Mom's step kids want to dole out money before she is gone. Any advice?

It’s not ok. $$$ should only be used for her care or if house repairs necessary. What about mom’s monthly bills? If $$$ given out before her demise, & she needs Medicaid, it will be considered a gift & there will be penalties. There will be a longer time for Medicaid to pay a SNF. Don’t do it.

They might be trying to get around losing everything if she goes into a nursing home. There is a five-year look back, though, so if she goes into the nursing home before then, the feds will come after that money. Estate planning CANNOT begin early enough.

It's not ok. You might want to remind them that they call it inheritance because it's what's lefter over AFTER someone dies. Pretty appalling, however it's also pretty common for people to start picking the flesh like a bunch of buzzards before the person stops breathing. Since you're asking the question, assume that you are in charge of the money for your mom - I question that you needed advice for this. Were you actually considering doing this??

Also, if her medical costs exceed what she has left, there will be a penalty in getting Medicaid to take over. Since she has late stage Alzheimer's it's pretty clear that she cannot make a decision to give her money away - so whoever is in charge (or has the capability) of taking money out of her accounts is probably going to be accountable for just giving away her assets. Not a seat I'd want to be sitting in.

Oh Hell No!
Sorry for my rough response but tell them just that.
Yes it can be done but if that is needed for whatever reason it needs to stay right there.
Ask them what the would do if this was not an option? Then tell them it's not. Discussion closed.

shame on the step kids. their care and concern for their step mom should be top priority not the money. don't give in to them. its wrong . no one knows what the future will bring and how long she may have in her life. until she passes, it is not their money.
I'm sorry the step sisters are having money issues but if your mom wanted them to have the money in advance she would of told them that.
there is many things that pop up after a person dies and that money may be needed for things such as funeral, flowers, bills, etc. their inheritance comes after all of the issues have been cleared.
mom is the priority now not her money, shame on your step sisters..

Consult an elder law attorney! ASAP

It's not OK.

Just to address a little piece of the confusion, it sounds like Mom's money was their Dad's estate and they want to make sure the residual goes to them not you. If I got that right, you can address it legally and let everyone be friends again and take care of Mom together.

Maybe or maybe not, it might help them to know what the will says. However, that is still contingent upon her needing the money for her care right now and that will determine how much is left over when she dies which is when the will can be followed after final expenses are paid. greedy! They are

Terrifying. This is fraud.

Even if they have a legal “vehicle,” this is completely unethical and disturbing.

Something may be getting lost in translation from the family law attorney to the stepsibling(s) to you to us.

There seems to be a lot of focus on whether your Mom will live more than five years. Are there enough assets to pay more than five years of care? That’s a lot of money. Maybe they are trying to get the “excess” out of her name in an attempt to shift to Medicaid after the five year lookback has passed?

If there isn’t that much money, clearly you wouldn’t want to cooperate in diverting money she needs for her care.

Did your Mom ever express any wishes in this area? Do you know where she fell on the continuum between “Don’t give everything to some nursing home, I want my money to go to  ____.” and “I’d never want to be on welfare (i.e., Medicaid).”

If she wouldn’t want to be on Medicaid, rely on your conscience to follow her wishes.

That leaves the situation where there is more than enough money, AND your Mom expressed a wish to avoid spending all of her own money. 

Only in the last case is there some argument for your stepsister’s approach. Does the POA allow for large “Medicaid planning” gifts? Relying on a family law attorney rather than one that specializes in elder law/medicaid doesn’t sound prudent. If you believe your Mom didn’t completely understand the differences in Medicaid care vs. private pay (location/privacy/amenities/...), you still may not want to cooperate.

Gifting is allowed before death. If there is plenty of money - it may not matter except the recipients will have weakened her "money making machine ( investments)" . If she lives long enough to need Medicaid, everyone had better be prepared to pay the money back.

The yearly amount for gifting finder IRS rules does not apply under Medicaid regulations. If parent is gifting you the tax-free gift amount, Medicaid will make every effort to recover those funds.

"When did it become ok to take inheritance before a person is resting in peace?"
NEVER.

Like others said, I believe your step sister is either misinformed, lying, confused or has not presented the full "case" to her "family law attorney." Perhaps she is just plain greedy! She also needs to have a better understanding of what a POA does (perhaps you need to tell her):

https://info.legalzoom.com/duties-power-attorney-20228.html

"Agent Responsibilities
The agent has a legal duty to the principal; he must act in the principal's interests and not his own when acting as an agent. Agents should keep records of all duties performed on behalf of the principal in case the principal or a court asks for an accounting of the agent's activities."

She should be handling mom's finances/affairs in the best interest of MOM. Taking her money now because she might die soon, doesn't need it or can't use it is just plain and simple GREED. Also be aware that POA duties END at the time of death. If there is a will, it should name an executor.

Questions for you:
1) Does mom have a will? All assets will go through probate and be allocated to remaining bills, burial, etc. and THEN to her heirs (with/without will).
2) If mom has a will, even if y'all are named as equal beneficiaries, the assets are distributed AFTER death (and probate/bills/etc.) Do you have a copy of it? Does POA understand her duties STOP on mom's death?
3) If there is a will, are the beneficiaries the same as those who would TAKE money now? If not, those beneficiaries are going to be a mean nasty bunch to deal with later!
4) Has mom officially been declared incompetent? If so, she CANNOT make that "decision" to gift, which is the ONLY way the POA could do the distribution. Children and POAs don't make that decision.
5) Is it possible for you to seek guardianship (if she isn't competent, she can't change/assign POA, but you *could* get guardianship, which would revoke any/all POA. Mom's assets can be used to pay for the attorney and court costs.
6) Does she have a prepaid burial plan to cover burial/cremation costs? If not, who is going to pay that?
7) As jacobsonbob says, if the "gifting" exceeds the Federal guidelines, y'all better hang on to some for the taxes you will have to pay!
8) If the funds are in a trust, there will ALSO be tax implications for taking it before TOD.

ALL of mom's assets should be left alone because:  
   There is no way to know how long she might live.
   Depending on what her needs are, she might need all of the funds for her care.
   IF she needs Medicaid within 5 years, she will get NOTHING until the NH is private-paid up to the total "gifted" (TAKEN.) Who is going to pay for that? You think they will??? HAH!
   If she has no burial fund, money will be needed to cover those costs.
   If she has any outstanding bills, money will be needed for those as well.

Best bet is to get a consult with an Elder Care attorney (most will give you ~30-60 minutes free first consult) and ask these questions. For the most part, besides the ethical and moral issues, the responses here are fairly consistent that this is a big NO-NO legally. Gifting would be mom's decision, IF she is competent, BUT a POA should still consider what is best/right to do and can override that. I would also inquire as to whether you could request an accounting of mom's assets, if you think anything is amiss.

If you don't feel you can take on the legal issues yourself (going for guardianship), I would at least call her bluff. Let her pay all the fees for taking you to court as a judge isn't likely to find in her favor (be sure to document mom's condition), and be sure to ask if POA is using mom's funds to bring this to court, which is ALSO wrong! The judge could make her pay back everything AND could order an audit to ensure she IS performing her POA duties properly (refer back to the legalzoom quote)! She's be in some deep doo-doo if she's pussyfooting with mom's assets.

This seems very much WRONG and you should have an attorney.

If they believe she won’t have long to live, then they won’t have long to wait. Ignore anything that will cause more division in the family. Everyone will regret it later. Just do the right thing with love.
Pray for God’s perfect timing and plan.