My mom hates when I ask her this question, I consider myself to be in the lower class, but I don't know what to call it when someone like my mother for instance, was a bad person all together, HOW can someone like myself cope with that, and how does she cope knowing that we know these things about her.
Financial POA gives that person the ability to handle the principles finances. Pay Bills, sell a house, a car. The ability to place them and apply for Medicaid if there are no assets. POA never uses their own money. When the principle runs out of money, the principle finds other resourses. Medical, POA just carries out the principles wishes and has the ability to talk to medical staff.
Mom may feel by having you as POA you will try to control her. You need to tell her that by not having POA, the State will step in and take over her care if she needs it. Neither she nor you will have any say. A guardian assigned by the state will make decisions for her.
If she is a bad person, I would not want to be her POA. When the time comes, let the state take over.
I have found parents do not like to be "told" what to do by their children. I can relate with myself and my children but consciously make the effort to give them the ability to voice their opinions and comments. And, I truly believe its a generational issue with the elderly.
I found that an outside source is best to approach the subject with regards to my parents financial and medical POA. My friends have swayed my parents numerous times just by a well calculated discussion when visiting. And, I have done the same with my friends parents. Planting seeds that get them to make the decision on their own (in their eyes) has always worked for me.
If your Mother was a "bad person" then why do you want to be involved, anyway? Haven't you had enough of whatever bad stuff she pulled as a parent? Are you a Rescuer? Do you have a dysfunctional co-dependent relationship with her? All of these things should be considered so that you can develop healthy boundaries with someone who treated you poorly and continues to do so.
"...how does she cope knowing that we know these things about her"
She either doesn't see herself like you do, or she does and she doesn't care.
You aren't responsible for her happiness. There are eventual solutions for elders like her so stop trying to insert yourself where you aren't wanted -- there'll be no thanks for it in the end and you might just burn out doing it.