First, I am not an attorney, but have the experience to give you general information as long as you remember that each state will have varying laws so I speak generally.

I agree with opaldancing's first paragraph, but you can't change their status. They want all the benefits of being married, but are working harder trying to go around it.

Medically, I would pursue "medical / healthcare surrogate" before a POA. Being named medical / healthcare surrogate allows that person to make the health decisions. While POA can typically also make those decisions, it is more for financial, property, etc decisions.

Know that POA ceases upon a person's death. As far as cremation or burial, that will be up to the person's legal next of kin. If I read correctly, his will be his adult children and in her case, most likely parents, then brothers/sisters, etc if she has no children.

I think they are making much more hassle for themselves than necessary.
If they are adamant, they should at least consult with an attorney to make sure something they are dreaming up will stand in court, whether challenged or not.

dl