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She has been diagnosed with vascular dementia and is unaware that she has it. We tell her but she forgets. She needs to let her daughter (who is very supportive) become POA.

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It may or may not be too late. Just because she has been diagnosed with vascular dementia does NOT mean she cannot sign documents as other people have stated. The problem is convincing her that a POA is needed and this is a very difficult problem when someone cannot see their own deficits. I went through this with my mother and it was incredibly challenging. Appeal to your sister’s love for her daughter and say something like “As we get older we need our loved ones to be able to care for us without struggling with legal issues at the same time. Let’s make it easier for daughter. We wouldn’t want her to have to fight and spend your money in court would we? That wouldn’t be fair to her.” Good luck.
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"Too late, too late!" the cry.

If your sister isn't capable of understanding her condition because of her vascular dementia, she is not going to be legally competent to create a power of attorney. Oh the irony! - you, I, we ALL need to get springing DPOAs into place before we lose it, because by the time your loved ones need to use it you've missed your chance.

Your niece's options are guardianship, or keep wriggling round the obstacles. She'd perhaps best consult a reputable lawyer, taking her mother with her to the appointment so that the lawyer gets the complete picture.
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Barb is correct. The not being able to reason, I think, comes before the short term memory. You cannot explain things to her. She probably has a hard time processing what you say. With Mom, you would be thru a sentence and she was still trying to figure out the first few words. Comprehending is no more. Her brain is broken, as one member says.

It probably is too late to have her daughter assigned as POA. Her Mom has to be competent to do it. Next would be guardianship which can be expensive. Medicaid allows daughter to use Moms money for this.
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In the “early days” of my parents’ diagnosis we were able to get things put into place by talking about “Just in case.” We would discuss other people, loved ones, who needed help with things and reassure my parents we would not step in unless they asked for help or were doing things that could cause them harm. Once things were in place I would offer to step in from time to time. Sometimes they agreed, sometimes they weren’t ready. But true to my word, I only overruled when there was risk of harm. It really is a tricky dance. It sounds like you have great love for your sister and she is lucky to have you. Always focus on that love when speaking with her about these things. I wish you wisdom and strength for the journey ahead.
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Ask her when her birthday is, and what day it is, and what year it is, and who is the president. If she cannot answer those simple questions then imo she clearly does not have the mental capacity to sign any legal forms.
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Beatty Apr 2020
My Mum knows those things. But she thinks 3 people + 2 wheelchairs will fit into a small car for a road trip. And that the driver could push those 2 people in their wheelchairs.

Vascular dementia can look quite different to Alzheimer's in the early stages. Mainly cognitive difficulty with reasoning and judgment. Later stages, memory is affected & it will look like the 'classic' dementia people know.

Problem is reasoning & judgement are just what you need to get a POA signed!
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Make appointment with lawyer. Get POAs, living will, and maybe "do not resuscitate" pieces signed. It might be a good idea to get those legal pieces yourself at the same time. Call it something that "I" - in reality you mean she - have been advised to take care of, especially with a pandemic going on. Don't make a big deal about it.

Then, get her a doctor's appointment to check her general health and decide if she needs to have her daughter "step in" to help more. If it seems gradual and a normal part of life, you should not be seen as the "bad guy."
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DH has vascular/ischemic dementia. I got him to agree to visit an elder care attorney with me. I had discussed situation with attorney ahead of time. Lawyer laid out what was best for both of us without mention of dementia and he consented to following her advice. We both did POAs, had wills redone (were done before we'd had second child who is now in 40s) and both did Advance Medical Directives. Went a lot smoother than I had expected but shouldn't have surprised me as he will listen to "experts" vs. "know nothing" me.....
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My dad was well aware that he had Alzheimer’s, so after my mom had passed away I told him that we needed to plan for his future to ensure that he would get the best care possible when he could no longer make decisions for himself. We made an appointment with a lawyer who was retired from the Navy, I picked him because he had been in the navy as my dad had been, so I knew dad would respect him. Our lawyer walked us through each part of the will and POA asking the question of who would make decisions for him if he was unable to, having discussed with dad beforehand about my brother and I being the ones who would take care of him it actually went very smoothly. We didn’t make a huge deal out of the fact that he wouldn’t be able to handle his money or make other decisions, it was just a fact. I don’t know if it seems wrong that we didn’t make a big thing about the money factor and decisions that he wouldn’t be able to make any longer, what I do know is that you can’t tell someone who has dementia that they are making horrible decisions and can’t do things they have always done because it just upsets them. Downplaying it really made it go smooth, the fact that we voiced it as helping and taking care of him made him happy to do it.
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I have said it a hundred times before but every single human on the face of this earth MUST PUT THEIR AFFAIRS IN CURRENT ORDER AND KEEP THEM CURRENT WHEN THEY ARE STILL ABLE TO DO SO. Why people wait until things happen is beyond me. I think that if it is possible, gently explain all the facts and figures of what is going on and what could happen, etc. Do not expect it to be understood or retained so do it as simply as you can. Somehow you must get her to sign a Power of Attorney for Health purposes and also a General Power of Attorney. If she balks, I think it is time to get tough and talk "turkey" so she realizes she must sign it. Not to do so would down the line most likely cause terrible problems and possibly entail applying for guardianship which is horribly expensive and complicated. If need be, get a professional to step in but you cannot wait. You do not have the time to dilly dally - get it done now.
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As "Beatty" said below, vascular dementia involves problems with reasoning and judgment. I saw this in my own father.

Therefore she does not "understand" that she is making bad decisions - even if you tell her this fact.
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