When considering whether to pass on inheritance to loved ones struggling with addiction, it is valid to be concerned about how they will handle your legacy. Although you wish for your family to get better, you also want to ensure that they will not misuse your estate recklessly.
Fortunately, it is possible to create an inheritance plan for individuals suffering from addiction. Consider adopting these recommendations to see which option best fits your situation.
Use a trust with unique provisions
A trust is a fiduciary relationship between a trustor, trustee and beneficiary. As the trustor, you can appoint a trustee to hold and manage the asset for the benefit of the beneficiary. You also have the right to enforce specific terms on how and when a beneficiary can access the funds it contains, such as:
- Drug test requirement: Require the beneficiary to undergo drug testing before gaining access to their trust.
- Treatment requirement: Enforce the beneficiary to enter a treatment program and instruct them to provide substantial proof of completion before accessing the trust.
- Discretionary trust: Instruct the trustee only to allow a withdrawal if it is for the benefit of the beneficiary.
- Incentive trust: Motivates the beneficiary to hit certain milestones in order to receive distributions.
- Distribution trust: Distribute funds to the beneficiary in capped amounts for a certain period.
These customizable options give you the freedom to ensure that your estate will not go to waste or enable the troubled beneficiary’s addiction further.
Protect your family while safeguarding their inheritance
If you have family members suffering from substance abuse, support them however you can. Your presence in their lives can do much more than you realize.
However, it is worth noting that your support does not enable their addiction. Setting up a managed trust for their future is one of the ways you can show your love. An estate planning attorney can provide advice on how you can approach trust creation cautiously.
