Clients sometimes come to me having already done some home-brew Medicaid planning, probably because they got some tips from their neighbor or simply were afraid of the perceived high cost of lawyers. However, this is one area where you definitely do not want to do-it-yourself!
First, the facts of your neighbor's situation are surely different from yours, in ways you may not realize even matter. For example, the income of your neighbor's parent, cost of the nursing home in question, his parent's health and life expectancy, may all differ from that of your situation. Yet each of these factors will most likely change what is advisable to do or suggest alternative approaches to an experienced elder law attorney who regularly advises about Medicaid issues.
Second, the laws change frequently. So even if your situation were exactly the same as that of your neighbor, the rules of the game may have changed in the months or years since your neighbor's advice made sense. For example, when Congress passed the Deficit Reduction Act of 2005 on February 8, 2006, the "lookback period" (which penalized gifts that were made a certain number of months before a Medicaid application) was extended from 36 to 60 months. Applying even one month too soon, following a large gift, could have disastrous financial consequences. It pays to know the rules!