I don't plan to purchase this home, but sell it and split according to the will. BUT I have a very sick husband (on hospice), so we can't just up and leave when she's no longer here. We'll need a couple months to pack up.
As far as that goes, I'm considering whether I should avoid purchasing an inexpensive home afterwards or not. My main concern is based on when one of us is left to carry on without their spouse's money. I only have about $1,000/ month coming in, and he has $1,400. We make it work together, but since he became ill, we've burned through our little savings.
You may be able to stay there if you provided mom medically necessary care, and documented, for a period of two years before she entered a nursing home. This would mean that mom would enter nursing home as self pay from savings until spent down, then apply for Medicaid.
See an elder law attorney for requirements in your state.
That said, there is an ethical dilemma in placing a senior who doesn't want to leave her house so that you and family can live in it by yourselves. With your husband on home hospice, your mom may well ask why she has to be the one to leave the house, especially as she owns it.
And that's key.
As she owns it, and as she moved y'all in to presumably never put her in a home, it would follow that the husband go into an SNF with hospice services before she has to.
You could claim that you were Moms caregiver in those 5 yrs. Definitely you are a resident. But you may need to prove you can pay the bills and upkeep for the home to remain in it.
If the house is sold before Moms death, that is her money and needs to be used for her care. In no scenario do you split proceeds according to the Will when the person is alive. The Will only comes into effect when the person dies. The house must be sold at Market Value when Medicaid is or will be involved at some point. If Mom is not competent hopefully you have POA because without it you can't sell the house.
Moms home is considered an exempt asset until her passing. When she passes, its an asset that Medicaid can recover the money they put out on Mom.
Watch out for those state-sponsored family caregiver programs too. Yes, a family caregiver can get paid by the state to care for an elderly loved one. They claim an estate to be paid back whatever they pay out though. Same applies for agency-employed homecare aides that are paid for by Medicaid. Believe me, nothing is free for a person if they have assets that are unprotected or still in their names.
As for loss of your husband's income. Medicaid is reasonable. Because you are his legal spouse, you will be left with enough to live on. You should buy a small place though. As the spouse, you would be allowed to remain in the home and Medicaid will consider it a protected asset. Unless you go to sell it and then they will expect your husband's half to be paid back to them.