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He has some dementia but on his good days he likes to socialize. He is in a nursing home.

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MPOA does not kick in until the patient is no longer able to make rational decisions regarding his medical care. I think VW9729 may be on target - "Dad's wife" is evidently not your Mom, and she may stand to gain much upon his death. I would get to an Elder Care lawyer ASAP and try to get the details of her authority over him. Even if she is his MPOA, if she is not acting in his best interest, you might be able to take legal action to stop her.
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From my understanding, as long as your father is competent to make decisions, his decision will the one that is important. Just make sure that it is known that his decision is to continue dialysis until he is ready for it to end, or no longer competent to have a voice in his own life.
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She can, but I suggest you talk to your father to see if he is willing to change his MPOA. It can be changed at any time as long as he is still lucid enough for the attorney. And some attorneys will come to the nursing home if needed too. Personally, if your dad is still having a decent quality of life and not suffering, I think it's lame to discontinue dialysis. It sounds to me like the wife is either tired of dealing with it or sees dollar signs. Good luck!!
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