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the trustee, after weighing the risks and benefits, was entitled
to have the trust make loans to Morrissey, as evidenced by
promissory notes, without violating fiduciary standards.
Petitioner also maintains that the notes included a
reasonable rate of interest and that Morrissey, at the time the
loans were made, had the ability to repay. Petitioner further
maintains that when his economic situation changed, he repaid the
loans with real estate instead of cash. Consequently, petitioner
contends that since Morrissey, as of 1990, was not of retirement
age, it is premature to conclude that as of that date, the trust
would not have funds available for distribution to him upon his
retirement. Petitioner asserts that the real property interests
transferred into the Money Purchase Plan and the Defined Benefit
Plan as repayment of the loans have markedly appreciated in value
to the point where it is reasonable to conclude that the
investments were in fact prudent. Petitioner further asserts
that a simple refinancing of the property could have provided for
both liquidity and diversity whenever Morrissey chose to do so.11
Respondent contends that the investments in the 23 loans
failed to provide the Defined Benefit Plan with a fair rate of
return, sufficient liquidity, adequate security, and diversity of
11We note that many of petitioner's contentions apply to the
Money Purchase Plan and not to the Defined Benefit Plan. See
supra note 1. Morrissey transferred nothing of value to the
Defined Benefit Plan.
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