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Protecting a family member with an addiction in estate planning

Recently, the Trump Administration announced the intent to battle the opioid crisis in the United States. This is due to the alarming number of people who become addicted to these medications. It also highlights the problem of substance abuse and addiction as a whole throughout the country.

As an aside, it also brings up the challenges in providing for loved ones who suffer from addictions to drugs or alcohol after you pass away. On the one hand, you want to ensure that your loved one is cared for, but on the other hand, you don't want to provide funds to feed the addiction. You may be able to accomplish both goals through estate planning.

A trust may provide the solution

By creating a trust, you can control when, how and under what circumstances your loved one receives distributions. The trustee will also need the power to withhold distributions if the beneficiary has an addiction. You don't necessarily have to include provisions in the trust specific to substance addiction and abuse, but that may put too much pressure on the trustee to oversee the beneficiary.

Instead, you could include provisions such as the following if substance abuse and addiction concerns you:

  • First, you would need to establish a way to evaluate whether a loved one suffers from an addiction or abuses drugs or alcohol. The trustee may need the discretion to determine the effect the beneficiary's condition has on him or her and the assets in the trust.
  • Second, the trustee needs the power to require the beneficiary to undergo testing and to require the results prior to making distributions.
  • Third, if testing reveals an addiction or abuse, your trust may direct that all distributions must cease while the addiction remains an issue. Distributions may only resume under certain circumstances.
  • Finally, resuming distributions may be contingent upon the beneficiary submitting to and successfully completing a treatment program.

Setting forth these types of provisions in your trust constitutes only one-half of the equation. You need to select a trustee who understands the challenges he or she faces when it comes to the beneficiary. This person will be required to delve into the personal life of the beneficiary and make decisions on his or her behalf.

Setting it up right

If you believe that setting up a trust in this manner is the best choice for your loved one, then it needs to be done right. Legal challenges to the trust could arise, and doing what you can to make sure it survives them may require help.

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