Estate Planning for a Beneficiary Suffering from Addiction

January 6, 2021

Do you worry what will happen to a child or loved one suffering from addiction after you pass away? Will they blow their inheritance?

Research indicates that addiction is a chronic disease. Recovery is a lifelong healing process peppered with relapses. Because of this, when developing an estate plan, some clients make the mistake of giving outright gifts on one extreme or completely disinheriting the addict on the other extreme. Some attempt to use other family members as a buffer by leaving one child’s inheritance to another with provisions to dole it out gradually to the addict. This is a huge mistake. It places an unfair burden on the beneficiary left responsible for dealing with an addict family member. That is a recipe for strife and discord. There is a better way to provide for an addict through proper estate planning.

Including an Addict’s Trust into your overall estate plan can help you accomplish the goals of providing for your loved one suffering from addiction while still setting up certain parameters that prevent enabling the addict. These incentive-based trusts are worded so that they motivate the addict to stay clean and sober and reap more rewards.

The following provisions are often included in the trust:

-Requirements that the beneficiary submit to random testing;

-A tiered payout with a minimal amount that will sustain the individual and higher payouts for certain time periods of sobriety;

-Depending on the severity of the situation, the trust may pay for provisions directly and never allow cash access to the individual beneficiary;

-Provides for payment of rehabilitative or treatment programs;

-Typically includes a harassment provision designed to penalize the addict from harassing the trustee or any third party service provider.

The trustee is typically a professional trustee rather than a family member. This provides a layer of protection so that the trustee does not submit to emotional or unreasonable demands.

Creating these types of incentive-based trusts require the knowledge and expertise of experienced estate planning attorneys. These are not boiler-plate documents. Estate planning attorneys drafting these trusts must be creative and use very specific language. The goal is to ensure that the beneficiary receives the care needed while also aiding them through recovery. A carefully tailored trust provides for the addict without enabling the individual to continue bad habits.

If you have a family member suffering from addiction and want to incorporate an Addict’s Trust into your estate plan, contact Stouffer Legal in the Greater Baltimore area today for a consultation.

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