A trust does not guarantee that an addicted person will be protected from their own bad decisions, but it can be structured in a way that helps ensure that an inheritance is used to their benefit and not to their detriment.
The Instructions Can Be Tailored to Meet Your Loved One’s Needs Without a Windfall
A trust allows you—the trustmaker—to set the terms for how the beneficiaries may use and have access to trust funds. The terms can be as specific as you want and may include provisions specifically designed to tackle addiction. For example, the trust could include the following types of terms:
- The inheritance must be used to pay for treatment.
- There are incentives to ensure that the beneficiary gets the help they need.
- Distributions cannot be made until the beneficiary completes rehab, is able to pass a random drug test, or, in the case of a relapse, maintains sobriety for a period of time.
- If the specified incentives are not met by a certain deadline, the trust’s accounts and property will pass to a different beneficiary or a charity.
- Trust funds may be used to pay for living expenses, since many addicts have accompanying money problems. A special type of trust can be set up for this purpose if we need to ensure that your loved one maintains access to means-tested government assistance or is able to apply for it in the future.
- The trust can last for years or even a lifetime, or terminate upon full rehabilitation, at which point the beneficiary takes control of their inheritance.
Choose the Trustee Carefully
Selecting a trustee is just as crucial as the provisions of a trust created for a beneficiary who suffers from addiction. The trustee should be somebody who will act in the best interests of the beneficiary while striving to preserve family harmony. When selecting a trustee, consider the following:
- The trustee you choose to manage the trust on behalf of an addicted loved one can be given complete authority about how to use the funds (a discretionary trust).
- The trustmaker can provide some guidance for distributions that address substance abuse concerns, such as requiring the trustee to pay third parties directly for approved expenses rather than giving funds for such expenses directly to the
- The trustee could be given direction or permission to be in communication with other family members to coordinate treatment and track recovery, if necessary.
- The trustee can be a member of the family or a professional (e.g., an attorney or a trust administration company). If you are concerned about maintaining family harmony, you may want to consider appointing someone other than a family member. It is also possible to have co-trustees. Further, backup trustees should be named in case the original successor trustees are removed or can no longer serve in their role.
Discuss Estate Planning Strategies for a Beneficiary Suffering from Addiction
You might feel torn between a desire to help an addict in your life and ensuring that your hard-earned money is put to its best use after you have passed away. Or maybe you have been your loved one’s rock, helping them stay sober and avoid relapse, and want to continue doing everything you can for them for as long as you can.
Addiction is often a lifelong struggle. To make a plan that provides addiction assistance for someone you care about, even after you have passed away, contact our estate planning attorneys.
