Mom has dementia but is still able to live alone with some assistance. She can no longer drive and recently my sister sold her car. This made mom very upset although she agreed to it at the time. Her money was put in a safe deposit box but now she is crying and terribly upset and wants her money. Should we give it to her. It will probably be wasted and she will give a huge portion of it away.
Most likely mom will need more and more assistance, at greater and greater costs. Perhaps she will someday run out of money and need to apply for Medicaid. If she is giving away money now and needs to apply for Medicaid within 5 years that may result in penalties. Plus, of course, any money she gives away is not available for her care.
Who has POA for Mom? I am surprised the cash is in a safe deposit box.
While Mother shouldn't have the cash (in my opinion) I hope you can find ways to reduce her distress. Would giving her some cash and taking her on a little spending spree help? Maybe $100 to buy a pretty sweater and some pajamas and then go out to lunch?