She has recently listed me as her DPOA for finances as well. She is widowed and childless and due to her very strong personality, alienated from her extended family and current neighbors. I have explained to her repeatedly that although I am willing to keep in touch & assist her with obtaining information about options for assisted living or LTC, I do not have the availability for more than that. I live 6 hours away, with a job, a husband, 2 sets of aging parents that live in other states, children and grandkids, and am frequently out of the country. I have been prompting her for 15 years to identify a more suitable DPOA. She has not. I have prompted her to get an elder care attorney to assist with her financial plans. She continues to live in declining health & limited mobility in her own home...which she recently remortgaged at age 85. She has unrealistic expectations that should she go into AL or LTC , she can keep her home for some possible future return to that home. Any advice? What happens to those without a designated POA?
Your advice to your friend that she talk with an elder law attorney is most helpful. You could encourage her with the thought that an elder law attorney in your state can explain the regulations governing how she could keep her house during her lifetime if she does need long term care in the future.
If she continues to decline realistic planning, and the responsibilities are beyond your ability to help, you can explain to her how an elder protective service agency in your area may become involved.
At that point, her case may become subject to guardianship or conservatorship proceedings in a court, and the control that your friend had so earnestly wanted to hold onto will be shifted to professional people who are appointed by the court.
Second, if you're willing to continue to act at some nominal level, you could write her (don't just call; document your position) and indicate that there are some specific actions for which you would be responsible, but not for medical, health and financial, generally.
However, given your own family obligations, as well as an apparent firm mindset of this friend, you might want to just consider resigning. You don't have to explain; being someone's attorney-in-fact is a tremendous responsibility to another individual.
I'm wondering if the "remortgage" is a reverse mortgage. If so, that's an added element of complexity. Same situation with her "unrealistic expectations". Would you really want to be obligated to help find a facility for her and manage her home while she refuses to accept reality?
I honestly can't answer your question as to what might happen to someone w/o a designated proxy, which is what you really would be as you act in her "place and stead". I would do some research on the state laws of the state in which she lives, but, honestly, it is NOT your responsibility to worry about what might happen to someone who you describe as alienated from family and who has unrealistic expectations.
That doesn't mean that you can't continue as her friend, but just not as her attorney-in fact or proxy for medical decisions. And the latter raises another issue. From what you describe of her personality, do you think she'd be satisfied with any future medical decisions you made, or any financial actions you may take? These two issues are something for very serious consideration.
Since you really aren't in a position to fulfil the role she is asking you to accept potentially, you must put it in writing to her that you can't continue to hold POA for her in either a health or a financial context. She may not like it; she may complain that you're letting her down; but on the contrary what would be unfair to her would be to agree to tasks you know you can't carry out, preventing her from finding somebody better.
If she has any money, a lawyer or accountant can hold DPOA. But if not... well, when all is said and done, who's going to get hurt?