Your MIL's friend is not doing himself any favors, on a number of different levels. He really should have a POA in place so he has some say in who acts for him. If he does not, AND if he is incapacitated, then you can petition the court to have a guardian/conservator appointed for him. Once that has been done, that person can legally determine where he resides.
If there is no POA and no guardian/conservator and something happens with your MIL, then the successor trustee(s) would need to evict him.
The only way to assume control of the man's affairs is through the court, if he refuses signing a POA. If the court deems him to be competent to handle his own affairs, then it will not appoint anyone to act for him, which could lead to further issues. Dementia, in and of itself would not necessarily cause him to be incompetent. But dementia usually is progressive, and it may only be a matter of time.
At some point, you will need an experienced estate planning/probate attorney to assist you with this. It is not clear from the facts whether that day is now, but it would not hurt to consult with someone to see if you can lay the groundwork that may need to be done. I am concerned about the prior pattern of abuse. Dementia is not likely to lessen the likelihood of that recurring and I am concerned about your MIL's safety. You are in a much better position to determine if this is a real concern or simply something to keep an eye on.
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I agree with Attorney Frederick. As has been said, where an individual has not, and refuses to, take care of matters in his best interest, then the way to ensure that these things are taken care of would be to establish a conservatorship. You should also be aware that hostility is not uncommon in individual’s suffering from dementia. This may mean that the friend’s ability to execute his health directive or other documents may be limited by his progressive incapacity. With a conservatorship, it sounds like you or your husband would be likely candidates for acting as the conservator. A conservatorship requires a filing in the Probate court, with yearly accountings made to the court, as well. This is a big responsibility, so you should think carefully about whether you want to take this on.
In cases, where no advanced health directive has been executed and the individual does not have the capacity to do so, family members are left to make such decisions. In this case, this does not appear to be an option here since you‘ve said that he has no family or friends. Without a directive, a hospital or health facility would be unable to follow his wishes. This can lead to a number of problems, which you obviously recognize. The facility would be required to maintain life, even where hope of recovery is nonexistent.
Given the friend‘s potential for violence, you seem to realize that you may need to take steps to ensure your mother-in-law’s safety. If moving in with you and your husband will be in her best interest then that should be done. As to what happens with the house if that happens, her friend would not be entitled to remain in the home unless they (he and your mother-in-law) have some type of enforceable agreement or your mother-in-law has provided her friend with a life estate in her home through her trust. This does not sound like it’s the case here since you have indicated that the house is in trust with your mother-in-law’s sons as beneficiaries. However, your mother-in-law can have an attorney clarify her wishes with regards to the house by reviewing her trust documents.
Disclaimer: The above answer does not create an attorney/client relationship. My responses are intended to provide general information about the question posted. I am licensed to practice in the state of California. The information provided on this site should not be used as a substitute for conferring with or hiring a competent legal advice from a licensed attorney that practices in the subject area in your state.
Both of the other attorneys make very good points. As has been stated, becoming someone's conservator is a big responsibility. Since this gentleman is not related to you, or your mother in law and is estranged from his family, an additional consideration would be to bring this matter to the attention of the county's public guardian and let the public guardian establish the conservatorship. The public guardian is available to assist residents when there is no family or other friends willing or able to take on the responsibility of the conservatorship.