Estate and Medicaid Planning for Victims of Nazi Persecution and their heirs

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 a Victim of Nazi Persecution Restitution Trust® they are protected in the event Mr. A ever needs nursing-home care himself, and are protected from Medicaid Estate recovery.

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 $14,000.00 a month. With the addition of private duty nurses, Ms. B would likely exhaust her substantial assets within 10 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 Victim of Nazi Persecution Restitution Trust ®. 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.

• Ms. B’s. assets were 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.

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 portion of her assets to her only son and pay the nursing home during the “wait out” ineligibility period resulting from this transfer. 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 Restitution 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.

Client D has received $30,000.00 in reparation payments and is 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 Victim of Nazi Persecution Restitution Trust ® ). 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 these funds are exempt and therefore, there should be no recapture.

• Victims of Nazi Persecution Restitution 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 does not properly protect these funds, does not provide for use of these funds if Client D is incapacitated and could potentially prevent the intended beneficiaries from receiving these funds.

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 a Victim of Nazi Persecution Restitution Trust ®.

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.

• Client F and his wife can accomplish their goals by properly establishing Victims of Nazi Persecution Restitution Trusts®, along with properly drafted Powers of Attorney and Health Care Proxy documents.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.