It appears there are different kinds of trusts so not sure which one. She is not mentally capable to handle documents, signatures, etc. I have POA. Thank you.

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If she is already on Medicaid there are  most likely liens on the house already. Those liens will have to be paid out of the house proceeds before anything else is paid. Medicaid will be very aware of the sale.
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OP, I would consult an elder law attorney in your area. It's may not be as dire as it's been presented in this thread.

People with reduced capacity can execute a trust. It can be legal even if all they can sign is an "X" as long as they are cognizant of the one thing they are signing about.

As for the house. Selling it out right maybe an issue, moving it into a trust should not be. Many states only seek recovery from probated assets. As long as it doesn't go to probate, it will not be eligible for recovery. There are many ways to shield a house from recovery. A trust is one. There are also exemptions to medicaid for transferring a house form a parent to a child if certain conditions are met.

You really need to see a medicaid attorney in your state to see what situations apply to you.
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That's the key question here - Medicaid or self pay? If Mom has "limited cash assets" as you mention, then it sounds like she may be on Medicaid already.

The problem is this: Even if Mom is not on Medicaid now, chances are good that she may have to be in the future, when her money runs out. Medicaid does a very thorough lookback to see if any assets have been sold, transferred or given away for the past 5 years prior to Medicaid qualification. If that has happened, they will delay her qualification for Medicaid until the money (or value) of that transfer has been "spent down" by paying for Mom's care out of pocket. That means if her house is worth $30,000, for example, she would have to spend $30,000 on her care expenses (and it would have to be documented) before she is qualified for Medicaid again.

Medicaid is notoriously picky about the assets someone has when applying (and rightfully so, given the risk of fraud). Example: My dad had to be on Medicaid, but when we applied, they asked if he had sold any assets in the past 5 years. The only asset that had been sold was a very old van that my dad sold to my son for $300. My son and my dad made an agreement that he would pay for the van once he got it titled in his name, etc - so he would use one paycheck to accomplish the transfer of title, etc - the next paycheck would go to pay Dad for the van. Two days after he paid $400+ for insurance, title, tags, etc, the van broke down and was not repairable. He had to have a junkyard come tow it away and they paid him $200 for the salvage value of the van. Dad said not to worry about paying him anything, just call it even, because he felt badly that it had broken down like that.
Being honest about it, I put the info on the Medicaid application and provided explanation of what happened. Medicaid made me go back to that junkyard and obtain a written statement that this broken-down, $300 van had $0 value when they picked it up, and it had to be a signed, notarized statement.

I guarantee that they *will* question the sale or transfer of that house if your Mom ends up on Medicaid, or if she already is. Unfortunately, you are most likely past the point of being able to transfer ownership or sell the house without incurring a spend-down from Medicaid - and that's without even considering the fact that Mom is unable to execute her own documents at this point. The last thing you want is to have to foot the bill for her care yourself because she loses her Medicaid coverage over the sale of the house. Sure, the house could be sold, but every penny from that sale would have to go straight to the care facility (as mentioned above by others), documented for Medicaid purposes as a spend-down, and then you'd have to get her back on Medicaid when the money is gone.
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Is mom self pay or is she on Medicaid? If she is on Medicaid they essentially own the house so there is no protecting your future inheritance. If she is self pay then the proceeds need to go to her continued care. The reality is that this is moms asset and it needs to be used for her, period.

Sorry, I know you were hoping to keep the house but, it is just not acceptable to ask others to pay the bill as long as she still can.
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Steel, I have a feeling that since your Mom is now not mentally capable to handle legal documents, then she would be unable to set up any type of Trust. Only your Mom can make the changes, not her Power of Attorney.

Any income Mom should get from the sale of her house should go toward the cost of her aging care.
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