My mother-in-law got a POA for her brother after he was hit by a car. He gets a disability check every month. When he got out of the hospital, he moved in with my mother-in-law and father-in-law. After 3 months they had to put him in a nursing home, because he was getting violent. Now that he is in a nursing home his insurance pays for his stay, so his disability check will still be coming in each month. My father-in-law strongly belives that they are able to spend his money just because he can't. I told him it doesn't matter if he can't spend it, it doesn't give you the right to spend it either. That my mother-in-law can spend it on things he needs and that's it.
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I suggest that your mother and father in law meet with an attorney to discuss and understand exactly what the POA is, what it means, exactly what they can spend the disability money on legally, etc. If they are not able to account for any, ANY, disability money spent on items that were not for your mother in law's brother, they will be in for a nasty and costly surprize.
At some point, the insurance will run out. At that time, he will be either a private pay patient or become a ward of the state. At that point, the law states his check will go to the nursing home. This can also occur if medicare or medicade comes into play as well.
You do not say how long he has been in a nursing home. I'm not sure what type of insurance is paying for his "keep" but I agree that it will probably not last forever. I am also surprised that the nursing home did not ask/require a "back-up" form of payment.
It is for sure that spending any of that money for anything other than his specific care is illegal and will/can cause very serious problems.
Please try to get the in-laws to seek legal advise (one idea may be to go to the Social Security office) or maybe print the answers given on this site and let them read what a few other people think.
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