to make distribution and expenditure of income and principal of any trust in accordance with the provisions of this Agreement. (D} Corporate distributions of shares of the distributing corporation shall be allocated to principal, regardless of the number of shares and however described or designated by the distributing corporation. (E) Except as may otherwise be provided in this Agreement, the Trustee shall have the following powers, to be exercised in its discretion, in addition to and not in limitation of those granted by law: to retain assets, without duty of diversification, in kind or to sell the same, at public or private sale, at such times and upon such terms and conditions as it sees fit; to invest in any kind of property, or fractional interest. therein, no matter where located, without regard to any otherwise applicable statutory or other limitations on investment by fiduciaries; to purchase policies of life insurance, to pay premiums thereon from income or principal and to exercise all rights of ownership thereover; to pledge, exchange or mortgage any real or personal property and to lease the same for any period of time, including without limitation more than either five (5) years or the term of the trust; to give or exercise options for sales, leases and exchanges; to borrow money; to lend money (including, without limitation, to any possible beneficiary hereunder) on commercially reasonable terms; to compromise claims; to vote shares of corporate stock, in person or by proxy, in favor of or against management proposals and otherwise exercise all rights of security holders; to carry securities in the name of a -11- ^ nominee, including that of a clearing corporation or depository, in book entry form, unregistered or in such other form as will pass by delivery; to allocate realized capital gains to income or principal; to allocate receipts and disbursements as between income and principal; and to make distribution either in cash or in kind. Without limiting the foregoing, the Trustee may invest in and hold property which is used as the principal or secondary residence, furniture, automobile and other items meeting the "special needs" of DAMON despite the fact that such property is nou-productive of income. (F) In exercising any discretion to distribute principal or Income granted to Trustee, the Trustee shall take into consideration other readily available funds of which it has knowledge, all applicable insurance coverage and tax consequences, as well as available governmental benefits, payments and programs. No discretionary power to distribute principal or Income provided for in this Agreement shall be construed to allow the payment therefrom of any specific expense or obligation of, or for, a beneficiary which is otherwise payable by any insurance or any governmental entity or pursuant to any governmental benefit or program. The trusts under this Agreement shall supplement, not supplant, governmental payments, benefits and programs to the greatest extent allowed by law. At termination of the trust for the benefit of DAMON, the Trustee shall, in accordance with 42 USC 1396p(d}(4)(A), repay any state an amount equal to the lesser of all the Trust Estate or the amount equal to the total medical assistance paid on DAMON's behalf for which reimbursement is required under a state plan established under the subchapter containing 42 U.S.C. 1396p. (Should the Trust Estate be insufficient, at such termination, to satisfy the aforesaid required reimbursement of medical assistance, and -12- should more than one state's Medicaid administering agency be entitled to such reimbursement at that time, such reimbursement shall be apportioned among such agencies based on the share of the total amount of medical assistance to be reimbursed which was paid by each such agency.) The Trustee shall furnish a copy of its annual statement of transactions to the third party liability section of any state department which has paid medical assistance on DAMON's behalf for which reimbursement is required. Absent reasons to do otherwise, in exercising any discretion to distribute principal or Income to, or for the benefit of, any non-skip beneficiary the Trustee shall make such distribution from ageneration-skipping transfer tax non-exempt trust before utilizing a generation-skipping transfer tax exempt trust. (G) The Trustee may resign, effective upon qualification of its successor, at any time, without stating cause, by petitioning a court of competent jurisdiction to designate and appoint a successor corporate Trustee, unless this Agreement names, or provides a procedure for naming, a successor to such resigning Trustee and such successor Trustee qualifies, in which event such successor shall serve. A copy of any account filed by a Trustee shall be served upon the Medicaid administering agency of any state which has paid medical assistance on DAMON's behalf for which reimbursement is required, including, without limitation, the Special Needs Trust Depository, Department of Public Welfare, P.O. Box 8486, Harrisburg, Pennsylvania, 17105-8486. (H) A corporate Trustee shall be entitled to compensation for its services hereunder in accordance with its schedule in effect when the services are performed. Por -13- any services performed by it in connection with DAMON's estate, which services are normally performed by the personal representative, the corporate Trustee shall be entitled to such additional compensation as may be fair and reasonable under the circumstances, not to exceed seventy-five (75 %) percent of the additional compensation to which it would be entitled as Executor if the assets of this Trust Estate were to be superimposed upon the testamentary estate of DAMON. Compensation inay be charged to principal or income, or partly to each, in the discretion of the Trustee. (I) The Trustee shall be entitled to pay all expenses incurred in the administration of the trust from the trust, and to employ or appoint, and pay reasonable compensation from the trust to, accountants, depositories, investment counsel, attorneys, attorneys-in-fact, and agents (with or without discretionary powers). In determining whether the existence of this trust for the benefit ofDAMON has the effect of rendering DAMON ineligible to receive any government benefits or to participate in any government program, to which DAMON would otherwise be entitled, the Trustee is granted full and complete discretion to initiate or defend administrative and/or judicial proceedings related to determining such eligibility, and all costs related thereto, including reasonable attorney's fees, shall be a proper charge to the Trust Estate• (J} Except as may otherwise be expressly provided herein, the Trustee's exercise or nonexercise of powers and discretions in good faith, and without negligence, shall be conclusive on all persons and the Trustee shall have no liability therefor. -14- (K} During DAMON's lifetime, the Trustee shall furnish a copy of its regular statements to DAMON, from and after DAMON's twenty-first (2150 birthday (so long as DAMON is, in the opinion of the Trustee, not incapacitated), as well as DAMON's parents and any judicially appointed guardian of the estate of DAMON, at addresses designated by them. In no event shall statements be provided less often than quarterly. (L) If, upon the expiration of the period allowed by the applicable statutory rule against perpetuities, if any, any interest in a trust created pursuant to this Agreement is void as a perpetuity and such void interest vests in any person who is then under the age of twenty-one (21) years, such interest shall not be paid out, but the Trustee shall pay such interest to a Custodian (selected by the Trustee) for such person under an appropriate Uniform Gifts or Transfers to Minors Act or to a Section 529 plan for the benefit of such person. For purposes of measuring the period allowed by the applicable statutory rule against perpetuities, if any, the measuring lives shall be those of DAMON's grandparents and said grandparents' issue, living, or in gestation, at the time of execution of this Agreement. (M) Except as may otherwise be provided in this Agreement, in addition to such powers, if any, as are afforded the Trustee under applicable law to separate or combine trusts, in establishing, funding, or administering the trusts provided for herein the Trustee shall have the power to separate a trust into trusts which contain the same diapositive provisions (except that if a trust is so separated some or all of the trusts resulting from such separation may be subject to different or additional testamentary powers of appointment) or combine trusts which contain the same diapositive provisions, for purposes of facilitating -15- administration, allowing use of anyone's exemption from any generation-skipping transfer tax, transforming a trust partially exempt from any generation-skipping transfer tax into trusts which are either wholly exempt from, or fully subject to, such tax, reducing taxes or any other reason deemed by the Trustee to be in the interest of the beneficiaries. Without limiting the foregoing, any of the trusts provided for in this Agreement may be divided by the Trustee to permit or facilitate use of anyone's available exemption from the Federal generation skipping transfer tax, including without limitation so as to wholly exempt, rather than partially exempt, any trust to which such exemption is allocated. In that regard, any trust may be divided into two separate parts, each to be held as a separate trust estate as follows. "Part One" shall be that portion to which any part of anyone's exemption from the Federal generation-skipping transfer tax is, or has been, allocated, and shall have an inclusion ratio for such generation-skipping transfer tax purposes of zero. The rest shall constitute "Part Two", which shall have an inclusion ratio for Federal generation-skipping transfer tax purposes of one. In the event the Trustee does effect such division, the terms of each trust shall be the same as those provided in this Agreement for the trust so divided, except that the Trustee may give any beneficiary of either trust a general testamentary power of appointment thereover exercisable in favor of the creditors of such beneficiary's estate and with power to direct the payment therefrom of any additional death taxes resulting from the possession of this general power. ARTICLE FIVE SUBSTITUTION PROVISION DAMON shall have the power to acquire the trust corpus by substituting other property of an equivalent value• -16- ~ > ~ l ARTICLE SIX FIDUCIARY PROVISIONS (A) In the event of the merger or consolidation of any corporate Trustee the resultant corporation shall become successor Trustee, without notice to any party. (B) No bond shall be required of the Trustee hereunder in any jurisdiction. (C) All powers, authorities and discretions conferred upon and granted to the Trustee named herein shall extend to and be exercisable by such Trustee's successor or successors, no matter how appointed. No successor Trustee shall be personally liable for any act or failure to act of a predecessor Trustee; PROVIDED, HOWEVER, that this provision shall not be deemed to abrogate the successor liability of an entity that succeeds to the assets or business of a Trustee and, thus, becomes a successor Trustee. (D) While observing its primary responsibility to act in the best interests of the beneficiaries, the Trustee is authorized to deal with its own institution and its affiliates on the same basis as with unrelated institutions. By way of illustration and not limitation, the Trustee may invest in interest-bearing accounts in, or certificates of deposit issued by, its own banking department, in shares of registered investment companies for which the Trustee or an affiliate performs services for a fee, whether as custodian, transfer agent, investment advisor or otherwise, or in securities underwritten by syndicates of which the Trustee is a member, but not if purchased from the Trustee; may borrow money from its -17- , banking department; and may execute purchases and sales through its affiliated brokerage service at the affiliate's regular institutional rates so long as that service provides competitive execution. Any broker or dealer executing transactions on behalf of the trust may receive commissions that are reasonable in relation to the value of the brokerage and/or research services provided. The term "affiliate" shall include, without limitation, a parent, sister or subsidiary corporation of the corporate Trustee, or a subsidiary of a sister or subsidiary corporation. ARTkCLE SEVEN REMOVAL POWER DAMON's parents, jointly, so long as both are sui juris, and, should only one parent be sui juris, the sole parent who is sui juris, and, additionally, DAMON, jointly with such parent, or unanimously with such parents, and, if neither parent is sui juris, DAMON, individually, so long as DAMON is, in any event, sui juris, and, at such time as none of DAMON's parents or DAMON is living, the beneficiary of any trust based on whose existence the trust was created, if sui juris, shall have the right, by an instrument in writing delivered to the Trustee and giving twenty-one (21) days advance notice, to remove such corporate Trustee and appoint as a successor any corporate fiduciary which is, at the time of its appointment, lawfully authorized to engage in trust business in the United States, is independent from, including not related or subordinate to, DAMON or anyone with a removal/appointment power as provided in this Article, (or persons controlled by DAMON or anyone with aremoval/appointment power), and has assets held as a fiduciary, excluding the subject trust, at least two hundred (200) times the value of the subject trust at -18- , l the time of the successor's appointment. Should a judicially appointed guardian of the estate be serving for (i) DAMON, or (ii) following DAMON's death, for the beneficiary of a trust based on whose existence the trust was created, the said guardian of the estate shall have the same right of removal/appointment as would DAMON or the beneficiary, as the case may be, under this Article if DAMON or the beneficiary were, respectively, sui jurist provided, however, that said guardian may not appoint itself Trustee hereunder. This right of removal/appointment may be exercised by any one individual (or such individual's judicially appointed guardian of the estate) no more often than once every twelve (12) months. Should a corporate fiduciary resign as Trustee of any trust under this Agreement, the person or persons, if any, who would have had the right, under the foregoing provisions of this Article, to remove that Trustee at that time (ignoring the immediately previous sentence) shall have the right to appoint a corporate fiduciary, meeting the same standards as set forth above, as successor Trustee by delivering an instrument in writing so providing to the resigning Trustee. Each successor Trustee shall furnish notice of its assumption of office to the third party liability section of any state department which has paid medical assistance on DAMON's behalf for which reimbursement is required. ARTICLE EIGHT EXCLUSION OF ENVIRONMENTAL LIABILITY The Trustee shall not be liable for any loss or depreciation in value sustained by the trust as a result of the Trustee acquiring any real property upon which there islater discovered to be hazardous materials or substances requiring remedial action pursuant to -19- , ! ~ any federal, state or local environmental law, unless the Trustee contributed to the loss or depreciation in value through willful default, willful misconduct or gross negligence. ARTICLE NINE ADDITIONS TO TRUST No one may make any addition to the Trust Estate (but the foregoing provision of this Article shall not be deemed to limit payments to the Trust Estate from a structured settlement, if any, approved as part of any settlement of the Litigation). ARTICLE TEN ACCEPTANCE OF TRUST SKY TRUST, N.A. expressly accepts the trust hereby created. ARTICLE ELEVEN IRREVOCABILITY OF TRUST This Agreement and the trust hereby created are IRREVOCABLE, PROVIDED, HOWEVER, that, during DAMON's lifetime, the Court authorizing execution of this Agreement shall have continuing jurisdiction with regard to it, including the power to modify or terminate it. Tlae Trustee shall serve upon each state department, which has paid medical assistance on behalf of DAMON for which reimbursement is required, any petition it intends to present to modify or terminate this Agreement, or to change the situs of the trust hereby created. ARTICLE TWELVE GOVERNING LAW -20- L ~ ~ This Agreement has been executed, delivered and accepted in the Commonwealth of Pennsylvania. This Agreement and the trust created pursuant hereto shall be governed, construed and administered according to the laws of the Commonwealth of Pennsylvania. The situs of this trust shall be Cumberland County, Pennsylvania. Notwithstanding the foregoing provisions of this Article, if at any time, in the opinion of the Trustee, it is in the best interests of the beneficiaries of any trust for the situs of the trust to be located in a jurisdiction other than the one in which the trust is administered at the time, the Trustee may (but, during DAMON's lifetime, only after first obtaining the approval of a court of competent jurisdiction} remove the trust. situs (and to the extent necessary or appropriate, the trust assets) to such other jurisdiction and elect that the law of such other jurisdiction shall govern the trust to the extent necessary or appropriate under the circumstances. ARTICLE THIRTEEN TITLES AND DETINITIONS (A) The titles of the various articles of this Agreement are for convenience and identification purposes only. The titles shall not be deemed to be part of this Agreement for purposes of ascertaining the intent or meaning of any provision in this Agreement or for any other reason. (13) In this Agreement where the context so warrants the singular shall be deemed to include the plural, and vice versa, and one gender form shall Ue deemed to include the others or either of the others. -21- .. , (C) In this Agreement, assets that are left to, distributable to or allocated for an individual's issue who are living at a certain time "per stirpes" or on a "per stirpital" basis shall be divided in the following manner. One equal share shall be created for each then living child of that individual and one equal share shall be created for each child who is not then living but of whom any issue is then living. It is intended that even if no child of the individual is then living the division shall still be made per capita for that individual's children of whom any issue is then living. Each share for a child not then living shall be divided in the same manner into sub-shares for that child's then living issue. (D) "Code" means the Internal Revenue Code of 1486, as amended, or any future United States internal revenue law. References to Sections of the Code shall, at any particular time, mean the specified sections of the Internal Revenue Code of 1986, as amended, or the corresponding provisions of any future United States internal revenue law. (E) An individual's "Qualified Spouse" shall mean a person who was lawfully married. to such individual at the time of such individual's actual death, survived such individual by at least ten (10) days and was residing with such individual at the time of such individual's actual death or was then separated from such individual for reasons other than marital discord. (F) "Charity" shall mean one or more, and "Charities" shall mean more than one, governmental, charitable, religious, educational and scientific corporations, trusts, funds and other organizations (whether located in the United States or abroad) as shall be of such character that gifts thereto shall be deductible for estate tax purposes under the -22- Code in force and effect at such time. ARTICLE FOURTEEN REFORMATION The Trustee is, at any particular time during the continuance of any trust under this Agreement, authorized to reform, by a writing made and filed with the records of such trust, any of the provisions of this Agreement relating to such trust, but only to the end and purpose that burdensome tax consequences may, consistently with the purposes of such trust and this Agreement, be eliminated or minimized; provided, however, that, during DAMON's lifetime, the Trustee is also authorized to reform, by a writing made and filed with the records of DAMON's trust, any of the provisions of this Agreement relating to such trust to the end and purpose that such trust may qualify as a special needs trust consistent with the intended purpose as described in the second paragraph of this Agreement. Any reformation shall be given such retroactive effect as may be necessary for its intended purpose and shall for all purposes be binding and conclusive in all respects on every person having any interest whatsoever in the trust estate of such trust. The Trustee shall give notice of any reformation to the third party liability section of any state department which has paid medical assistance on DAMON's behalf for which reimbursement is required. ACCEPTANCE OF TRUSTEE SKY TRUST, N.A, hereby accepts the foregoing trust upon the terms and conditions therein set forth. The Trustee shall provide a copy of this Agreement to the Medicaid administering agency of any state paying such benefit to DAMON and to the SSI -23- Program Support Team for any region paying such benefit to DAMON, including, without limitation, the Special Needs Trust Depository, Department of Public Welfare, P.O. Box 8486, Harrisburg, Pennsylvania, 17105-8486, and the SSI Program Support Team, Attention: Team Leader, Mid Atlantic Program Service Center, 3rd and Spring Garden Streets, Philadelphia, Pennsylvania, 19101. WITNESS the due execution hereof, INTENDING TO BE LEGALLY BOUND, the day and year first written above. By ATTE T: ~. ~ 1 ru fficer _24. RitV TRTICT N A ~ 'i~ ~ SCHEDULE A This schedule is attached to and forms a part of that certain irrevocable trust agreement known as the DAMON BRYAN IRREVOCABLE TRUST, dated March 15, 2007, and identifies the initial trust property held subject to that trust. All DAMON BRYAN's rights in, to and under that certain settlement of the Litigation. -25- , Y' i State of ~ hJhl~~ 1/~n~~.fl ) ss. County of .~.`1 ~ ~.-1~ ~ N ~/ ) ~\--•,, On this, the ~ day of ~l'1f}kC.~-~ , 2007, before me, --CIt~~~~Jh ~7(~;(j~,~/ , the undersigned officer, personally appeared TnS~PI~ ~{~EC-4 ,who acknowledg d himself/herself to be a O~t2.. of SKY TRUST, N.A., and that he/she as such ~-~~s' Qp~ '$sZjE~.3 • ,being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of SKY TRUST, N.A., by himself/herself as~~sc'~~kC a~~en) 7' In witness whereof, I hereunto set my hand and official seal. tary Public ~_..~ COMMONWEALTFI OF PENNSYLVANIA Notarial ~a~ I -'~ Sandra Burger, Notary Public BakAMn 9a~o, Allegheny County My Commis;ion F x~ir~::July 2, 2008 Mentbar, Pr~nnayiv[tn!%, ~sorf~rtlon O1 Notaries ~ •r' r VERIFICATION I, r~g~1~Cc,.- ~e~-S14, with a title of V. ~ ~~ea~c~~'', am an authorized representative of The Huntington National bank and hereby verify that I am authorized to make this statement and that the facts contained in the Petition are true and correct to the best of my knowledge, information, and belief. This Verification is made subject to the penalties of 18 Pa. C.S. § 4904 relating to unswom falsification to authorities. THE UNTINGTON'NATIONAL BANK Date: ~ "~ 3 l - ~ ~ gy. Name: 'ri1e~ e ' Title: y;~ ~}-e,:~-~- BF-376714.1:018668-143399 ~ ~S f VERIFICATION & CONSENT We, Darren and Jennifer Bryan, verify that the facts contained in the foregoing Petition are true and correct to the best of our knowledge, information, and belief, and consent to the relief requested therein. This Verification is made subject to the penalties of 18 Pa. C.S. § 4904 relating to unsworn falsecation to authorities. Date: ~ Date:~~ - 2 S~ I C1 Darren Bryan an,~D ~ ~ Jenn(fer Bryan BF-376714.1:018668-143399 .. . IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA IN RE: ORPHANS' COURT DIVISION DAMON BRYAN IRREVOCABLE TRUST AGREEMENT No. CERTIFICATE OF SERVICE I certify that I caused to be served a true and con-ect copy of the Petition for Approval to Modify Real Estate on the following by way of U.S. first-class mail, postage prepaid on the ~~ day of September, 2010: Ms. Lisa B. Dees Department of Public Welfare Office of General Counsel Health and Welfare Building 7th and Forester Streets Third Floor, West Harrisburg, PA 17120 The Special Needs Trust Depository Attn: Manager, TPL Section P.O. Box 8486 Harrisburg, Pennsylvania 17105-8486 BF-376714.1:018688-143399 Darren and Jennifer Bryan ,! IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA IN RE: ORPHANS' COURT DIVISION DAMON BRYAN IRREVOCABLE TRUST AGREEMENT No. NOTICE OF PRESENTATION To: Those Persons on the Attached Certificate of Service Please take notice that the attached Petition will be presented to the Court by filing same with Cumberland County Clerk of the Orphans' Court Division (for subsequent internal transmission) on September, 2010. Please advise us right away if you have any objection or questions. Filed on Behalf of Petitioner: ARENSBERG, P.C. Pa. I.D. BF-376714.1:018688-143389 ~ '~' r IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA IN RE: ORPHANS' COURT DIVISION DAMON BRYAN IRREVOCABLE TRUST AGREEMENT No. ORDER OF COURT AND NOW this day of , 2010, after consideration of the Petition to Approval Modification of Real Estate filed by The Huntington National Bank, IT IS ORDERED that any party in interest shall be afforded the ability to file a responsive pleading to the Petition by , 2010. If no pleading in response is filed, the petition shall be granted and the proposed order submitted with the Petition shall be entered. By: J BF-376714.1:018668-143399 ~ ~ IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA IN RE: ORPHANS' COURT DIVISION DAMON BRYAN IRREVOCABLE TRUST AGREEMENT No. PETITION FOR APPROVAL TO MODIFY REAL ESTATE Filed by: The Huntington National Bank, Trustee of the Damon Bryan Irrevocable Trust Agreement Counsel of Record for Petitioner: William C. Ries Pa. I.D. No. 19191 wries(d~tuckertaw.com Nora E. Gieg Pa. I.D. No. 200446 ngieg~tuckerlaw.com Tucker Arensberg, P.C. Firm No. 287 1500 One PPG Place Pittsburgh, PA 15222 412-566-1212 BF-376714.1:018668-143399