As she seems to have capacity to make the decision, it would be worth communicating that to the family sooner rather than later, once the solicitor has been instructed so there are no (unpleasant?) surprises in the future. I hesitate to say it, but has she made a will? If not, she should while she still has the capacity to do so again to save problems later on.
Hi Lightworker, welcome to TP (love the Starwars sounding name)
I can only echo what Beet says while she has capacity get all the paperwork sorted, power of attorney and all that and make sure the family know what's happening.
I personally would use a solicitor rather than do a "home-made" will and doing the LPA on line that way you have an independent witness that what she does was of her own free will and not under any influence from you.
What should happen is what your friend wants to happen and to make sure it does I'd get it all on paper, signed and witnessed so the "unpleasant surprises" Beet eludes to never happen.
Normally I would say getting a Lasting Power of Attorney for both health and finance (you probably need both) is simple enough, however, in the circumstances it might be better to have someone independent set this up specially if you may inherit from her and because you're joint tenants.
That's my advice others may see it differently but keep posting if you want to discuss it further.
K