Planning for a Loved One with Addiction: What You Need to Know
Loving someone with an addiction is incredibly challenging. It's especially difficult for parents who once had high hopes and dreams for their child’s future, only to see them struggle with substance abuse. Whether it’s a child, sibling, or another close family member, dealing with addiction is never easy, regardless of the relationship or the addict's age.
Estate planning often involves navigating tough situations. Delaying decisions on how to care for an addicted loved one can lead to missed opportunities and loss of control, which may further complicate matters. It’s crucial to address these issues head-on to ensure the best possible care for your loved one when you’re no longer around.
How to Best Support Someone Struggling with Addiction
According to the latest National Survey on Drug Use and Health, approximately 17% of Americans over the age of 12 had a substance use disorder in 2022. That’s about 48.7 million people, including 29.5 million with an alcohol use disorder, 27.2 million with a drug use disorder, and 8 million with both.
Despite these staggering numbers, the good news is that recovery from addiction is not just possible—it’s common. A study from the Centers for Disease Control and the National Institute on Drug Abuse found that three out of four people struggling with addiction eventually enter recovery and go on to lead healthy, fulfilling lives.
Treatment and recovery services are essential for successful addiction recovery. Financial barriers often prevent people from accessing these services. While family members might want to help by providing financial support, they often worry that doing so might be counterproductive.
Estate Planning for Beneficiaries with Substance Abuse Issues
There is no one-size-fits-all solution for supporting a loved one dealing with addiction. Most experts agree that you cannot force someone to seek treatment. Family members can encourage recovery, but the decision to pursue treatment ultimately lies with the individual.
When including an addicted loved one in your estate plan, keep in mind that your plan can be customized to suit your family's unique needs. Here are some considerations:
You Don’t Have to Disinherit Them: While you may be concerned that leaving money or property to an addict could be squandered or even harm them, there are ways to provide an inheritance without giving them direct access to it.
Be Cautious About Relying on Relatives: Depending on a sibling or relative to manage an inheritance for an addict can be risky. Addiction can strain family relationships, and a financial windfall could lead to conflicts and disrupt family harmony, which is often a key goal in estate planning.
Consider Guardianship for Minors: If your child is underage and struggling with addiction, you can name a guardian in your will to manage their finances until they reach adulthood. However, once they turn 18, guardianship ends, so this is only a short-term solution. A more effective option may be to hold their inheritance in a trust, managed by a trustee until they reach a certain age or meet specific conditions.
Setting Up a Trust for an Addicted Loved One
A trust can’t guarantee that an addicted person will be protected from poor decisions, but it can be structured to help ensure the inheritance is used for their benefit rather than their detriment.
As the trustmaker, you can set terms dictating how the trust funds are used. These terms can be highly specific and designed to address addiction concerns. For example, you could include provisions such as:
Requiring the inheritance to be used for treatment.
Offering incentives for the beneficiary to seek help.
Withholding distributions until the beneficiary completes rehab, passes a random drug test, or maintains sobriety for a specified period.
Redirecting the trust’s assets to another beneficiary or charity if the addict fails to meet the required conditions.
Using trust funds to cover living expenses, especially if the beneficiary struggles financially. A special type of trust can also be set up to ensure they maintain access to government assistance or qualify for it in the future.
Extending the trust’s duration for years, even a lifetime, with the option to terminate it once the beneficiary is fully rehabilitated and ready to manage their inheritance.
Choose the right trustee
Selecting the right trustee is just as important as the terms of the trust. The trustee should act in the best interests of the beneficiary while striving to preserve family harmony. Consider the following:
The trustee can be given complete discretion over how to use the funds (a discretionary trust).
You can provide guidelines for the trustee on addressing substance abuse concerns, such as paying third parties directly for approved expenses rather than giving money directly to the beneficiary.
The trustee can be authorized to communicate with family members to coordinate treatment and monitor recovery.
The trustee can be a family member or a professional, such as an attorney or a trust administration company. If maintaining family harmony is a concern, appointing someone outside the family may be wise. You can also appoint co-trustees and name backup trustees if the original trustee can no longer serve.
Protecting Your Loved One Starts with You
Failing to plan for an addicted loved one can lead to significant problems. Without an estate plan, the court will determine how your assets are distributed based on state law. Your loved one could end up with a lump sum of money without any restrictions, potentially worsening their addiction. If your loved one isn’t a direct family member, they may receive nothing if you don’t have an estate plan in place.
Discuss Estate Planning Strategies for a Loved One Struggling with Addiction
Balancing the desire to help a loved one with addiction and ensuring your hard-earned money is used wisely after your passing can be difficult. Whether you’ve been a steady support system for your loved one or want to continue providing assistance after you’re gone, our estate planning attorneys can help you create a plan tailored to your needs and theirs.
Contact us today to discuss how we can help protect your loved one and your legacy.