Good afternoon Jerry,
I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today.
No, you cannot keep the money. Medicaid will require that it be given back to your mother (if it is not already in an account in her name) and spent down so that she then qualifies for Medicaid. However, you don't just have to hand it over to Medicaid. You may give it to your mother or assist her in spending it down on legitimate things---even take her on a vacation if she is able.
The safe harbor provision provided in 20 CFR(###) ###-####t sec., permits a wide range of items such as furniture, appliances, electronic equipment such as personal computers and televisions sets, carpets, cooking and eating utensils, and dishes.
Under 20 CFR(###) ###-#### ***** care items and educational or recreational items such as books or musical instruments are allowed because of an individual’s impairment. Additionally, household goods, automobiles, trucks, tractors,boats, machinery, livestock, and building are allowed.
Things such as prepaid funeral arrangements and special needs trusts are allowed. The trust is not something that you can do on your own, but will require the assistance of a trust attorney or Elder Law attorney to help you set up. Here is an instructive article about the benefits of a Special Needs Trust: http://www.nsnn.com/frequently.htm
Finally, here is a good article on MediCaid spend down strategies:
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I wish you and yours the best in 2016,