The family of the woman found out about the incident after she had passed away in October last year but when they asked for the money to be returned, the Volksbank in Pinkafeld, Burgenland, said that they planned to keep it.
According to Falter magazine who first reported the story, elderly Maria Dixon, 91, had emigrated to America and made a small fortune before returning to Austria to live out her days.
Her savings were still in US dollars and, after reading about the bank's financial difficulties in the newspaper, she sent them a cheque in March 2012 written out for $50,000.
But she was suffering from dementia and in the last few years of her life ended up in a care home, with her nephew Wolfgang Sauer taking over responsibility for her affairs and becoming her legal guardian.
And Sauer was outraged after her death when he discovered the cheque had been cashed by the local bank and attempted to get the money back.
The directors were of the opinion, however, that the money had been fairly given to the bank and that they had no intention of handing it back, according to the ORF.
Now taking legal action, Sauer said it is not about the money but about his aunt's rights, adding: "I do not need the money."
His lawyer said: "No right-thinking person who is in full possession of their mental faculties would believe that a donation like this could be treated seriously."
Story courtesy of Central European News/The Local Austria