Q: Should my mother gift her home to a family member prior to going to a nursing home?
A:
NO! Medicaid has a five year look back period. Transfers for less than fair market value (which a gift always is) are presumed to be transfers in an attempt to qualify for Medicaid and will result in a penalty period during which Medicaid will not pay for your mother's care. The penalty period could be several months to several years, depending on the value of the home.
In Texas, as long as your mother checks a box on the Medicaid application saying that she has an intent to return home (who doesn't?), her home will not among the "countable assets" in determining her Medicaid eligibility.
In Texas, if she signs a Transfer on Death Deed or a Lady Bird Deed and records it in the county clerk's deed records, her home will transfer on death to whomever she names free of Medicaid Estate Recovery. (If she cannot sign, her agent under a Durable Power of Attorney can sign a Lady Bird Deed, but not a Transfer on Death Deed, for her.)
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