Many parents throughout Tennessee and the rest of the country have a son or daughter who is struggling with addiction to illegal and/or prescription drugs. Addiction impacts the entire family emotionally and financially. Attorneys are increasingly seeing the conflicts faced by parents of addicts as they draft their estate plans.
How do you include a loved one who suffers from addiction in your estate plan? You don't want to disinherit them. Even if you do want to, you probably shouldn't. Such an action could cause them to spiral even further downward.
However, you don't want to give your child access to money via even a small inheritance that would help them fund their addiction. Nonetheless, you hope for and want to reward their recovery and help them have financial stability if and when they succeed in that recovery.
Experts generally recommend creating a discretionary trust for a child or other loved one who's an addict. The money left to the beneficiary is controlled by a trustee, who has sole discretion over distributions.
Choosing the right trustee in these cases is crucial. Giving a family member who may have very conflicted feelings about the beneficiary the responsibility can be unwise. Siblings, in particular, may resent the toll that their addicted brother or sister has taken on the family and the considerable money that may already have been spent on rehab facilities and other attempts at helping the addict.
However, finding a corporate trustee willing to assume the responsibility may be a challenge. Many trust companies and financial institutions that provide corporate trust services hesitate to take responsibility of a trust for an addict, particularly if the addiction is to illegal drugs.
Once you've chosen a trustee and drafted the trust documents, the beneficiary needs to sign a consent form indicating that he or she agrees to the terms of the trust. There should be instructions for alternative distribution of the funds in the trust if the beneficiary refuses to sign.
Many parents understandably aren't comfortable talking about a child or other loved one's addiction. However, you need to honestly discuss it with your estate planning attorney. These attorneys deal with planning for beneficiaries with substance abuse issues all the time. Your lawyer can guide you in setting up a trust that will help you do what you can to protect your loved one, even after you're gone.
Source: WealthManagement.com, "The Opioid Crisis’ Impact on Wealth Planning," Kevin L. Johns, accessed May 09, 2018