Your estate plan could hurt or help your substance abusing child.
You love your children.
You did your best to rear them right.
Somewhere along the way, your child got into drugs.
Since then, he has been in a vicious downward spiral.
Can you provide for this child while protecting him from using the funds to fuel his habit?
According to a recent Kiplinger article titled “Selecting the Right Trustee and Protector for a Substance Abuse Trust,” such protection is possible with proper planning and forethought.
You can work with an experienced estate planning attorney to create a substance abuse trust.
Designating a trustee is an essential consideration.
The trustee you choose will need to act in good faith and according to the terms you have outlined in the trust.
This person or institution will have a fiduciary duty to act solely in the best interest of the beneficiary.
You will want to have a good idea of the duties this trustee will be required to perform.
When selecting an individual or institutional trustee, perform your due diligence when it comes to experience and qualifications.
Who will be your best trustee option?
An individual trustee will give personal attention to both your trust and your child with substance issues.
Choosing a friend of family member could place strains and even change personal relationships.
An institutional trustee will remove the potential for family drama or conflicts of interest.
You will sacrifice the personalized attention available through a family member.
A happy medium would be to appoint both an institution and an individual as co-trustees.
In this case, you could maximize your personal and professional teams.
In addition to choosing a trustee, you should also pay special attention to the terms of your trust.
A good option may be to tie distributions to helping your child.
You could allow distributions to only be made to pay for a treatment plan.
This could include the cost of in-patient rehab and related fees.
It could also include job training to set your child up for future success.
You could also include incentive clauses.
In this case, the trustee would only need to evaluate whether the beneficiary has met the goals.
These goals could include sobriety milestones.
If your child received government benefits through Medicaid or SSI, you should set up the trust to avoid putting these benefits at risk.
Naming a "trust protector" may also be a good option.
The role of a trust protector is to ensure that the trust is being administered properly.
This would essentially provide another layer of the oversight to the duties and actions of the trustee.
The protector trustee also brings experience to an individual who does not have the experience or ability to track the eligibility requirements of the beneficiary.
It is more than possible to create an estate plan to help rather than hurt those you love.
Work with an experienced estate planning attorney to determine the best options for you and your family.
Reference: Kiplinger (March 8, 2019) “Selecting the Right Trustee and Protector for a Substance Abuse Trust”