This is a problem when a nursing home resident who is covered by Medicaid, as most nursing home residents are, files a lawsuit against a nursing facility. In order to get Medicaid coverage, nursing home residents must spend down all of their money. If they receive money from any source, including a lawsuit, it must then be spent down. This is something the law firm should have discussed with your family before bringing the lawsuit. Some states allow transfers to a pooled disability trust, which would permit the funds to be used for your mother’s benefit. Any funds left in the trust at your mother's death would have to be paid to the state.
To see if this avenue is available where your mother lives, contact a pooled trust in your state. Here’s a directory of pooled trusts.
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