I believe I read that a widowed spouse can keep the home as long as A) he/she continues to live in the home and/or B) does not remarry. The engaged couple wants to live in her home. Appears to me the widowed spouse is w/in the law allowing her to continue living in her home until she dies. Once remarried though and still living in her home it appears to be against the law that disallows a remarried widow to keep ownership. So one rule appears to apply in this situation, but the other does not. I was somewhat confused when they said they would remarry and live in her home and he would rent out his home.
I couple I know were both widowed. They married and lived in her house. She passed before him. Her will allowed for him to be allowed to live in the house until he passed and then it would revert back to her kids. He did have a girlfriend that moved herself in and upon his death she was asked to leave. (She had a house of her own) Now, if they had married, she still would have had to leave the house because it wasn't his.
So, we need to know what you are reading, a will or Medicaid rules.
You need to consult a verified eldercare attorney familiar with the laws of the local jurisdiction .