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Illinois Seizes Prisoner’s Life Insurance Inheritance

Leonce J. Ruckman, an Illinois state prisoner who had been incarcerated since 1988, received the benefits of his mother’s life insurance policy after she died. He used some of the proceeds to purchase a MetLife annuity with a cash value of $32,178.22. When state officials learned of the inheritance they sued Ruckman, seeking reimbursement of the costs of his incarceration pursuant to 730 ILCS 5/3-7-6(a). Ruckman filed a motion to quash, alleging that life insurance proceeds were exempt. The district court denied the motion and entered an order for MetLife to pay the state $29,156.60 – the current cash value of the annuity minus a $2,000 personal property exemption. Ruckman appealed.

On December 13, 2005, on de novo review, the Court of Appeals held that 730 ILCS 5/3-7-6(e)(3) gives the state extensive powers to seize a prisoner’s assets for reimbursement of incarceration expenses. However, this was subject to the restrictions of section 12-1001(b), which exempts $2,000 in personal property. The appellate court also held that 735 ILCS 5/12-1001(f) provides an exemption for life insurance proceeds, but does not protect such proceeds when they have been converted into another form of property such as an annuity. Furthermore, the converted proceeds were not exempt pursuant to 735 ILCS 5/12-1001(h)(3), which exempts property of a dependent of the policy holder which is traceable to the life insurance payment, because Ruckman was a dependent of the state, not a dependent of his mother.

The fact that Ruckman himself had dependents was irrelevant to this determination. Therefore, the decision of the trial court was affirmed. See: People ex rel Director of Corrections v. Ruckman, 363 Ill.App.3d 708, 843 N.E.2d 882 (Ill.App. 5 Dist. 2005), appeal denied.

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Related legal case

People ex rel Director of Corrections v. Ruckman