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Of course there is more to this story. Im sure.
For both my husband and my mother, (both with dementia), we made the decision not to use Assisted Living facilities, opting instead to provide the assistance needed in private homes -- mine for my husband, and my sister's for our mother. We reasoned that as long as they only needed "assistance" we would provide it, and when they needed more, then they could go to a nursing home. It worked well in both cases. With various kinds of help I was able to keep my husband home through hospice care. My mother moved into a nursing home after 14 months, and lived there another 29 months.
It was not easy. It did require in-home help. Could we have been the "assisted" part of assisted living if our loved ones were living next door, instead of in our homes? I honestly do not think so. Not with dementia in the picture, and not with my mother's mobility issues.
I don't think there is any legal reason why the wards could not rent a place close to family. But there may be many practical barriers. It is worth discussing with the guardian.
As for the costs, I really wouldn't worry about that. If the wards needed a guardian there health is such that all of their assets will no doubt be spent in their care, unless they die soon. If they run out of money in assisted living, the guardian is responsible for making arrangements for them, such as applying for Medicaid.
Saving money isn't a good reason for making these kinds of decisions. Doing what is best for the wards is.
Coney, I would talk to the guardian and discuss this as a possibility. Of course, the degree of your commitment to this arrangement has to be seriously considered. It is no small thing to do this. You need to realize that this will likely keep getting worse thru the coming years and this will be a REAL burden on you. Think it over carefully, then discuss it.