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She has dementia is this legal?

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Even with dementia mom may be competent to carry out this transaction. Like Jeanne said, it coyld be coersion, that is illegal and should be reported to Adult Protective Services. If mom and sis think this will save the house from Medicaid recovery, they are wrong. If mom needs Medicaid to pay for increased level of care then her financial records for the past five years will be combed through. Any gifts will be subject to a penalty my Medicaid equal to the dollar amount of the gifts. That penalty will be tallied monthly, even if she needs care, where she will be ineligible for Medicaid.
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Maybe.

"Dementia" covers a huge range of cognitive impairments. Some persons with dementia are definitely incompetent to handle their own affairs. Other are capable of understanding what they are doing.

Is there some reason that would explain why mother did this? For example, is Sister the primary caregiver? Does she or a child have a handicap? Are you estranged from the family? Typically (not always) parents try to be fairly even if what they give their children, unless there is a reason to do otherwise.

If you can think of no reason why Mother might have done this, do you suspect undue influence or coercion? Does your sister have a history consistent with that kind of behavior?

Where has mother been living since she gave her house away? Is anyone living with her? Who provides caregiving?

Who is her DPOA? Does anyone have guardianship?

Please provide a little more information in order to get more specific suggestions.
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