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They are pushing it back to January 1st 2024. Now she is may be getting up to $14,000 back in a Tax Refund. From what i understand she has a year to spend it. But she is in a Nursing Home now. So now what should I do ? Do I go see a lawyer ? Can I put the monies in another account?

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Attorney time, too many variables.
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Does she owe the NH for months not paid before she received it?

Hopefully she needs a funeral trust. I think Medicaid has a cap, like 10k but that was 7yrs ago. Take the whole amount allowed. Does she have bills you had to let go? Pay them. A house you need to sell that needs some sprucing up.
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No, you must never attempt to hide any monies at all.

One wonders how this massive error happened in taxation of an elder who is destitute, but I am sure that's one long story.

You should see an attorney right away, and there's a start to spending it down, for sure.
The attorney can advise you on any chance of a Miller Trust or other options you may have.
As you will be aware, as POA you are responsible to reliable, legal and responsibly meticulous records for your senior as well as files. This is something you can be advised of by the elder law attorney as well. This expert advice of an attorney is part of your duties as POA and paid for by the POA.
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Spending on things she needs
Pre paid funeral.
Any dental work needed?
Glasses?
Orthotics?
New clothes?
TV?
Phone?
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