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liquidation, and to effect eventual distribution of the
proceeds of the Property to the beneficiaries * * *.
During 1989, the Liquidating Trust instrument was amended to
permit decedent to transfer her interest to her living trust for
estate planning purposes, and, in all other respects, the
restrictions on alienation of an interest in the Liquidating
Trust remained in force. The Liquidating Trust instrument could
be amended only by the consent of at least 71 percent of the
beneficiaries. The trustee of the Liquidating Trust had the
power to sell Residence without the consent of the beneficiaries,
and, accordingly, decedent’s living trust had no direct control
over the terms or conditions of the sale.
After Residence was placed in the Liquidating Trust, the
trustee began receiving offers which, during 1988, ranged from
$4,500,000 to $9,600,000, with the majority of them placing near
$7 million. The offers were generally contingent on soil and
geologic testing and, in some cases, approval to subdivide. The
trustee, after deciding that the offers received up to that point
were unacceptable, began looking for a wealthy purchaser in order
to exploit Residence’s unique character and to maximize its
selling price. To avoid possible contingencies, the trustee, at
the expense of the Liquidating Trust, caused soil and earthquake
tests to be conducted during 1988 and 1989. An auction of the
Liquidating Trust personalty, which attracted 2,500 people, was
conducted during September 1989. Gross proceeds of the auction
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Last modified: May 25, 2011