Can payment be stopped? I suppose anything is possible. It does not seem likely, under the circumstances. I guess the question I have, if push comes to legal action...is whether or not your husband's action would be deemed to be a breach of fiduciary duty. He is required to act in his mother's best interest alone. It is hard to see how removing this money could be construed to be in HER best interest. It is likely to generate income tax, if nothing else.
It seems to me that the financial tug of war over the mother is grinding everyone down, and perhaps the mother, most of all. She appears to be a pawn in this situation. Given the fact that your husband's sister has taken advantage of her mother before, I would not feel at all secure with the current arrangement. It appears that if the mother is incapacitated, then a guardian/conservator should be put in place. That *could* be both children, or it could be a totally neutral third party. It does not appear that either child should act on their own. My guess is they will not agree on this and so a judge would not appoint one over the other.
Your husband needs to consult with a probate attorney to decide how best to proceed.
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Generally a cashiers check can not be stopped. There may be a few rare instances where a bank can refuse to honor its cashiers check but the penalty if they are wrong is high so most will not dishonor.
If your husband held a POA he can only act in the interest of his mother. If your husband has taken his mothers money and placed it in an account in his sole name, it might look to others as if he is converting her assets to his use.
Even though it sounds like the daughter does not have her mothers best interest at heart, the decision is still the mothers.
Your husband should consult an attorney about how to handle the funds he has deposited in the savings account to avoid future claims of breach of his fiduciary duty.
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If the cashier's check was in your name, I do not see where you did anything wrong legally. However, it could be looked at as you were keeping it away from your mother. But how would anyone know it had been cashed? I agree that a conservatorship sounds appropriate.