McGinley v. Bank of America, N.A.
Kansas Supreme Court
109 P.3d 1146 (2005)
Marie McGinley created a revocable trust naming Bank of America (the bank) as trustee, with discretionary management authority but a requirement to consult McGinley about purchases or sales and abide by her decisions. After McGinley transferred Enron stock into the trust, the bank drafted (and McGinley signed) a letter directing it to retain the Enron stock without monitoring or analyzing it, and expressly exonerating the bank from any resulting loss. The stock rose to about $750,000 by 2000 before collapsing to $4,800 in 2001; McGinley never revoked her letter, then sued the bank for breach of fiduciary duty over the lost value, and the district court granted the bank summary judgment.
Whether, where a trust requires the trustee to follow the grantor's instructions regarding investments and the grantor expressly instructs the trustee to take certain investment action, the trustee is liable for the loss that results from taking that action.