Mother just qualified for Medicaid. I live out of state. My sister cares for her by being prime contact, visiting frequently, and taking her to doctor. Now since mom has spent down the paperwork and bills are less so my sister can manage the financials too. Mother has significant cognitive decline and cannot make this decision. She doesn't even know where she lives. She if that far gone. Once the government paperwork is complete and we are on "autopilot" how can I legally transfer POA to my sister? She and my mother live in Tennessee. I live in Georgia. Would guardianship be the only way we could do this?
You could do guardianship but that's not easy and will cost a good bit of money. It seems to me you're in a pretty good position to take care of her affairs as it stands.
I have a vague recollection that years ago there was a situation in which a law firm client relinquished his/her rights and voluntarily assigned it to another family member.
Guardianship/Conservatorship is a very expensive and time consuming thing to pursue. The court is going to look into why the least restrictive option (POA) isn't working and may send you back to make it work. Take my word for it, getting guardianship will eat up all the money. Then when you have it, everything is just 10 times more difficult because of the rules you have to follow, which vary by state.
Laws for POA & guardianship vary by state so you can either do your own research or pay an eldercare attorney to adivse you and possibly even do the paperwork.