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From what I 've read so far, this is a dysfunctional family. It seems to me that the GM trusts the gchildren more and I can see why. Maybe the GD lives with her for company or because there r problems in her family. The thing here is that a child has no right to move into a parents home If the parent doesn't want them there and this is what is happening. Seems to me the Aunts are bullies. Someone needs to stand up for this woman before anyone sets up residency then it will be hard to get them out. I have no idea how this an be done. Maybe try Office of the aging and see what resources they have or can point her in the right direction.
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Yes, take it GM for a good check up. If found to be of sound mind, yes she can revoke her POA and assign a new one. Hopefully she hasn't made it Aunts executors. If so, she can change that. If the doctor finds her sound, have him write a report to have for the lawyer that will be transfering the POA. Your grandmother can appoint the lawyer POA. That way no family member is involved and he will be able to reinforce it better by asking your GM what her wishes are.
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Just to reiterate what Jeanne wrote, a person can choose any heir he or she wants, and similarly can specifically disinherit any family member or relative.

Where the familial relationship comes into play legally is if the person dies intestate. Then state law holds, and specifies the family relations which are considered to be heirs.
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