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Leaving an inheritance for a loved one with an addiction

On Behalf of | Oct 21, 2021 | Estate Planning |

Family members whom you love and respect may have personal struggles that affect your whole family. When a child or grandchild has a serious addiction, the entire family may have to invest time and resources in helping them overcome their substance abuse.

Unfortunately, many people fail to fully address what causes their addiction and will relapse even if they do stop drinking or using pain medication for a while. Whether your loved one is currently battling substance abuse or has been sober for several years, you will still need to think about their background when planning your estate.

A straightforward inheritance will likely do more harm than good

If you leave some of your assets to a loved one with an addiction, they can do whatever they want with those resources. You might choose to leave them physical property rather than money, but they could sell those assets and use the proceeds of those sales during a relapse.

An inheritance of liquid capital is even more dangerous and requires fewer steps for someone to misuse those resources. Carefully creating and funding a trust can help you include an addicted loved one in your legacy without putting them at risk due to their own habits. 

A trust offers multiple layers of protection for someone with an addiction

Creating a trust for someone with a history of substance abuse will require the use of special language and terms. You may want to create an incentive trust that offers rewards to your loved one when they achieve certain goals.

For example, attending rehabilitation, reaching certain sobriety goals or keeping a job for a certain amount of time could all be achievements that trigger distributions from the trust. Provided that the incentive is something that cannot be misused, like a vehicle or payments directly to a school for tuition, the trust can help you support someone without also supporting their addiction.

The trustee that you name is also an important protection for your loved one. The person who serves as trustee will have to communicate with the beneficiary and review their circumstances frequently to manage the trust assets. That trustee can be an important resource for someone trying to maintain sobriety.

Thinking carefully about your family’s unique needs will make it easier for you to create an appropriate estate plan.


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