Trusts: A way for parents to provide for child with addiction
Family relationships can be complicated; there is no doubt about that. For this reason, estate planning is often a much more personal and emotional experience than one might think. A great example of this involves a situation in which a parent has a child that struggles with addiction.
A parent may desperately love a child that struggles with addiction to things such as alcohol, drugs, gambling or even shopping. Although a parent may want to provide for a child in their estate plans, giving a lump sum of money to an individual with an addiction may only enable them. Is there a solution?
Parents in Fort Myers have a simple tool for addressing this exact type of situation; it only takes the assistance of an estate planning attorney to ensure that it is utilized in the most effective manner. We are talking about a trust.
A trust is an estate planning instrument that provides protection through a seemingly endless possibility of restrictions, requirements and limitations that can be placed on the distribution of money.
In the simplest terms, a trust is a tool in which an individual — a trustee — is appointed to hold money or assets on behalf of the individual or individuals named as a beneficiary. The trustee also has a legal obligation to follow the terms of the trust.
How can the terms be set to help a child with addiction? Terms that parents may set include granting the trustee discretion to hand out money for certain expenditures. These expenditures may include rent, groceries, clothing, education or even vacations. Approving expenditures helps prevent the child from using money to pay for things that might feed an addiction.
What about requirements? A child with a drug addiction could be required to pass regular drug testing in order to obtain the money. Distribution could also be contingent on the child maintaining a steady job or successfully completing treatment.
Of course, a parent can choose to strike a child from the plans entirely. Although a spouse has a legally defined claim on the estate, a child doesn’t have these same rights. Again, it is a personal decision.
The important moral of the story: obtain advice from an estate planning attorney both to maximize options and avoid unintended consequences.
Source: NWI, “ESTATE PLANNING: When a loved one’s faults need to be recognized,” Christopher W. Yugo, Nov. 26, 2013