All of her savings is gone. We would like to apply for Medicaid for her, so that would take care of the nursing home. But she still has her house, since the housing market has bombed out. We have had it up for sale for 1 year with no luck. When dad died 4 years ago, each child was given some money (that was their, husband and wife decision) Do the children now have pay that back to pay for the nursing home?
About the gifts -- there can be a penalty on gifts. The penalty decreases with time to application. IOW, the penalty for gifts made 4 years ago will not be as high as if they were given yesterday. I would find out the exact amount of the penalty before making any decisions. I hope someone more knowledgeable than me will comment on this, because I am far from expert in these matters.