My brother recently was given power of attorney for my aging grandmother, who is experiencing some memory loss, though is still of sound mind and body. She did not trust her daughter (my aunt) or her son (my uncle) with the responsibility (our mother died last year, so they are the only remaining children). I am afraid that after she dies, her children will try to make a case against my brother and say that he mismanaged her money while she was alive and try to take legal action against him. He has formal documentation of all payments/income, but they are very spiteful and selfish, so I would not put it past them to try to sue him or take other legal action. Should he be documenting every conversation with my grandmother and her children just in case? or is that overkill? Is there anything else he should be doing to protect himself or is it enough that my grandmom trusted him with power of attorney?
Yes, make sure brother has documented and witnessed POA.
Have him keep meticulous records of everything. In a loving and cohesive family this would seem like overkill--but I found that even in cases of the most trusting families--people get so weird when money is involved. Keep records and receipts. DON'T use your own funds ever, if possible, if you must, keep an exact accounting of how you were reimbursed.
After my FIL died, I "flipped" two of his properties. I kept a spreadsheet of every dime I spent. I was reimbursed ONLY that amount, and paid nothing for my time, which was immense. The only way my BIL (my hubby's sister's hubby) would even consent to my working at the these places to ready them for sale was to agree to do it for free.) Then when they were sold, everything was split 3 ways--after BIL got his 3% commission for selling them. Fair? Absolutely not--but peace in the family was worth it.
KEEP RECORDS!! I'm never sorry when I have kept receipts that seemed like no brainers--it's always good to have the backup.
You know the family members who might object better than we do, so if you're wondering if it would be necessary to document more rather than less, go ahead and do it.
One thing your brother might do as an extra protection, or rather a comeback if they do challenge what he's done, is to keep a list of what he's done and the specific POA provisions under which he's acting.
Then if someone claims he didn't have authority to do a, b or c, he can easily point to the POA terms for those specific actions.
As to trying to take legal action against him, that would be a good wake-up call for them. Attorneys aren't going to get involved in these kinds of suits unless there's solid proof of wrong doing or fiduciary mismanagement.
And quarreling siblings might not have the wherewithal to know what to document or how to provide evidence. From what I've read here, when a situation progresses to the fighting stage, emotions take over on the part of the family who feel wrongdoing was occurring.