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Why is your mother and step father living with you if your step father is truly of sound mind? Is he able to take care of your mother? You say your mother has her documents in order, but your stepfather does not. If he is of sound mind and can take care of himself, then I wouldn't worry about him right now in that capacity. What I would do is have a conversation with him about your mother and what is best for her and her care as she progresses in this disease of her mind. There are options...they could move into a subsidized apartment community for seniors and have home healthcare come in to help with the care giving. Is there a possibility you could become your mother's legal guardian?
Is there any reason you know of for the alienation/estrangement that has occurred? This has got to be terribly upsetting, but maybe they are not just horrible people and something happened or was said that could be revisited. Sorry you are in the middle - literally - of this sorry state of affairs for your family!
But if he needs life-saving medical care, that's a separate issue and the one which would make me uncomfortable having him in my care. It's this issue that could also split the family.
If his children, grandchildren and he won't specify his wishes as to emergency and/or life-saving care, you and your husband could be putting yourselves in the middle of a contentious situation in which no one agrees, yet you're left "holding the bag".
I think I would e-mail or write (i.e., document) this concern and ask his adult family what their intentions are if he needs this kind of treatment. I would also ask who wants to be notified in the event of such a situation.
Failing specification, you and your husband will make the decisions. That might get them to move.
But I still would feel uncomfortable having that responsibility. It's unfortunate that you're the only looking and planning ahead.
We were never able to convince my mother to do any of the documents. I and my three sisters wish we had such official authority. But we do our best to make the decisions we are called upon to make and to advocate on her behalf. The care she is getting really wouldn't be any different if she had done the documents. But there is no family conflict and our relationships weren't/aren't dysfunctional. I am sure that makes a huge difference.
You cannot (and should not) try to force SF to plan ahead and provide the authority and information you would like.
You can, of course, make decisions about your own actions. For example, you can put this issue behind you and let his children deal with it when the time comes. Or you could insist that you will not have people living in your house who have not provided that paperwork and ask them to leave. Or you could decide to make everyone miserable by nagging about it everyday.
The $650 you get per month for the couple's living expenses is a separate issue altogether. Again, you are in charge of your own decisions and actions.
Decide what amount would be acceptable. Charge that amount. You might research Assisted Living costs for a couple in your area, just to show your Mom and SF while you are discussing the increase in their costs. I'm not suggesting the you charge what an ALF does, but that you use their alternative costs for their education.
And get this financial arrangement in writing! That is probably even more important that having their living wills. See an attorney specializing in Elder Law and draw up a room and board (and possibly care) agreement spelling out what you provide and what they pay.
Why is this critical? There are all kinds of relatives in your situation who may have opinions and animosities about the money now or later. If either parent needs Medicaid in the future, you do not want that money to be considered a "gift" to you.
You have taken on a huge and very compassionate responsibility. You know the old saying, "No good deed goes unpunished?" -- protect yourself as best you can!