You can spend the money down on anything for your mother, including paying for her care and prepaying for her funeral. You may pay off any debts she has and, if she owns a home, pay down the mortgage and pay for maintenance and repairs (but not improvements). If anyone in your family is disabled, she can make gifts to that individual or into trust for his or her sole benefit. In some states nursing home residents can transfer funds to so-called (d)(4)(C) trusts (also called "pooled trusts") for their own benefit.
These are the general rules. It’s always important to consult with a local elder law attorney to learn about how these rules are applied by your particular Medicaid agency or whether there are particular circumstances in your mother’s situation that would permit her to preserve some of her savings.
For more on spending down assets to qualify for Medicaid coverage, click here.