Downs Law Firm, P.C.
There are many stories of strange conditions in wills and trusts over time. For example, the German poet Heinrich ‘Henry’ Heine died in 1856 and left his estate to his wife, Matilda, on the condition that she remarry, so that ‘there will be at least one man to regret my death’.
When you hear the word trust fund, you might think of wealthy kids a big chunk of cash on their 25th birthday. However, trust funds aren’t just for the rich. They are flexible tools to protect your loved ones.
Families struggle with the damages created by alcohol or drug habits and the collateral impact of addiction. Most families have had to work with a member or more with substance abuse issues. It is something that knows no boundaries regarding age, gender, or race. Now, the leading cause of death of Americans under the age of 50 is opioid addiction, and this is having an impact on estate planning, according to MarketWatch in “How to leave money to a family member with an addiction.” Addiction has been known to drive even good people to steal and lie to get money to support their habits. Parents of children are wracked by guilt and anger. The stories of families spending hundreds of thousands of dollars in an effort to help their children are growing in number—as are the number of families who exhaust their retirement savings paying for rehabilitation and related services. Trusted family advisors, including estate planning attorneys and financial advisors, find themselves working with families to protect the family finances and the well-being of their addicted family members. The fallout from addiction creates many secondary problems for families. Estate planning for a family grappling with addiction addresses many different issues, not just inheritance. For starters, deciding whether someone has a drug or alcohol problem is itself often a great impact of addiction due to the great discord and disagreement it ferments. Substance abuse issues usually run in families and across generations. The discord can be a huge impediment to putting planning in place. Lump sum distributions or full bequests to an adult struggling with addiction can be deadly if the person uses the funds to purchase large quantities of drugs. At the same time, writing someone out of the will completely and withdrawing all support, can be devastating to the addicted adult and the family. Creating a trust can help to protect assets and ensure that there is some degree of accountability in how the distributions are made. Incentive trusts, where a certain behavior or accomplishment markers are determined, can be used to encourage behaviors. This may mean that the addicted adult does not receive funds until after passing a drug test, attending a certain number of treatment sessions, or entering a residential rehabilitation program. Incentive trusts are part of a particular area of estate planning. Therefore, it is necessary to work with an attorney who has experience with trusts and with incentive trusts. Ideally, the attorney who helps your family, will be also familiar with the impact of addiction on families. Creating incentives for positive outcomes includes having consequences when the person fails to meet the terms of the trust. In this situation, a trustee who is extremely trustworthy and not prone to being manipulated is necessary. They will need to make sure the person adheres to the requirements and while they may be given certain levels of discretion, this person needs to be strong-willed enough to withstand an addict. Naming one sibling to be trustee over another is a choice many
You’ve done all you could to draw up the perfect trust to protect your child and help them on the path to recovery. Now you need the right person (or team) to help make it happen.
Why would you leave an inheritance to a trust for a beneficiary rather than “outright” to the beneficiary? The answer is control.
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