Supplemental Illustrations of Clients Benefited by Victims of Nazi Persecution

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 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.

EXAMPLE D.

Client D has received $30,000.00 in reparation payments and s advised to establish the "Client D Reparation Account" at her bank. Client D eventually applies for and receives Medicaid and dies two years later.

Since the Reparation Account was established in the name of Client D, a formal Probate proceeding is required to appoint an executor to distribute the funds to Client D's beneficiaries. (Probate is not required for funds in a Victims of Nazi Persecution Compensation Trusts® Account.)

Additionally, prior to distribution, the Executor will receive Notification from the Department of Human Resources stating that no distributions can be made by the executor until such time as Medicaid has had an opportunity to review the matter and determine whether a Medicaid recapture demand is appropriate. (Medicaid picks up estate names from the Surrogate's Court and still has the right to review whether recapture is appropriate against the estate of any Medicaid recipient).

Therefore, the administration of the estate will be delayed while Client D's executor either hires an attorney or makes his own attempt to prove to Medicaid that the new Department of Health regulations apply to these funds and that, therefore, there should be no recapture. ( Remember that the new Department of Health guideline states that Medicaid (should) not recapture this is precatory, not mandatory language and therefore the status of these funds can be reviewed and debated ad nauseam and the resolution may be uncertain.

The Victims of Nazi Persecution Compensation Trusts® avoid the delays of probate of this asset and preempts debate by Medicaid as to whether this asset should be recaptured. Client D's Reparation account neither protects these funds properly, nor does it provide for use of these funds if Client D is incapacitated, potentially preventing the intended beneficiaries from receiving these funds.

EXAMPLE E.

Client E knows about Client D's plan. He also read some articles about Medicaid planning and consults both a social worker and an Elder law attorney regarding the protection of his reparation money, his failing health and his compelling need to secure long term health care assistance. Client E is advised that a Reparation Account in his name is insufficient and that what he should do is establish a "Client E Reparation Account " held jointly at his bank with one of his nephews.

Client E feels comfortable with this account. He is happy that his nephew has access to the money in the account and believes that, upon his death, the account will be transferred to his nephew by operation of law. He believes that this will avoid the expense and inconvenience of probate and, therefore, Medicaid will not review this account.

However, Client E's plan still creates potential problems. As is the case with all jointly held assets, situations can arise that will totally defeat this alleged solution. For example:

Client E's nephew withdraws the money from the account, as he is legally entitled to do, and leaves Client E with no assets whatsoever.

If Client E's nephew unexpectedly predeceases Client E, then Client E will be in the same position as Client D was in Example D above.

Client E's nephew survived Client E and upon his uncle's death he closed the account, kept the money and ignored his uncle's wishes that this money be divided evenly with his three cousins. As a joint owner of the money he was legally able to ignore his uncle's wishes.

Client E's nephew (in this instance well intentioned and meaning to distribute the funds according to his uncle's wishes), unfortunately had a problem with the IRS and has to pay off his tax lien. As a joint owner, Client E's reparation account may be lost to the IRS.

The possibilities for disasters regarding jointly held reparation accounts are endless and are easily avoided with the establishment of Victims of Nazi Persecution Compensation Trusts® accounts.

EXAMPLE F.

Client F and his spouse are both victims of Nazi Persecution. They have received conflicting advice about restitution asset protection from the various attorneys and social service organizations they have consulted. Unfortunately, Client F and his wife are frail, making it essential to address the issue of their long term health care.

Client F has received $150,000.00 in Restitution and his wife has received $225,000.00. Additionally, the couple received $250,000.00 in 1983 as a result of a property settlement and, recently, they also received special payments for slave labor. In total, Mr. and Mrs. F have received approximately $625,000.00 in restitution payments.

Their current net worth is, coincidentally, also $625,000.00, which is maintained in various banks and brokerage accounts. Although Mr. and Mrs. F. are close to their children, they want to maintain control of their own assets; they want to prevent, or at least limit, the access the children have to the funds; and , further, they want to ensure that the influence of their sons- and daughters-in-law would have no impact on their testamentary wishes.

By properly establishing Victims of Nazi Persecution Compensation Trusts® , along with properly drafted Powers of Attorney and Health Care Proxy documents, Client F and his wife can accomplish their goals. They can identify, protect and maintain absolute control of $625,000.00 of their assets (the current total amount of restitution payments), receive Medicaid assistance and, under New York guidelines, preserve this unique Medicaid exemption for the next generation.

EXAMPLE G.

A senior citizen, Ms. G, is admitted into a nursing home. Although Ms. G has no resources, she receives a monthly restitution income, which is payable to her by virtue of her status as a victim of Nazi persecution. The nursing home assists Ms. G in preparing a Medicaid application so that her nursing home care expenses may be covered by the Medicaid program.

In conjunction with its preparation of her Medicaid application, the nursing home prepares Ms. G's Net Available Monthly Income statement (NAMI) which states how much of her income is payable to the nursing home. In preparing the NAMI, the nursing home calculates that Ms. G's restitution income is payable to the nursing home. The nursing home proceeds to collect her restitution income for several years.

Issue: Did the nursing home err in including Ms. G's restitution income as part of the NAMI resulting in the overpayment to the nursing home of Ms. G's exempt restitution income.

Discussion: The nursing home erred in including Ms. G's restitution income as part of the NAMI resulting in the overpayment to the nursing home of her exempt restitution income. Generally, pursuant to Medicaid guidelines, a Medicaid recipient's monthly income in excess of a personal needs allowance is payable to the nursing home against the cost of care, with the exception of income that is considered an exempt source of income. Pursuant to the guidelines, restitution income is a source of exempt income that should not be considered when determining an individual's eligibility for Medicaid and should not be considered when determining the (NAMI). Accordingly, since Ms. G is a recipient of restitution income payable to her by virtue of her status as a victim of Nazi persecution, the nursing home should never have included such income in the NAMI. Therefore, Ms. G is able to recover this money from the nursing home and to amend the NAMI to reflect that her restitution income is not payable to the nursing home.

EXAMPLE H:

A social services agency (the "Agency") is appointed as guardian of the person and property of an incapacitated person (the "IP") a long time client of the Agency. The IP's assets amounted to one hundred twenty thousand ($120,000.00) dollars. The Agency is aware that the IP receives approximately eight hundred ($800.00) dollars per month in restitution payments payable to the IP by virtue of her status as a victim of Nazi persecution.

The Agency has determined that throughout her lifetime, the IP has collected in excess of two hundred ($200,000.00) dollars in restitution. The Agency hired private health aides to provide the IP with private pay home care assistance. The Agency spent down the IP's entire assets, and then applied for Medicaid assistance for her home care needs.

Issue: Since the Agency was aware that the incapacitated person was a victim of Nazi persecution, was it incumbent upon the Agency to immediately investigate whether the incapacitated person was eligible for benefits under the Medicaid program.

Discussion: Since the Agency was aware that the IP was a victim of Nazi persecution and a recipient of restitution, a logical presumption would be that it would be incumbent upon the Agency to immediately investigate whether the incapacitated person was eligible for benefits under the Medicaid program. Such a presumption is consistent with section 1(a) of the Victims of Nazi Persecution Act of 1994, Public Law 103-286 (the "Act"), which provides in pertinent part as follows: "Payments made to individuals because of their status as victims of Nazi persecution shall be disregarded in determining eligibility for and the amount of benefits or services to be provided under any federal or federally assisted program which provides benefits or services based, in whole or in part, on need." Since Medicaid is a federally assisted program, the Act applies to the Medicaid program. Notwithstanding the unequivocal terms of the Act, the New York County Supreme Court, in Matter of Fredrika Steiner, has ruled that a Guardian does not need to engage in Medicaid planning as part of its fiduciary duty to preserve the assets of the IP. Accordingly, Survivors must beware that, although their assets may be exempt resources, which may deem them immediately Medicaid eligible, if they do not properly plan, a guardian can improperly dissipate their assets without recourse from the judicial system.

Issue: Did the Agency err in spending down the assets of the incapacitated person prior to applying for Medicaid?

Discussion: A strict as well as common sense application of the Act would support the position that the Agency erred in spending down the assets of the incapacitated person prior to applying for Medicaid, because the methodology is clear - once these exempt assets are identified, if it is determined that the restitution sums received are equal to or greater than the person's present day assets, then that person may immediately be deemed Medicaid eligible, without the necessity of a transfer or spending down of assets. However, as per the holding in Matter of Fredrika Steiner, a mismanagement of exempt restitution assets by a social service agency does not rise to a breach of fiduciary duty that would warrant judicial sanctions.

Issue: Since the incapacitated person had received over $200,000.00 in restitution payments during her lifetime, an amount greater than the value of her $120,000.00 assets, was she eligible for Medicaid assistance at the time that the Agency was appointed her guardian?

Discussion: Since the incapacitated person had received in excess of $200,000.00 in restitution payments during her lifetime, an amount greater than the value of her present day assets in the amount of $120,000.00, she was eligible for Medicaid assistance at the time that the Agency was appointed her guardian even though the Agency failed to properly plan on her behalf resulting in the unnecessary waste of her exempt resources.

CONCLUSIONS:

Establishing Victims of Nazi Persecution Compensation Trusts® ensures that a person's assets are protected without loss of control and provides the means to preserve their legacy.

Anticipatory discussion and planning are advised to all victims of Nazi persecution who are receive compensation.

Information disseminated to the general public regarding asset protection for senior citizens does not fully address the concerns of victims of Nazi persecution.

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