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Stock Ownership and Valuations
Prior to Mr. Mellinger's death, decedent and Mr. Mellinger
were husband and wife and owned as community property 4,921,160
shares of the common stock of FOH. Such shares were held under
the terms of a revocable inter vivos trust known as the
Frederick N. Mellinger Family Trust (the family trust).
On the death of Mr. Mellinger, under the terms of the family
trust, Mr. Mellinger left his community property interest of
2,460,580 shares of FOH stock in an irrevocable marital trust
(the QTIP trust) for the benefit of decedent during her lifetime.
Property in the QTIP trust was treated in Mr. Mellinger's estate
as "qualified terminable interest property" (QTIP property) for
which a marital deduction was claimed pursuant to section
2056(b)(7). Hugh V. Hunter (Hunter) and Wells Fargo Bank
(referred to collectively as cotrustees and coexecutors herein)
were the cotrustees of the QTIP trust after decedent's death.
Under the terms of the QTIP trust, decedent received a qualified
income interest for her lifetime. Upon decedent's death, the
QTIP trust provided for the payment of certain periodic and lump
sums to the adult children of Mr. Mellinger and decedent, until
they attained the age of 65, in addition to certain periodic
lump-sum payments to the grandchildren of Mr. Mellinger and
decedent, until they attained the age of 30. Upon the final
payment to the children and grandchildren, the QTIP trust
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Last modified: May 25, 2011