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My grandma was contacted and is being investigated by adult services for financial abuse. Her bank is claiming me and my mother have misused her bank account. I have told them a portion of the money is what my grandmother loaned me for some custody legal fees for my daughter and I am paying her back with my tax return. They are still being pushy and continuing the investigation. They've gotten my grandma to revoke POA from my mother by getting her confused. She has early stage Alzheimer's but is still able to drive and care for herself everyday.

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The bank is looking out for your grandmother, and good for them! It may seem harsh and unforgiving, but the bank has to err on the side of caution to protect their clients. If, as POA, you withdrew money for yourself, even if you intend to pay it back, then I'm afraid the bank is perfectly justified in questioning the withdrawal. If your grandmother is still mentally competent (in the eyes of the bank), then she just needs to let the bank know that whatever withdrawal you made was legitimate and authorized by her.
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Concernedcake Jan 15, 2020
She did tell them that. She told them she lent me the money and that my mother who has POA can do whatever she wants with the bank account but they are not listening
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If you have nothing regarding this “loan” in writing and signed by you and Grandma, this will not go well for you. I’d be thinking about getting a lawyer.
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You need to have dPOA-Durable Power of Attorney or Financial POA. Healthcare POA is for when she becomes unable to speak on her own behalf due to health reason. Banks don't budge unless you have Financial Power of Attorney.
Getting that now would look suspicious, so Grandma needs to go into her bank and at least sign the banks paperwork that allows you access to her account and then-you can only do limited things.
I attend to my Mom's financial things but at her bequest and I have gotten to know most of the people at her bank quite well but there are still some legal documents that need her attention that only she can do, and this is because she refuses to give me DPOA.
Good luck.
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rovana Jan 16, 2020
Great advice here. The formal legal arrangements do matter. It is risky doing things on a casual "family understands" basis.
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You really have no business using your vulnerable granny's money for your legal messes anyway - now you have another rather serious legal mess.
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Get a good lawyer ASAP if you want to prevent the state from taking guardianship of Grandma. If that happens you and your Mom could effectively be cut out of Grandma's life which I'd imagine would be horrible for all involved. As far as being prosecuted for crimes, that is highly unlikely unless there is much more than what you are telling us, but what the state will do is take complete control of Grandma and her assets and cut you and Mom out of her life possibly.
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You definitely need a lawyer. I am POA for my parents and helping them with their finances is one of the areas I feel most uncomfortable with. My Dad has a movement disorder and it has progressed to the point that he can no longer write checks. My mother’s hands are severely disformed and she can’t write either. I pay all their bills, deposit all their checks. I purchase all their supplies etc. I have had one check written out to me for $47.00 for items I purchased with my own credit card. Not only do I have a fiduciary duty to my parents, the bank does as well. They are the protectors of your Grandmothers bank account and so is your Mother. The bank can and should investigate any large amounts of money paid out that looks suspicious
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A POA presumes (expects) fiduciary responsibility over bank accounts. Your grandmother's bank account SHOULD NOT be used to get you out of a financial jam, regardless of your intention to "pay her back". Period.

Word of warning: if your grandmother stays alive long enough to need long-term care and she will need assistance to pay for it -- meaning Medicaid, before she is given that assistance, Medicaid will demand to see every transaction that has occurred in her bank account over an EXTENDED amount -- they could go back 5 years. It can be an ugly audit of accounts and your grandmother could be denied assistance for these financial "gifts" (mishaps?).

The best you and your mother can do for your grandmother is to not touch her bank accounts and don't ask for money from her. It's harsh, I know, but that is truly the best action to take at this point.
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jacobsonbob Jan 17, 2020
What if the grandmother's account is paid back in full during that 5-year period? Would this essentially "cancel" the original transaction in the eyes of the Medicaid people?
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I'm going to stir the pot a little here (sorry not sorry) as I find some of the responses here a little silly. Granted we don't know the fine details in this case and what really was discussed and agreed upon between the family members, but it's perfectly normal and reasonable in many families to loan or help other family members out financially when needed. Many Grandparents are happy and willing to help their family when needed. Some explicitly give away (maybe feeling the inheritance would do them better now than later). They don't think about or even know anything about Medicaid laws and gifting. The case here could easily be innocent and mutually transactional in nature in which case if Grandma were strong enough, she could raise wholly hell with the bank and APS and the courts if it ever got that far.

If she does have mild dementia, I would advise OP to have Grandma hire an attorney to fight for the her and the family. Assuming the transaction was as innocent as described.
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Tothill Jan 17, 2020
Mstrbill, I do not think it would have been a problem if the POA had not been activated. If it was activated, it is because a doctor thought Gma was no longer capable of making sound decisions.

That the bank in their due diligence reported that after Mum had POA on Gma's accounts, an unusually large sum was removed from Gma's account, is a good thing.

OP should be hiring her low lawyer to help her. To have Gma's funds used to hire a lawyer to defend OP is once again misuse of her funds and digging a bigger hole.
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Unless the Durable Power of Attorney specifies that your mother is authorized to withdraw funds from your grandmother's account to loan out to a family member, your mother is in violation of financial abuse and fraud. Your grandmother may have verbally authorized the loan, but without a signed I.O.U. that has been witnessed or notarized by a neutral third party, it can be deemed misuse of her funds. This is a good lesson learned about what a DPOA can and cannot do with someone's assets.
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Mom cannot do as she pleases with grandma's bank account, including lending money. As POA the only responsibility mom has is to do what is for grandma's benefit and in her best interest. Best file for that tax refund soon.
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