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COA: Bank didn't breach duties as trustee

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Although tempted to analyze with "the benefit of hindsight" a suit filed by beneficiaries of a trust against a bank that served as the trustee, the Indiana Court of Appeals affirmed summary judgment in favor of the bank after finding the bank acted in good faith.

The beneficiaries of a trust set up by their father, Chanell and Micaela Cochran, filed the suit In re: Matter of the Trust of Stuart Cochran Irrevocable Trust v. KeyBank, N.A., No. 71A04-0806-CV-3847, alleging KeyBank, as trustee, had breached its obligations and violated the prudent investor rule.

Stuart Cochran set up the trust in 1987 with his then-minor daughters as beneficiaries and received assistance from insurance advisor Art Roberson. KeyBank became successor trustee in 1999, just after Roberson had recommended the trust be replaced with two variable universal life policies. Stuart agreed to change his policy to a safer John Hancock one in 2003 with a fixed payout of around $2.5 million after his variable universal life policies continued to lose money in the stock market following Sept. 11, 2001. The previous policy was originally valued around $8 million before losses.

Stuart died unexpectedly shortly after the new policy was confirmed, leaving his daughters with only the $2 million in life insurance funds instead of the larger amount they could have had from the previous variable universal life policies. The daughters filed suit and the trial court ruled in favor of the bank.

On appeal, the Court of Appeals reviewed the case under the Indiana Prudent Investor Act, which cautions that compliance with the act's rules should be made in light of the facts and circumstances at the time a trustee made a decision or action, not by hindsight. Now it is known that the stock market would rebound and the variable universal life policies would have been worth more than the John Hancock policy, wrote Chief Judge John Baker, and the appellate court can understand why the daughters wish that KeyBank had made a different decision. However, KeyBank acted in good faith in making the switch and had an independent outside insurance consultant review all the policies before making the decision.

The Court of Appeals also affirmed that under the Prudent Investor Act, KeyBank didn't improperly delegate certain decision-making functions to Roberson and Stuart, the bank didn't violate the PIA by disregarding the insurance consultant's recommendations regarding the variable universal life policies, and that the bank didn't violate the PIA for failing to investigate alternatives for other life insurance policies.

While the appellate court found KeyBank's decision-making process and communication with Stuart's daughters wasn't perfect, the trial court didn't err in finding it was sufficient.

"Although it is tempting to analyze these cases with the benefit of hindsight, we are not permitted to do so, nor should we. KeyBank chose between two viable, prudent options, and given the facts and circumstances it was faced with at that time, we do not find that its actions were imprudent, a breach of any relevant duties, or a cause of any damages to the (daughters)," wrote the chief judge.

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  1. Can I get this form on line,if not where can I obtain one. I am eligible.

  2. What a fine example of the best of the Hoosier tradition! How sad that the AP has to include partisan snark in the obit for this great American patriot and adventurer.

  3. Why are all these lawyers yakking to the media about pending matters? Trial by media? What the devil happened to not making extrajudicial statements? The system is falling apart.

  4. It is a sad story indeed as this couple has been only in survival mode, NOT found guilty with Ponzi, shaken down for 5 years and pursued by prosecution that has been ignited by a civil suit with very deep pockets wrenched in their bitterness...It has been said that many of us are breaking an average of 300 federal laws a day without even knowing it. Structuring laws, & civilForfeiture laws are among the scariest that need to be restructured or repealed . These laws were initially created for drug Lords and laundering money and now reach over that line. Here you have a couple that took out their own money, not drug money, not laundering. Yes...Many upset that they lost money...but how much did they make before it all fell apart? No one ask that question? A civil suit against Williams was awarded because he has no more money to fight...they pushed for a break in order...they took all his belongings...even underwear, shoes and clothes? who does that? What allows that? Maybe if you had the picture of him purchasing a jacket at the Goodwill just to go to court the next day...his enemy may be satisfied? But not likely...bitterness is a master. For happy ending lovers, you will be happy to know they have a faith that has changed their world and a solid love that many of us can only dream about. They will spend their time in federal jail for taking their money from their account, but at the end of the day they have loyal friends, a true love and a hope of a new life in time...and none of that can be bought or taken That is the real story.

  5. Could be his email did something especially heinous, really over the top like questioning Ind S.Ct. officials or accusing JLAP of being the political correctness police.

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