A relative may be discharged soon from a Nursing home. If I become guardian am I responsible for making living arrangements and costs?

She wouldn't have to live with you and the costs for care would come out of her pocket, not yours. If her insurance doesn't cover all care and she doesn't have her own funds, then you might have to apply for Medicaid for her, too, but you don't have to pay the costs yourself.
I believe that you would be responsible for making living arrangements, but if you need help with that, the discharge planner should be able to help. My dad was recently discharged from a two month stay at a nursing facility. My dad had a whole team from the nursing home to helped coordinate his discharge and continuing home therapy, including the head of nursing, the physical therapist, and a full time social worker that they had on staff. My dad wanted to go home, so they did a home visit, made recommendations that would make it easier for him to get around the house, coached him on how he could remember to take his medications on time, helped him order a wheelchair and get it mostly covered by insurance, helped him apply for assistance through the VA, and they recommended that he have an aid at home 24/7 in the beginning and they gave referrals to home health agencies. They also gave me info on how I could pursue a guardianship (I haven't done that). Ask your relative's discharge planner if s/he can help with all of these things, or at least refer you to a social worker who can.

You also might be able to accomplish everything you need to do, like making living arrangements, without becoming a guardian.

I am the legal guardian for my sister in a group home. The cost to appoint me in 1994 was $2500 so it will be a lot more now. I had to have a total background check and my family (father and 2 sisters) had to sign off agreeing with my appointment. You become responsible for annual financial reports to the court and responsible for the oversight for her care. You don't have to spend your own money for her bills, but must keep track of it and do a multipage report each year. You must sign authorization for any medications and attend all medical appointments and case reviews.

Next - being a "ward of the state" in many, many ways is a good thing. Often for wards, facilities who seem to have no openings will miraculously have one. Group homes who have a waiting list suddenly have them as the next in line resident. All of the wards expenses and needs will be overseen & managed by the state paid guardian. Most of the time court appointed guardian have undergone specific training and certification to do their job. Plus you can be a part of their life and bring her things without the detailed responsibilities of guardianship.

10 years is a long time and having her re-introduced into society is going to be quite a challenge and likely a full time job and then some for whomever takes over.
Per chance is her state one of those that are closing mental health facilities all over the state? My state (Louisiana) has done this and the main LTC one in Mandeville (which was the default one for everybody in New Orleans area) got shut down with like 90 day notice and there is nothing, & I do mean nothing, around to replace what they did. The facility has "re-opened" as a primarily private pay (read that as good health insurance) facility too. One of my BFF sister is schizophrenic (unable to work & function in greater society situations) and now the nearest for them is 6 hours away. BFF is her guardian and about every 15 months or so, there is an episode (serious imminent danger stuff) that requires she go back into a facility - it is the nature of the disease for her. It is sad and has adversely affect my BFF marriage and business with extra costs & time to be a good guardian. Not counting the emotional aspect. I'm digressing but my point is that a lot of states are moving long term mental health patients out of facilities & essentially dumping them out to fend for themselves. You are probably not the only person facing this issue from this facility.

Now your profile doesn't say where you are? Are you in the same state as this distant family member? If not, then becoming her guardian is going to be filled with problems from having to have her become a resident of your state to lots of red tape in having her re-evaluated & requalified for whatever your state does.

My suggestion is to have her continue on as a ward of her state and over time reintroduce yourself into her world and work with her state appointed guardian in all this. IF it seems that a closer and mutually responsible relationship between you two is feasible, then you can go to court in a year or two to do this. There is a cost to becoming a guardian but if it is a transfer of guardianship, that cost seems to be just minimal.

I haven't been a guardian but have been a executrix twice and spent countless hours in probate court listening to the dramarama of probate (& where guardianships are heard). Guardianship is pretty regulated in that you have to do for specific reporting to the court (for their lifetime) and could also have drop-by check-in's by the state to your residence if she is living there to see what's what. If you have any issues in your family (like someone has a record, or your teenager has a juvee issue), then you can be viewed as unfit and the court will haul you in to explain. For my BFF, her ex had a foreclosure but his name was there as her hubby 20 years ago when she was initially named guardian, so she had to go to court to establish that his financial situation was not hers.....PIA. For elderly in a NH, or a young child still in school, guardianship is pretty straightforward. But for someone able to go & do is a whole other issue & could get complex.

I would have a come to Jesus talk with the social worker and then whomever is her state appointed guardian. I would suggest approaching it so that you tell them you cannot be guardian and then just see what they have in place for her. They are required to have a plan B and not just dump her onto some family member. But they know that most of the time, family will swoop in and take them back home. Their problem is now solved. Then have a long serious talk with your family about how all this will affect their lives before you decide what to do.

Medicare is paying for only some portion of her care. If she is a ward of the state, then she is also probably getting Medicaid. It is Medicaid that is paying for her daily room & board costs. If she moves in with you, that Medicaid $ will go away.
Good luck and let us know what they tell you.

Good advice above to really learn what you are getting into.
Also consider if this is someone you love, or feel sorry for.

If she is ward of the state, then a social worker with the state will make arrangements. When my children with CPS in AZ were wards of the state, I was responsible for their group homes, living arrangements, and their expenses (with state money that is). Why are you thinking you have to be a guardian? It is a big responsibility and if you don't know the first thing about being one, you either get yourself up to speed, or decline. Lots of information out there, but you will have to study your state's laws applicable to your state for legality.

There are many ways that you can be a kind and helpful neighbor without getting yourself enmeshed with the legalities. In fact, you might be horrified that dealing with the legalities eats up huge chunks of the time that you would otherwise be willing to spend on her!

Why don't you google responsibilities for a guardian in your state and get all of your answers.

Suggestion: Consult an attorney experienced in laws related to elder care. If you cannot afford one, your community probably offers free services from a legal aid agency.

FOOLS rush in where ANGELS fear to tread! PLEASE do not be too hasty to encumber yourself in this way. Get ALL the facts BEFORE you do anything!

I had to become guardian of my sister as she was unable to make decisions for herself. It was quite a hassle. I felt I had no choice and this was what the elder attorney advised. If you can continue to be a support and get her needs met, I would suggest to forgo the guardianship.