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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. Being on this journey from the beginning has convinced me the justice system really doesn't care about the welfare of the child. The trial court judge knew the child belonged with the mother. The father having total disregard for the rules of the court. Not only did this cost the mother and child valuable time together but thousands in legal fees. When the child was with the father the mother paid her child support. When the child was finally with the right parent somehow the father got away without having to pay one penny of child support. He had to be in control. Since he withheld all information regarding the child's welfare he put her in harms way. Mother took the child to the doctor when she got sick and was totally embarrassed she knew nothing regarding the medical information especially the allergies, The mother texted the father (from the doctors office) and he replied call his attorney. To me this doesn't seem like a concerned father. Seeing the child upset when she had to go back to the father. What upset me the most was finding out the child sleeps with him. Sometimes in the nude. Maybe I don't understand all the rules of the law but I thought this was also morally wrong. A concerned parent would allow the child to finish the school year. Say goodbye to her friends. It saddens me to know the child will not have contact with the sisters, aunts, uncles and the 87 year old grandfather. He didn't allow it before. Only the mother is allowed to talk to the child. I don't think now will be any different. I hope the decision the courts made would've been the same one if this was a member of their family. Someday this child will end up in therapy if allowed to remain with the father.

  2. Ok attorney Straw ... if that be a good idea ... And I am not saying it is ... but if it were ... would that be ripe prior to her suffering an embarrassing remand from the Seventh? Seems more than a tad premature here soldier. One putting on the armor should not boast liked one taking it off.

  3. The judge thinks that she is so cute to deny jurisdiction, but without jurisdiction, she loses her immunity. She did not give me any due process hearing or any discovery, like the Middlesex case provided for that lawyer. Because she has refused to protect me and she has no immunity because she rejected jurisdiction, I am now suing her in her district.

  4. Sam Bradbury was never a resident of Lafayette he lived in rural Tippecanoe County, Thats an error.

  5. Sam Bradbury was never a resident of Lafayette he lived in rural Tippecanoe County, Thats an error.

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