Substance addiction is not uncommon in the United States, impacting as many as one in seven Americans. Because of its regularity, navigating a loved one’s addiction is actually a relatively common occurrence in everyday life. However, a loved one’s addiction or substance abuse problem should be considered when working on your estate planning. Whether the addiction is alcohol, illegal drugs, prescription drugs, or behavioral like gambling, most clients want their loved ones to be safe and experience a successful recovery if possible. A properly created estate plan can help, rather than hinder that recovery.
The idea that money from a trust could end up fueling those addictive behaviors can be a particularly troubling one for most clients. 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 their addiction treatment. If a family member is already struggling with addiction issues, you can explicitly designate your trust funds for use in his or her voluntary recovery efforts. In extreme cases where an intervention of some sort is required to keep the family member safe, you can provide your trustee with guidance to help other family members with the beneficiary’s best interest by encouraging involuntary treatment until the problem is stabilized and the loved one begins recovery.
Incentive trusts
Incentives can be included in your estate planning to help improve the behavior of the person. For example, the loved one who has an addiction can be required to maintain steady employment or voluntarily seek treatment in order to obtain additional benefits of the trust (such as money for a vacation or new car). Although this might seem controlling, this type of incentive structure can also help with treatment and recovery by giving a loved one something to work towards. This approach is probably best paired with funding for treatment as discussed above, so that there are resources to help with treatment and then benefits that can help to motivate a beneficiary.
Discretionary trusts
Giving your heirs their inheritance as a lump sum could end up enabling addiction or making successful treatment more difficult. There is another option. Lifetime discretionary trusts provide structure for an heir’s inheritance. If someone in your life is, or might eventually, struggle with addiction, you can rest easy when you know the inheritance you leave can’t be accessed early or make harmful 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 would 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 addicted person’s hands. In some circumstances, it is better to appoint a corporate, or neutral third party, as trustee to avoid any familial influence or pressure the addicted beneficiary may attempt to wield over the appointed trustee.
Navigating a loved one’s addiction is more than enough stress without having to worry about further enablement through assets contained in your trust. Having a qualified estate planning attorney to take some of the burden off your shoulders by helping you build an estate plan that positively impacts your loved one and doesn’t contribute to the problem at hand will allow you to sleep easier at night. That way, you can go back to focusing your efforts on the solution. Call us today to see how we can help.
Zach Wiegand is a Burnsville, Minnesota estate planning attorney who also handles probate in Dakota County and other counties in the greater Twin-Cities area. Zach is the owner of Gold Leaf Estate Planning, LLC, which is a Minnesota estate planning law firm that handles probate and trust administration in Minnesota. Zach was named a 2017 Minnesota Super Lawyer – Rising Star and he is a member of WealthCounsel – a national organization of estate planning attorneys dedicated to practice excellence. You can contact Zach via e-mail at zach@goldleafestateplanning.com or by calling (952) 658-6503. Gold Leaf Estate Planning is located in Burnsville at 3000 County Road 42 W., Suite 310, Burnsville, MN 55337.
