What to do When a Beneficiary is Serving a Prison Sentence

Experienced Estate Planning Attorney Serving Families and Beneficiaries in Upstate New York

prison sentence A beneficiary of an estate could find him or herself serving time in jail or prison. What is an executor to do when a beneficiary is otherwise detained? The funds from the estate plan are designated for that recipient, but recipients in prison are not exactly capable of accepting their inheritance.

This is a complicated situation that occurs more often than realized. Not only will the executor have a few legal hurdles to get through, but the inmate who is the beneficiary will equally have a few items to handle from the inside of a prison.

Determining how the inheritance is handled will depend on the reason why the beneficiary is incarcerated. If there is an order for restitution to the victim’s family or the victim, that inheritance might never go to the recipient.

When the Inmate is a Beneficiary of a Trust

If the prison inmate is a recipient of the trust, the trustee is obligated to check with the state’s victim compensation board to see if there is a pending compensation. The government claims office must also be reviewed to ensure there is no interest in the inheritance. These agencies handle victim restitution, which is ordered by a criminal court judge during sentencing. The appropriate government office must be paid as quickly as possible after the trust becomes active and by all state laws.

When the Inmate is the Beneficiary of a Life Insurance Policy

Within the estate plan, there might be one or more life insurance policies. These policies could name a prison inmate for the beneficiary position. In this case, the insurance payout would be set up in a trust in the prison inmate’s name; then, the inmate would have discretion in appointing his or her trustee to manage the funds until release.

If, however, the prison inmate was also the person responsible for the death of the policyholder, then there are state laws that prohibit the inmate from collecting on his or her crime.

When the Inmate is an Heir to an Estate

While the will goes through probate, an inmate listed as an heir would require the executor to inform the state and the probate court judge of the incarceration status of the beneficiary. The state’s probate court would then decide how to handle the assets pending in that case.

In some instances, the heir would forfeit his or her right to collect inherited assets, and the other beneficiaries would be entitled to splitting that share of the inheritance intended for the recipient incarcerated. In other instances, those assets could be given to the next of kin of the prisoner, such as a spouse or child.

When there is no will and a beneficiary is incarcerated, the state may decide that the prisoner inherits nothing and goes down the line of succession by the statute to determine the next eligible party for inheriting remaining assets.

Always Consult an Attorney When Dealing with Complex Estate Issues

Numerous complex issues can arise while acting as an executor or drafting an estate plan. That is why it is in your best interest to contact an attorney before trying to interpret the law.

Speak with someone from the Law Office of Andrew M. Lamkin, P.C. today by calling 516-605-0625 or request a consultation online.

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