My mom is in assisted living and receiving a small amount from the VA. Her savings are running out and my sister will buy her house. Advice?

You should consider application for medicaid. The house is a protected asset. If your sister is buying the house you must be absolutely certain she is paying fair market value. Then all the proceeds from the sale of the home must be assets in your MOTHER'S name, paid for her by her guardian or her POA for her care in LTC, or for her care otherwise. I would get the advice of a professional. Going the wrong way in this will preclude your Mom from getting governmental help, and may also get you in a real illegal financial tangle with charges of "gifting", embezzling the money of a senior by selling at less than fair value, and on and on and on. See a Lawyer. When you are talking issues like this some on Forum may have a lot of knowledge but it may not be right for your own area/state/what have you.

Does ‘keep the house in Mom’s name’ mean not going through with the sale? Would sister pay rent – and how would this income affect mother’s finances? You, sister and mother probably need to get legal advice, because deals like this that aren’t documented can turn very sour when things change.

If mother gets paid for the house, check out the possibility of putting it in the special trust that allows Medicaid to reclaim money only up to the amount owed. I’ve forgotten it’s name, but someone can tell you. If you are trying to keep all the money in the family as well as maximising assistance for mother, it’s not really an ethical thing to do, and is quite likely to go wrong. It would be a good idea to think this through a bit more, and to get legal advice before you do something that could come back to bite you.

Sis has to pay fair market value for the home to maintain Medicaid eligibility.