Asset Protection for Victims of Nazi Persecution

Prepared in March, 2001, at the request of the Library of Congress

Goal: To preserve a significant portion of the assets of Victims of Nazi Persecution in the event the need arises for long-term health care.

Method: Creation of Victims of Nazi Persecution Compensation Trusts®

  • allows eligible persons to receive U.S. Governmental assistance for medical benefits (i.e. Medicaid), without spending down assets to poverty levels as normally required;
  • allows the complicated and time-consuming task of preparing a restitution payment history to be completed BEFORE the time constraints of a Medicaid application begin; and
  • allows currently held assets to be recognized as restitution payments in the eyes of Health Care Financing Agency ("HCFA").

Advantages of Compensation Trusts ®

  • Provides Medicaid exemption for multiple assets.
  • Unifies assets under one entity.
  • Allows Grantor to maintain control of disposition of assets.
  • Allows client to retain assets in his or her individual name.
  • Provides flexibility due to its revocability.
  • Provides directions for asset management in the event of incapacity without the necessity of a guardianship proceeding.
  • Eliminates burden on spouse or next-of- kin to guess Grantor's intent in the event of incapacity.
  • Empowers family members to take action on behalf of the Grantor, since assets remain under Grantor's control.
  • Simplifies distribution of such assets to multiple beneficiaries.

Eligibility: Persons must be:

  • American citizens or resident aliens; and
  • former victims of Nazi persecution;

and must also either:

  • have received and/or currently receive compensation in the form of restitution ("Wiedergutmachung"), pension (German/Austrian social security payments) or property claims from Germany, Austrian or other occupied areas; or
  • anticipate receipt of newly available funds resulting from recent settlements.

Common Misconceptions:

  • That the above referenced forms of compensation are not recognized as exempt assets in the eyes of Medicaid when, in fact, they ARE considered by HCFA to be exempt assets.
  • That the creation of Victims of Nazi Persecution Compensation Trusts® can wait until a person becomes ill and in need of extended care when, in fact, such delay may only result in unnecessary expenses.

EXAMPLE A - Protection of community spouse's assets

Mr. A, a restitution recipient, is aware that, by claiming Spousal Refusal, he would be eligible to seek Medicaid benefits for his wife, who is in a nursing home,

Mr. A believes that, since his assets exceed Medicaid limits by almost $200,000.00, he will be sued by Medicaid to provide contribution for his wife's care after she receives Medicaid.

Mr. A is not aware that any current assets he holds could be made exempt for Medicaid purposes by qualifying them as co-mingled restitution payments.

By qualifying Mr. A's assets as restitution they become exempt from Medicaid.

Mr. A can never be required to contribute to his wife's care because in the eyes of Medicaid he has no assets to contribute.

Further, by placing those assets in Victims of Nazi Persecution Compensation Trusts® they are protected in the event Mr. A ever needs nursing-home care himself, and are protected from Medicaid Estate recovery.

EXAMPLE B - Assuring Auxiliary Care and Testamentary Intent

Ms. B, a restitution recipient, suffered a stroke and, after a brief hospital stay, is discharged to a nursing rehabilitation center from where she is, unfortunately, unable to return home.

Because Ms. B has assets in excess of $185,000, she is advised that she would need to pay privately for her Nursing Home care, in this case $9,000.00 a month. With the addition of private duty nurses, Ms. B would likely exhaust her substantial assets within 15 months.

Upon our review of Ms. B's history, we determined that she is immediately eligible for Medicaid despite her assets.

We filed an application for Medicaid and transferred her assets into a Victims of Nazi Persecution Compensation Trusts®.

We instructed her attorney-in-fact not to make any further payments to the nursing home, pending the decision on Ms. B's Medicaid application, which was subsequently granted.

Thus, Ms. B's. assets are preserved and, via the Trust, remained a source of funds available to provide her with private duty nurses. The Trust also ensured that Ms. B would be able to pass a legacy to her family, friends and favorite charities.

EXAMPLE C - Need for Anticipatory Planning

Mrs. C, a recipient of Wiedergutmachung and a widow's pension, had assets in excess of $400,000.00 prior to entering a nursing home.

Before contacting us, Mrs. C had received professional advice about initiating a standard Medicaid plan which called for her to transfer a large proportion of her assets to her only son and pay the nursing home during the 'wait out' ineligibility period resulting from this transfer (approximately 36 months).

Concerned that during the first 13 months of this ineligibility period, Mrs. C had spent over $110,000.00 of her own assets for nursing home care, Mrs. C's son called us to assess whether his mother's restitution might provide an alternative to exhausting her remaining funds.

Our calculation of Mrs. C's restitution payments revealed that, over time, she had received restitution in excess of $430,000.00 and was thus presently and immediately eligible for Medicaid benefits.

Unfortunately, because Mrs. C had waited to consider restitution planning, none of the assets which she had already paid would be returned.

While Victims of Nazi Persecution Compensation Trusts® shield a person's assets from the reaches of Medicaid, Medicaid reimbursement provisions only apply to money privately paid to a nursing home within three months of filing a Medicaid application. Thus, as illustrated above, the clients who discover their entitlement too late will needlessly and irrevocably be forced to spend their own funds.

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