Estate Planning When an Adult Child Has a Substance Abuse Problem
Posted by Janet Brewer on Tue, Aug 17, 2010 @ 12:34 AM
Inheriting a large sum could have dire consequencies
This delicate but important topic does not often receive the due attention it deserves. However, there could be some serious personal consequences if a person with substance abuse issues suddenly inherits $20,000 – or $2,000,000 - and can do with it as he or she pleases, especially if there is no parental supervision in place. In essence, this could be as severe as a death sentence.
There are ways to address this matter. The first obstacle to overcome is to be completely honest with yourself about your adult child’s situation and addictions. Don’t imagine that the trauma of your passing will “cure” any preexisting problems with substance abuse.
Choosing your trustee carefully
One of the most important steps to take is to not make this adult child the trustee of your trust (or the executor of your estate); that should be a “given.” Choose a neutral trustee who can, without fail, withhold distributions of funds until it is appropriate; even if the adult child should come knocking on the door in the middle of the night looking for some extra cash for “rent.” Some might think this is too harsh and they establish monthly distributions to their adult child, but this can also be too much for a person in their position to handle. It is generally best to restrict access to cash and assets as much as possible and set up certain controls.
You can empower your trustee to only distribute funds if, and only if, the adult child is showing no signs of addiction and if they pass periodic or random drug tests given by a third-party.
Setting up conditions for distribution
No doubt this will put the trustee in a difficult position, so don’t choose someone who already has an emotional relationship with the adult child. At the same time, don’t succumb to the fear that your adult child will never be able to control their substance abuse issues. You can set up your estate to provide funds for counseling or drug treatment, or to permit the trustee to make additional distributions upon successful completion of appropriate milestones (think of it as the carrot at the end of a stick). If an adult child fails to pass a drug test or complete a rehabilitation program, you can set up your estate plan to stop all further distributions forever, for a finite time or until the person can pass a drug test consistently.
Money management issues
Problems can come in other forms, too, so don’t think that your estate only needs protection from a person with a history of drug abuse. Persons with money management issues, gambling addictions or financially-controlling spouses may benefit from the restrictions you plan now with your trustee. Again, the key is to be open and honest with yourself about your adult child’s situation and to plan for the time when you won’t be around to give encouragement or “tough love.”
A solid estate plan with some restrictive measures in place can literally save a person’s life, so don’t put off a decision that is as important to you as it will be for those you leave behind. A knowledgeable and experienced estate planning lawyer can help you set up a thoughtful and generous inheritance plan for those you love most.
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All the best,
