Substance use disorder is increasingly affecting families across the nation. According to the CDC, 128 people die each and every day from an opioid overdose. (1) This doesn’t even include deaths by other drugs. Drug overdose is now the leading cause of death in the age group under 50. (4)
Whether your grown child is addicted to opioids or other drugs, their addiction is likely tearing your family apart. It is hard to watch someone you love turn into someone you never imagined they could become. It is impossible to trust that an addict will care for themself or others.
Making an estate plan with a substance abuse problem in your family is difficult, but not impossible. Working with an experienced estate planning attorney can help you set up a plan that will not only work for you and any other children, but also the addicted. Let’s look at some of your options as a concerned parent who wants to do what is best for your addicted child and any other children.
Boundaries and Disinheritance
As a parent, the last thing you want to do is watch an inheritance wasted on the drugs that are destroying your child. It is even harder to think that their inheritance could buy a fatal overdose. Distancing yourself from your child with boundaries is a normal and helpful tactic, but parents sometimes also consider disinheritance as a solution.
However, disinheritance affects your child for the rest of their life whether they become sober or not. If your child eventually gets better and becomes a functioning part of society, you may need to rewrite your will to include them again. Often, this can be tedious as a child seems to get better and then falls into drug disordered behavior again.
There are other better ways to include your child in the inheritance without harming them in the process. Seeing an attorney to write your will is important and including a disinheritance declaration for your child could make sense for your family. However, there are other solutions that don’t leave your child out in the cold.
If you die without a will, the court will include your child in probate proceedings and in any inheritance. A lump sum payment by a probate court to a child with addiction could be fatal. Your family issues would also be played out in public probate court as other relatives or children might hire lawyers to prevent any inheritance going to the addicted child. The drama created if you do not have a will could tear your family apart further and also cost a good chunk of your estate in court and attorney fees.
A trust is basically just a business where you provide the funds and the appointed Trustee metes them out according to your written legal documents. You decide when and how the money leaves the trust, how it will be funded, and how it will be distributed to the qualified beneficiaries.
There are ways to set up a trust that could benefit a substance abuse disordered child. You could provide payments directly for their needs instead of cash disbursement. If the child needs to pay child support, alimony, rent, healthcare expenses, dentist, etc. the funds could go directly where needed.This type of clause for an addicted child is often called a “Spendthrift Clause” because it protects a child from using money for unnecessary items or blowing all the money at once. This type of trust enables you to offer support in a way that the child can benefit from.
A “spendthrift clause also typically protects the funds in the estate from creditors. So long as the funds are in the trust, creditors cannot reach them. This is ideal in instances where your child may have to declare bankruptcy due to poor financial decisions while under the influence of drugs or alcohol, has a large amount of debt, or is likely to accrue a large amount of debt.” (3)
Another way to use a trust to help your child may be to offer incentives through a trust to convince a child to attend and complete a drug addiction rehabilitation program. The trustee you choose is then in charge of checking medical records and recovery milestones before giving money or paying certain types of bills.
You can also offer incentives to help a child stay sober with check ins and drug testing. However, these types of incentive programs may not touch the core reason your child is using drugs and may not have long term effects of sobriety after the incentives are gone.
Qualify for Government Benefits
Some types of trusts could possibly even enable your child to qualify for needs-based government benefits such as Supplemental Security Income, Medicaid, sectioned housing, SNAP, or more. These could potentially keep a homeless child safe from the elements and getting food and medical care.
Choosing a Trustee
It is easy to name another family member as trustee. Common choices include a sibling or cousin of your addicted child. However, choosing a family member sets your family up for problems. Whoever acts as trustee will have the power to make decisions about the child’s potential inheritance and the disbursements of funds.
A trustee can easily become exhausted by an addicted family member begging for the funds to get the drugs they need. A good relationship with your addicted child could easily be destroyed by the responsibility of handling their inheritance. A trustee who is close to the addicted child, could also easily be fooled into making a bad decision because they want so badly for the addicted child to be well again.
It is often better to name a corporate trustee or a friend of the family. The trustee must be able to step back from the situation and accurately assess where money should go.
Your will lays out what your wishes are, but some types of financial situations override your will. Make sure to check your accounts to be sure that you are not sharing with your addicted child an account held jointly with the right of survivorship. Also check retirement accounts for any beneficiary designations in your child’s name. If your retirement account has your child listed as a beneficiary, the child receives the funds whether your will names someone else or not.
Power of Attorney
Be sure to check who you have named as your durable power of attorney and medical power of attorney. A drug addicted child will not be able to properly care for you or make decisions for you if you become incapable of caring for yourself.
An experienced estate planning attorney can make all the difference when it comes to making decisions for your family’s future. There are ways to help your substance abusing child without disinheriting them completely. Using a legal framework such as a trust gives you the ability to control how much and when a child receives inheritance while also allowing whatever other estate planning methods are best for the rest of your family.