Someone on Avvo recently asked: "My husband has POA to sell his fathers home. The proceeds are intended to be used for his care and living expenses. He is in assisted living. He has not proved to be wise with finances and we suspect gambling. How can my husband protect the proceeds from him and make sure they are used for his expenses and end of life expenses. He has no life insurance and the family will need money to pay for a funeral."
Answer from Wood County, Ohio Estate Planning Attorney Staten Middleton: "I am sorry to hear about your situation. Unfortunately, your husband's father is free to act on his own behalf as long as he is not determined by a Court to be incompetent. A power of attorney alone does not make the maker incompetent. I have encountered similar situations and have addressed it by quickly moving to establish a guardianship through a probate Court.
However, simply establishing a guardianship is not enough. The next step is to transfer all assets to the guardian. That ensures that only the guardian may transact business. If this step is not taken his father may still transact business, such as making withdrawals. An account holder is generally not liable if they provide assets to a person determined to be incompetent so long as they are not aware of the incompetence determination.
Powers of Attorney are generally designed to avoid the necessity of a guardianship except in cases where the maker of the POA does not act in their own best interest.
I would suggest your consult an attorney familiar with these matters and wish you and your family the best."