Tax Shelter For Restitution Money


Survivors are now able to give "every penny" of the restitution money they have received over the years to their children and grandchildren: tax free. A Manhattan law firm has developed a way of sheltering restitution payments from Medicaid and nursing homes while they are alive, and from Medicaid estate recovery after their deaths.

"They aren’t going to be victimized again," vowed lawyer Michael Lissner.

"We saw that our clients were penniless in nursing homes, and that is not right," added his wife, Barbara Urbach Lissner, who with her husband is a partner in the law firm that bears their names. "That is not the intent of the restitution money. It was intended to make up for their losses."

The couple, whose parents were themselves survivors, have developed what they call a Nazi Victim Compensation Trust. They stressed that survivors should not wait until they enter a nursing home to set up such a trust but rather should act now to protect their money.

Lissner said he and his wife have represented hundreds of survivors over the years and that the need for such a trust evolved as the survivors aged.

"We began getting calls from survivors saying that they have been in a nursing home for two years and have used up all of their money and were now eligible for Medicaid" to pay the nursing home bill, said Robert Epstein, a member of their firm. He noted that nursing home costs are from $7,000 to $12,000 each month.

To be eligible for Medicaid, an individual may keep no more than $3,600 in assets. But if a survivor does not shelter that $3,600, Medicaid is permitted to take it all after the survivor’s death. And what makes this Nazi Victim Compensation Trust special, Lissner said, is that it can shelter "every penny" of reparation money the survivor has received: dating back to the 1950s, in many instances.

Epstein said that although many nursing homes encourage survivors to set up special accounts to protect their restitution money from being counted as an asset by Medicaid, such accounts do not protect the money from Medicaid claims after their deaths.

By establishing a Nazi Victim Compensation Trust, all reparation money is sheltered, Epstein said.

Lissner said his firm has an arrangement with the German government for it to provide each client with the exact date their reparations began and the amount they initially received. Using a software program the firm developed, Lissner is able to determine the total amount of money the client received. If it was $200,000 through May 15, Lissner said, $200,000 of his client’s assets would then be transferred into the trust. The money in the trust is then available to the survivor to "pay for a private duty nurse or to buy gifts for his or her children and grandchildren, or to give to charities," said Barbara Lissner.

Lissner said survivors might also want to review any long-term health insurance policies they have. Citing studies that indicate 35 percent of the general public will need long-term care, he said such insurance policies cost about $6,000 a year.

"They may not need a long-term health care policy because if we can qualify their assets as accumulated restitution/pension and use them to fund the Nazi Victim Compensation Trust, Medicaid will pay [their medical bills]," Epstein said.

Barbara Lissner said her firm is unique because of it has lawyers who "understand German, the restitution claims process, restitution exemptions and the necessary computer software."

"We’re the first firm to put all these pieces together," said her husband, "and to do restitution estate planning."