How should we handle the funds from the sale of mom's car so they don’t negatively impact her assistance?

As said, it depends on what the car is worth. Also, what type of assistance she is on. I would not sell until I asked a few questions of her caseworker.

Medicaid for health, she may get away with additional income. Medicaid for in home and Longterm care are different. These are based on assets and income.

If Mom has not prepaid her funeral, this is a good way to use additional funds.

While applying for Medicaid , they want to know the value of the car , how much it was sold for… be sure to keep accurate records of this. The car is an asset, when sold becomes income . Spend it on mom with receipts.

If the value of the car is just a few thousand then sell it for cash (and keep the cash on hand, not in the bank) and use it to pay for her needs. If the car is worth much more, then you will need to check with your state's Medicaid program for guidance.

If the assistance programs are similar to Medicaid, there is a limit on how much she can have in assets. So anything over that amount will need to be spent down for her benefit within the required timeframe. Typical spend down items include prepaid final expenses, durable medical equipment, and household items like a good recliner chair.