Poa loses money

[anna79]

What is the name of your state (only U.S. law)? Va
If a poa loses 40% in risky stock investment for a 75 year old person in nursing home are they liable at all.

[anteater]

If a poa loses 40% in risky stock investment for a 75 year old person in nursing home are they liable at all.

Assuming that the POA document gives the agent the authority to invest in equities, the only honest response that you should receive to this type of question is: Possibly.

Whether the agent could be considered to have breached his/her fiduciary responsibilities will depend upon the principal's total financial circumstances and the agent's overall management of the principal's finances.

For example, if the principal has financial assets of $1 million and the agent invested $10,000 in a risky equity that lost 40% as part of an overall portfolio, then there is not likely any case to be made.

Same investment but the principal's financial assets are only $100,000, then there is probably a good argument that the agent has not acted prudently.

[tranquility]

An attorney in fact does not need to be correct. He needs to be appropriate.

What that means is that the fact money was lost is not evidence of a fiduciary breach. Why the investment was made and how the investments were chosen are far more important.

Did the attorney in fact get the advice of an investment professional? Did he follow the advice?

[anna79]

From what I've heard 40% of 1.7mil. was lost with the parent being 75 and in nursing home. The nursing home was being paid for though proceeds with no loss of principle until the poa loss this money. Now priciple is shrinking ea. month. Thanks:

[anteater]

The devil is in the details.

As Tranquility said, the loss itself would not indicate a breach of fiduciary duty. It is whether the overall portfolio was appropriate under the circumstances.

Or, to paraphrase one of my favorite financial advisors, "Don't confuse strategy with outcomes." You can't control the outcome. You can control the strategy and ensure that the strategy is appropriate. Sometimes an appropriate strategy goes up in flames. Sometimes a totally inappropriate strategy comes up smelling like a rose.

The agent under the POA might be held accountable for the strategy, not necessarily the outcome. Just as a thought experiment, would anybody be upset if the agent's strategy had produced a positive 40% return over the same period that it lost 40%? I doubt it even though the strategy may have been just as inappropriate.

That said, the best suggestion is for the parent, or an interested party if the parent is not legally competent, to get as many details as possible about how the finances were handled and consult with an attorney familiar with the fiduciary duty of an agent in Virginia.