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A Matter of Trusts

He then found that the trust would have gained more -- the life insurance payoff -- from Giesinger's death than it would from his continued life. "Further," he said, "the trust suffered no detriment, pecuniary or otherwise, upon the death of" Giesinger.

"While the case could have been decided, rightly or wrongly, on the question of the failure of the insured to fully disclose his physical condition, that is not the way the court ruled," Tansill said. "The court ruled that even if the insurance was validly obtained and there was no question as to the disclosure about the physical condition of the insured, the trustee would still not be able to collect on the policy, because of this lack of insurable interest problem."

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Even more mysterious to Crispin, Tansill and others is why Transamerica raised the insurable interest argument in the case.

"This defense is unprecedented. There's no reported case in the country where an insurance company has defended on this ground. It make no sense to defend on this ground" because of the potential effect on trust-owned life insurance, Crispin said.

Transamerica declined to comment on the case. A spokeswoman said the company does not comment on pending litigation.

The trust also owned Giesinger's house and allowed him to receive income from trust assets. It also did not specifically permit the purchase of life insurance, though it did grant broad powers to the trustees.

These oddities in the trust -- which Tansill said likely would have undermined its tax benefits -- along with the misrepresentation will probably be enough to prevent the case from being extendable to others, according to the life insurance council and Maryland insurance regulators.

Crispin said he doesn't see how those factors are relevant to Hilton's holding on the insurance interest. But the trust is appealing the ruling to the U.S. Court of Appeals for the 4th Circuit, which could overturn some or all of it.

A federal judge in Oregon sentenced three people connected with the "Christian Patriot Association" to prison after they were convicted of tax fraud, the Justice Department said. The warehouse bank they were operating allowed people to deposit money in numbered accounts and engage in transactions that were virtually untraceable, the department said.

Richard George Flowers was sentenced to 50 month in prison; Dorothy Lenore Flowers drew three years' probation, and Jeffrey Allen Weakley 30 months in prison.

The warehouse bank provided anonymous banking services to some 900 members nationwide and handled deposits of more than $186 million, the government said.

More than three of four Americans say they will be better prepared financially for retirement than their parents, according to a survey by Fidelity Investments. Young adults, age 21 to 34, are more confident than those 35 to 54, the survey found. Parents' biggest mistake: waiting too long to start saving.

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