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I am POA for my mother, however if I pass away, I am told I need a backup POA. How do I do this as she has full dementia now.

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You're wise, and honest, to address this situation now. Let us know after you've read the POA document and if necessary posters can suggest alternate options.
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Thanks. She is not of sound mind, so I am not sure I can do this. That's my concern......
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First read the POA to see if it authorizes you to do this (mine does). If not, you'll have to have your mother create a new one which provides authority for you to designate an alternative, or successor, or your mother can do this in a new POA which she creates.
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