Stock concentration cases against fiduciaries just keep getting scarier.

The latest fright comes from Hamilton County, Ohio. If the New York case of Dumont sent chills down advisors' spines, Ohio's Fifth Third Bank v. Firstar Bank, No. C-050518, should give them nightmares.

In Dumont, the fidicuary had years to diversify a portfolio and failed to do so, despite beneficiary's entreaties. A trial court decision fining the fiduciary sent shock waves through the estate-planning community. Ultimately, though, the fiduciary won on appeal.

Now comes this Ohio case. The fiduciary -- U.S. Bank National Association also known as Firstar Bank -- was a trustee of the charitable remainder unitrust (CRUT) in question for only one year. During that time, Firstar made efforts to diversify the single-stock portfolio The investment officer in charge sold when the stock price was up; postponed sales when the price went down. Firstar even had language in the trust document stating that the bank had the right to hold onto the trust's assets even if that meant the assets depreciated in value.

But the investment officer didn't sell quickly enough. And the appellate court found that the trust document's language didn't relieve Firstar of the duty to diversify. The Ohio state attorney general got involved because the trust in question was a CRUT, so he defended the interests of the ultimate beneficiaries, that is to say the charities. Big mess. Result: Firstar now must pay $1.04 million.

How did this happen?

Elizabeth Gamble Reagan, a descendent of one of the founders of industrial giant Proctor & Gamble (P&G), in 2000 established a CRUT with $2 million worth of P&G stock. Firstar was appointed trustee. Reagan was to get 8 percent of the principal value each year until her death, at which time the remainder would go to three charities: the University of Kentucky Equine Research Foundations, Inc., The Hole in the Wall Gang Fund, and Make-a-Wish Foundation.

During that first year, P&G stock values plummeted. At the end of that year, Reagan's P&G stock was worth 50 percent less than at the beginning. She appointed Fifth Third Bank trustee and filed a claim against Firstar. The case was tried before a jury, which awarded Reagan and Fifth Third Bank damages of $1.04 million.

On Sept. 1, an appellate court upheld the verdict.

Drafters of trust documents, put on your thinking caps. The Ohio judges said that the language of Reagan CRUT's governing instrument "did not clearly indicate the intention to abrogate the duty to diversity." This, even though the CRUT said that Firstar had the right "to retain without liability for loss or depreciation resulting from such retention, original property, real or personal, received from Grantor or from any other source, although it may represent a disproportionate part of the trust."

Also, trustees, pay close attention. The appellate judges in Ohio added: "Even if we determined that the CRUT had relieved [Firstar] from the duty to diversify, Fifth Third [Bank] presented evidence that... the investment officer failed to 'verify facts relevant to the investment management' of the CRUT... Fifth Third also argued that the investment officer did not take into consideration the economic conditions, the tax consequences, and the need for liquidity when he chose to sell P&G stock gradually over the course of the year. The evidence was sufficient to create questions of fact properly resolved by the jury."

To be fair, the court found that Reagan and Firstar both understood that a primary purpose of her CRUT was to diversify out of P&G stock in a tax-efficient manner. Highly appreciated assets are often placed in charitable trusts so they can be sold without the worry of taxable gains. Unfortunately, the investment officer in this case was more focused on what investment officers normally focus on: getting the best sales price. But Reagan's goals could have been achieved had her P&G stock been sold immediately and all at once. And as she had just $2 million worth of P&G, putting it up for sale all at once certainly wouldn't have pushed down the overall P&G stock price.

So when you invest for a trust or oversee someone who is doing the actual investing, keep the big picture in mind. And remember: someday, your decisions may be scrutinized by a jury of ordinary citizens.

Good luck.

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