Just about everyone knows or loves someone with a substance abuse problem. The detrimental effects impact many facets of American society. Sadly, we are seeing an upswing in the number of clients that have to deal with a loved one’s substance abuse in their estate planning.
Most parents want to split their inheritance equally among their children, but when you have a child who is addicted to drugs or alcohol, it can complicate things significantly. A parent may want to help their troubled child, but they know that leaving a lump sum of money could cause more harm than good.
Luckily, there are estate planning strategies that may help parents in this situation. One possible solution is to create a trust, which is an arrangement that allows a third party to hold someone’s assets. That third party is referred to as the trustee who manages all distributions of the trust. The trustee is obligated to follow instructions set forth in the trust. For example, you could give the trustee the authority to end distributions if he or she determines the recipient is using drugs or not going to treatment.
Some parents take a harder line and decide to leave their child with substance abuse problems nothing. In this case, we would make sure that the parents understand the consequences of this choice. For example, the addict child will probably hassle siblings and other relatives who may be more sympathetic. Also, there is a chance that the addict child will end up on the streets.
Sometimes parents ask us whether it’s a wise idea to leave the adult child’s inheritance to their sibling who will hold the money instead. This could cause several problems, especially since the sibling holding the money is not technically obligated to give it to the other child. Even if you completely trust the sibling to do the right thing with the money, if the sibling goes through divorce or bankruptcy, or a creditor is coming after the child holding the money, it could all be lost.
If you have a child who suffers from a substance abuse problem, we’d be happy to have a confidential conversation that will give you the information you need to make the best choice for your family. We have experience working through these difficult situations with families, and we can help you find a path that works best for you and your loved ones. Call us, a Certified Elder Law and Estate Planning Lawyer firm.