@caoilin,
Your aunt has dementia so that is what worries me.
Does the neighbor really care about your aunt? More than any of you family? Was she coerced to sign these papers? There is potential to have these more recent papers voided if it appears that the neighbor convinced your aunt to sign and your aunt does not have full mental capacity due to her illness.
It seems suspicious if your sister has maintain regular contact with your aunt. If your aunt really has dementia depending on the degree she may have signed without really realizing what she was doing or fully understanding so it may have nothing to do with her not wanting to have her family around her.
I know when my husband's grandmother became very ill - she had cancer and dementia - she had when well given my husband power or attorney, trustee all that stuff. So when she started to get very ill where her mental facilities started to fail her - he regrettably took control knowing some people/church, etc may take advantage of her. He was able to set up in an assisted living facility so she and her husband could get the care they needed while still having independence. He did take control of their money as the place was very expensive and my husband felt they would just start giving their money away.
Dementia can make you do and suspect strange things - they were claiming he was stealing their money because they did not have the open access to it. My husband to help with this would ask them how much cash they would want say per month/week and give that to them (they really did not need much at their facility) and he explained to them how he wanted to ensure they had enough money so they could there (as opposed to running out and having to stay at a government assisted place).
Any way long story short - when you have dementia you can get paranoid and suspect family members that you used to completely trust do the opposite - savvy people can take advantage of dementia and have these people sign things over they never would with their full mental facilities.
To be honest, if your sister is as close to your aunt as it sounds and wants to do what is in the best interest of your aunt - I would have her seek out an attorney and have this other paperwork that a neighbor pushed on her nulled and voided.