As the holder of a life estate interest in the home, your mother must receive a share of the sale proceeds proportionate to her life estate interest. This amount is
computed by the use of standard charts used by both Medicaid and the IRS. If your mother receives her share as a lump sum, she will be disqualified from Medicaid until she has spent this money down, at which time she can reapply again for Medicaid benefits. However, it may be possible for her to receive her share of the proceeds by way of periodic payments or an annuity which could permit her to remain on Medicaid although the amounts she would be receiving would affect her Patient Pay Amount. The laws regarding this differ somewhat from state to state so I suggest that you contact an Elder Law lawyer in your state to assist you with this matter. As for being reimbursed for work that has been performed on the home, it is very much dependent on what the agreement was when the work was done. If it was, in essence, a loan by which you were to be paid back when the home was sold, you may be able to have these amounts deducted from the sales proceeds. Again, this is complicated and you should obtain the services of a trained elder law attorney. You can find one by going to the website of the National Academy of Elder Law Attorneys.