Can I draw up a contract to purchase Mom's home in case she needs to go into an AL?

Countrymouse seems to have it right (as usual). As long as you pay market rate and the money is used for her care there shouldn't be a problem. You'll need to work with the bank, of course, because you'll likely need a new mortgage.
Good luck,
Carol

I can't see why not. If you're just planning to buy her house from her at the market rate, more or less, and then she pays off her mortgage and any remaining equity is used to pay for her ALF… what would be the problem? You'd be a buyer like any other.

If you're thinking you could buy it cheap and thus minimise her capital heh-heh-heh, though… that would be dodgy. Don't do that.

If the purchase is to 'protect' from Medicaid look back, if ALF turns into NH, One would be better off considering the irrevocable trust, & importantly maintain the step-up in basis privilege (still have 5 years), but after that you are past the period

If it were to sell before her passing, it is not an an asset increase for VA benefit purposes, with the trust

Make sure you have it appraised and pay fair market value. On assisted living applications for SLFs in Illinois, there is a question about selling real estate for less than market value. This could go against her if she needs to apply for Medicaid.

My Moms house was in a Trust and I was the Trustee. The money from the sale of the house went into a "trust bank account" and was used for her care (at home care, myself and help, supplies, etc) Once it was gone we are just now on SS but she is still with me. The Assisted Living will take their monthly payments and then the nursing home but you cannot use the money for anything, but her. PS you have to be the Trustee to touch it. This is a lawyer issue 100%.