Substance addiction is by no means rare, impacting as many as one in seven Americans. Because of its prevalence, navigating a loved one’s addiction is actually a relatively common topic in everyday life. But you should also consider it when creating your estate plan. Whether the addiction is alcoholism, drug abuse, or gambling, we all want our loved ones to be safe and experience a successful recovery. A properly crafted estate plan can help achieve this goal.
The idea that money from a trust could end up fueling addictive behaviors can be particularly troubling. Fortunately, it’s possible to frame your estate planning efforts in such a way that you’ll ensure your wealth has only a positive impact on your loved one during their difficult moments.
Funding for treatment
One of the ways your trust can have a positive influence on your loved one’s life is by helping fund treatment for their addiction. If a loved one is already struggling with addiction, you can explicitly designate your trust funds for use in his or her voluntary recovery efforts. In extreme cases where an intervention is required to keep the family member safe, you can provide your trustee with guidance to help encourage involuntary treatment until the problem is stabilized and your loved one begins recovery.
Incentive features can be included in your estate planning to help improve the behavior of the person struggling with addiction. For example, your loved one may be required to maintain steady employment or voluntarily seek treatment in order to obtain additional benefits from the trust (such as money for a vacation or a new car). Although this might seem controlling, this type of incentive structure can also help with treatment and recovery by giving a loved one a goal to work towards. This approach is probably best paired with funding for treatment (discussed above), so there are resources to help with treatment and subsequent benefits that can help motivate a beneficiary.
Lifetime discretionary trusts
Giving your heirs an inheritance as a lump sum could end up enabling addiction or making successful treatment more difficult. Luckily, there’s a way to avoid this. Lifetime discretionary trusts provide structure for an heir’s inheritance. If someone in your life struggles with addiction, you can rest easy knowing the inheritance you leave won’t be accessed early or make addiction problems worse.
Of course, you want to balance this lifetime protection of the money with the ability of your loved one to actually obtain money out of the trust. That’s where the critical consideration of who to appoint as a trustee comes in. Your trustee will have discretion to give money directly to your beneficiary or pay on your loved one’s behalf (such as a payment directly to an inpatient treatment center or payment of an insurance premium). When dealing with addiction, your trustee will need to have a firm grasp of what appropriate usage of the trust’s funds looks like. Appointing a trustee is always an important task, but it’s made even more significant when that person will be responsible for keeping potentially harmful sums of money out of the beneficiary’s hands.
Navigating a loved one’s addiction is stressful enough without having to worry about further enablement through assets contained in your trust. We can help take some of the burden off your shoulders by creating an estate plan that positively impacts your loved one and doesn’t contribute to the problem at hand. Contact me to discuss how to achieve this through a well-crafted estate plan.