Legal Question in Wills and Trusts in Pennsylvania

Wills only become effective at death; you are the beneficiary of nothing right now as your aunt is alive. Your aunt could use all her funds for her nursing care. Or, she might get Medicaid and Medicaid is mandated now to seek recovery from your aunt's estate once she dies. Either way, you end up with nothing. So being a beneficiary of a will gives you no rights to an accounting.

If your aunt had a life insurance policy that was cashed in, that was her right to do that. Maybe she gave the money to someone who took advantage of her. In that case, the POA could pursue a legal action, but it depends on who it was, how much money we are talking about and what assets they have. Litigation is very very costly and it may not be in your aunt's best interests to pursue a legal action against someone.

The Medicaid lookback rule is used to determine eligiility for Medicaid. The lookback period is measured from the date one applies for Medicaid and looks back five years to see if the person (you aunt) gave away any property. I am not sure how PA Medicaid looks at life insurance. I do know that each state has limits as to the value of property an insured can have and will require people to spend down their assets to qualify. Maybe it was cashed in as part of that?

While I am not encouraging anyone to commit Medicaid fraud, what possible benefit would there be to you to tell Medicaid that your aunt cashed in a life insurance policy if she is on or will be eligible for Medicaid? If you report suspected fraud to Medicaid and they agree, they will declare your aunt ineligble for Medicaid. If she now has no resources to cover her nursing home care (which is very costly - $3000 - $6000 per month) how have you helped her? That money is not going to come back to your aunt so that you can inherit it.

What makes you believe that your aunt's sister got your aunt to transfer assets prior to getting POA? Do you have evidence to support this? The only way to defeat a POA is to pursue guardianship. You would have to show the court that your aunt is not competent to handle her affairs. While this can be done given the dementia, to pursue some kind of a claim against the sister, you would have to establish your aunt's mental state at the time of the transfer(s) and prove that the sister got it and that the sister acted wrongly.

How exactly are you going to do that? It will not be difficult to prove the insurance policy was cashed in. However, what happened to the money? You would need to examine your aunt's bank account at the relevant time and that of her sister to see if there is a correlation like a check or something. And you would need to prove that the transfer was wrongfully procured by your aunt's sister - like showing fraud, undue influence or some combination of wrongful conduct and lack of capacity in your aunt. Otherwise, this will go nowhere because if your aunt did something prior to the POA taking effect, she is presumed competent and could gift money to anyone she wanted.

Your aunt would be the best person to know what she did with the money. Perhaps she will have a moment of lucidity and be able to recall. If you are truly concerned about your aunt and her sister or someone else made off with a substantial portion of assets, then you will have to sit down and think about when the dementia started, when the transfers were made and who ended up with assets. If you have grounds, then pursue the guardiandship and go after the person who received the assets, However, if the sum involved is not going to justify the cost, you might want to just leave this be. Its not going to help your aunt and reporting suspected Medicaid fraud is just going to punish your aunt by denying her benefits for her medical and nursing home care.