Sep 23, 2015 - 09:28 AM
Generally a gift of property or money in the past 5 years will result in a penalty. Also generally the retention of a life-estate will not be counted as an asset if the transfer has been more than 5 years. Both of these items can vary from state to state. If the house is sold now even if it has been more than 5 years your mother will have to be paid for the value of her life estate.
If the house is rented the income will likely be income for your mother. The net income not the gross amount.
Keep this example in mind: If it has been 4 ½ years since the transfer of a $100,000 house to the children the children can pay the next six months of care, say $5,000 per month or $30,000 total and keep the $100,000 house. You should definitely see an estate planning or Medicaid attorney in your area for help on this matter.