If you happen to be a beneficiary named in a trust, are there situations where you may not be able to receive the trust money? Yes! If you are incarcerated and are the beneficiary named in a will, trust or life insurance policy, chances are you will not be able to receive the money. So who gets the money intended for you? That depends on why you are in jail or prison to begin with. The answer to this question may vary from state to state so it is best to consult with a trust litigation lawyer Cherry Hill, NJ trusts to discuss your specific situation.
In some instances, and depending on the crime, the funds may go to your victim, victim’s family or perhaps to the prison to help defer some of the costs of your incarceration. In some states, it may go to your next of kin. And again, depending upon the circumstances of your crime, the inherited money could be placed in a special trust held for you until you are released. It is rare for the money to go into a special trust so be sure to check with your attorney to confirm the laws regarding this in your state. In many states, if you are jailed at the federal or state level, you automatically forfeit any right to receive income of any kind. In addition, the right is usually not given to you when you are released, meaning any monies received while you are incarcerated are not recoverable.
Trusts and Incarceration
The government claims office and the state’s victim compensation board office will need to be contacted by the trustee if the inmate is the beneficiary of a trust and any property or funds due to the inmate. One of the responsibilities of these agencies is to deal with restitution. If the creator of the trust dies, the state must be given this information in a timely manner. Your attorney can help with this process. The government agency will determine how much money it is entitled to based on the laws in that particular state as well as the reason for the jail term and how long they will be in jail.
The same information applies if the inmate is named in a will that is going through probate.
Homicide and Life Insurance
It is pretty cut and dry that if you are found guilty of killing the policy owner of an insurance policy where you are the beneficiary, you will not receive any proceeds from the policy. In addition, inmates may also forfeit any life insurance proceeds even if he was not at all involved in the policy owner’s death. That money may go to the state and the state’s victim compensation office.
Assets That are Inherited
Again, this hinges on the laws at the state level. In some states, the right to inherit depends upon whether the inmate committed a felony. Other states dictate that the inmate’s claim is legally void and if there are any other beneficiaries, it gets split among them. Still other states demand the assets go to the inmate’s next of kin or possibly be put in a trust that is available to the inmate when they are released.
Thank you to our friends and contributors at Klenk Law for their insight into trusts and estate planning.