When does a POA need a letter of competence for a dementia?

My mom's Neurologist, the one who made the dementia diagnosis, gave me a letter. It stated what her diagnosis was, and that he agreed that her POA should be in effect.

Proof of incompetence is a requirement to activate some POAs (sometimes called a springing POA), you will need to read the document to see if that is what you have. Some people also have had difficulty getting the person they are caring for to accept any kind of care, often the only way to force the issue would be to prove incompetence.