my mother is 84 and can no longer take care of herself. She is planning on selling her home and I am going to build a small apartment next to my house with a portion of her procedes or charge her rent to pay for the addition. The balance of the monies will be spent on her care. How can I structure this arrangement and what if the monies are used up and she needs additional care. thanks

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You have a unique planning opportunity which I will attempt to succinctly convey here.

Mother can create what is known as a "life estate" in your property with her funds. The agreement will give her the ability to live in the property for the "rest of her life". If she then lives in the property for at least two years, the money she transferred to you as the property owner will not be considered an uncompensated transfer for Medicaid eligibility purposes. This is a good thing. However, if she requires or applies for Medicaid before the two years has elapsed, the transfer will be considered uncompensated and a penalty period of ineligibility will be imposed.

Funds she has in addition to those that will be used for the property should be handled so as permit her to have access to them while receiving benefits. Once you are contemplating public benefit application consider tools such as the Personal Services Contract or Supplemental Needs Trust for "over-resourced" amounts.
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