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This is in Kansas. My grandfather passed late last year, and my mother couldn't afford his house and didn't want to risk it going to Medicaid for no good reason, so she disclaimed the inheritance, including the money. The intention was that should would trust her brother to give me the money portion, which I intended to spend on her like I would had she elected a special needs trust. And they did send me some of the money, which I have spent some of on her. However, we then found out that my grandfather had the deed to the house auto-transfer to her on his death. And in researching her option of using a quitclaim we found that SSI counts the inheritance whether she accepts it or not. Further, we're worried that having spent the money on her could count as fraud. We stopped any such spending or exchange of money immediately. How to fix this? Can we just buy a 3rd party special needs trust? Just let SSI know what's happened and hoping they don't go on a witch hunt? Has there been fraud committed? If we hire an elder law attorney to help navigate all of this would they be obligated to report said fraud?

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@rovana it's in the first sentence - "she couldn't afford [to live in] his house and didn't want to risk it going to Medicaid for no good reason, so she disclaimed the inheritance"

Basically my uncle convinced her that by disclaiming the entire inheritance it would save the house, and that he had verified that such a disclaim was acceptable to medicaid (he still insists that's the case, even after I've shown him a lot of evidence to the contrary)

As for fairness - do you really think it's "fair" that the state takes the home my grandfather built, literally with his own two hands, because he made a mistake in leaving it to her, when she can't even afford to live in it regardless? ... That she's having to grieve the loss of her father while trying to deal with all of this - WHILE SHE'S BATTLING BRAIN CANCER?  ...Do you think it's fair that these laws appear to accomplish nothing more than stealing assets from elderly people, and keeping poor families poor? My mother has been disabled my entire life, and I've carried that burden. To think that I don't deserve to inherit anything when she dies seems vastly more unfair than the state spending more trying to recover the assets than they'll even make from them....

However, this isn't about "fairness" this is about trying to save my mother from the mess her brother is (and continues) making.  If you could be helpful in that regard I would like that, otherwise... 
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I think your only answer is a properly qualified attorney. I'm pretty sure that trying to refuse an inheritance when you are on public aid will cause trouble because the state would expect you to use those monies for your care, rather than gift them on. What was the reason your mother refused the inheritance rather than accepting it and using it (selling the house as well) to pay for her care? Frankly I'm not sure that accepting state help, while trying to keep money out of their hands, is really fair.
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So, I've spoken to 2 CELA attorneys so far, and neither were able to help. Didn't know what I should do. One called it "opening pandora's box" ...What now? Keep trying? One suggested that I speak to the estate attorney, but I haven't been able to get her to return my calls. (I think because I'm not in the will - having my mother call instead).

I've come to suspect that they are trying to rip my mother off. They haven't provided any copies of the paperworks they've had her sign; they haven't been clear on how much money she received; despite finding that her disclaiming could be a problem they keep insisting that she disclaim the life insurance money -- at some point they tried saying the state wont take the money because she's not in a home, but if that's the case then why are they trying to "save" the home? They've tried convincing her that she can't trust me; that a special needs trust is the wrong way to go because she wont have access to the money -- at some point switching to a pooled needs trust (which, best I can tell, just means a non-profit would act as trustee rather than me...); they've resisted the idea of me or her meeting with the estate attorney when they go; and, probably most importantly, every step they've taken appears to be in disregard to how all of this may affect her SSI/medicaid. .. I would like to avoid probate, because she probably wont live long enough to see the other side of it, but I'm really just not sure what to do at this point.
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So many convoluted layers of a hot mess of mistakes.....
Mom needs a CELA or NAELA level of elder law atty & asap.

To anyone reading this, a good rule is to never ever sell or buy anything done via a QCD (Quit claim Deed). The only way to me that QCDs can ever work without risk is IF it’s done within a divorce decree with judges sign off.
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This is a difficult question unless a lawyer can answer it and guide you through the process needed. Suggest you contact an elder care attorney immediately.
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