Is anyone responsible when all the estate is lost?

Dear Michael: We had come to talk to you about our mother about 10 years ago. At the time, she had land, she had life insurance policies and some long-term care insurance. You suggested we move the land over to a life estate for the children and the life insurance policies be moved to our ownership as well. Had this been done, it would have been protected from Medicaid if my mother needed to apply for Medicaid.

My brother was named as the Power of Attorney at the time as he was the one living closest to her. After attending our meetings with you, he talked to someone else who said we did not need to do all those things. My brother then insisted my mother did not need to do anything.

Well, here we are 10 years later, and Mom has gone into the nursing home. Her long-term care insurance only pays around $2500 a month. She has already used up all her savings and now they are insisting we have to think about cashing in her life insurance policies and putting her land up for sale – as it looks like she could be there for a while.

Hindsight is 20/20, but who is responsible for the losses our family is going to be incurring? Had we listened to you years ago, we would not be facing these losses. All of the children were in favor of these recommendations except my brother who said, "I am her Power of Attorney and I can stop you from making these changes." It really wasn't my mother's decision as she didn't understand and just listened blindly to my brother. It looks like we are going to lose hundreds of thousands of dollars! – Blinded by The Oldest

Dear Blinded: In this case, if your mother had relied upon your brother to provide her with guidance throughout her elder years, he would fall under the Prudent Man rule. The Prudent Man rule goes by what kind of advice was she given by your brother that any prudent man would have given.

However, in your case it is a bit different. Your brother accepted the Power of Attorney for your mother. He then listened to the alternatives and in spite of being in the minority still decided to do nothing and even to block you from attempting you to do so. That is not what a prudent man would do.

The case may be made that as a Power of Attorney, your brother now falls under a "fiduciary" responsibility. If he exercised such powers as blocking the transfer of property, then he this might be considered "fiduciary" powers.

Fiduciary powers are a lot more stringent than Prudent Man rules.

A fiduciary is charged with the responsibility of protecting the assets of your mother's. A fiduciary is held responsible for any losses that your mother incurs – including the loss of her life insurance policies and her land unlike a "prudent man" who just have to live up to "normal" responsibilities. In other words, what would a normal person do – good or bad?

If he attended meetings, met with qualified individuals, then told the other siblings he would block any changes in ownership, then under fiduciary responsibility it is possible your brother is now liable for the loss of assets.

The question then becomes how do you go about proving these "fiduciary" responsibilities? Did your brother put this in writing – an email or letter – that he didn't want to change anything?

If not, do the rest of the siblings remember the incident? If so, they should get together and either collectively or individually recount their memories of this incident and put it in writing.

If you are angry enough to take your brother to court because he made decisions solely for all of you that cost you hundreds of thousands of dollars, then you may have a winnable lawsuit.

If your mother had made bad decisions that is one thing – if your brother made them for her, that is another.