Complex sentence: Upon the death of their mother and father, their grandfather assumes custody of the children, but they run away because they believe him to be cruel, first from the orphanage and then from a baker and his wife who want to separate the children.
Split into simpler sentences: Upon the death of their mother and father, their grandfather assumes custody of the children, but they run away because they believe him to be cruel. First, they flee from the orphanage and then from a baker and his wife who want to separate the children.