You pose a lot of good questions. The timing of the payment is a bit unfortunate. If the nursing home resident’s funeral has not yet been prepaid, that may be the best use of the money. But here are some answers to your questions with the caveat that practices may be a bit different in your state, meaning that to be certain you will need to consult with a local elder law attorney. During the calendar month of receipt, the funds are treated as income and must be used to pay the nursing home. After the first of the following month, they are treated as a resource and if the recipient has more than the asset limit in his state, he will be ineligible for benefits until the amount is spent down. He will have to pay for his own costs until the money is spent down. As mentioned above, the best way to spend it down quickly may be to prepay his funeral costs. There may be other ways available and we strongly recommend that the family consult with a local elder law attorney. To find an attorney near you, click here. It is not the nursing home’s money. The patient or his agent should have the right to manage it. It’s unlikely that the VA will pay for the nursing home. But there are exceptions, so it can’t hurt to ask.