Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 33 years.

JPMorgan Chase and Co. is being sued by a historical local church after the congregation reportedly lost millions. Christ Church Cathedral claims the investment bankers mismanagement of two trust funds and self-dealing resulted in a $13 million loss from a trust donated by humanitarian Eli Lilly Jr., the Associated Press reported Wednesday.

Can your trustee be trusted to make the right decisions?

When Eli Lilly, Jr. passed away, he directed that 10% of his estate be left in trust to an Indianapolis church, The Christ Church Cathedral. As reported in the International Business Times in an article titled Christ Church vs. JPMorgan: Bank Allegedly Mismanaged Millions, Lilly actually left three separate trusts for the church. Each trust was to be handled by a different bank.

The article does not say how, but at least one of the trusts eventually came under the management of JP Morgan. The church alleges that the bank invested trust assets in risky financial ventures controlled by the bank. It further alleges that the bank received more value out of these investments than the trust. The church claims a loss of $13 million.

This case highlights an inherent risk when trustees are financial firms that sell investment products. The trustees certainly have a financial interest in channeling trust assets into their own products, but that might not always be in the best interests of the trusts. Rival financial firms might have more appropriate investment products for the trust.

Trustees are supposed to act as reasonably prudent investors. Accordingly, they should be investing trust assets wisely and not just in the products they sell.

That is not to say all financial firms will make poor trustees. However, it is something to consider when designating a trustee. It is not always a good idea to choose a trustee who might have an interest in using trust assets to further his or her own firm.

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If you need legal help with an estate or trust issue you should speak with an experienced trust and estate administration attorney as soon as possible. Contact us online or call our office directly at 800.756.5596 to claim your space at one of our free, informative seminars. Your attendance will qualify you for a discount for our estate and trust administration services. We proudly serve clients throughout California with offices in Torrance, Newport Beach, Orange, Woodland Hills and Pasadena.

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