Substance use disorder affects more than 20 million Americans aged 12 and older. Many of us can think of at least one person we know that has struggled with substance use disorder. Because of the prevalence of substance use disorder and the debilitating mental illness that often can go hand in hand with it, there is a chance you may need to consider how to tailor your estate plan to protect what you have spent a lifetime building while still leaving something for your adult children.
Custom Trust Provisions
If you choose to establish a trust as your primary estate planning tool, you can build in protections that will allow your beneficiaries to only receive money or assets if they follow the guidelines set in the trust. For example, you could require the Trustee to see they comply with their treatment plan or have proof of a clean drug screen that did not show any substances, unless prescribed.
Avoid Large Outright Gifts
Whether a client has a loved one dealing with substance use disorder and debilitating mental illness or not, we usually caution against outright gifts at your passing. When people get large sums of money or property, they often do not know what to do with it and go through it quicker than you would have wanted. We often advise clients to consider putting a minimum age on receiving an inheritance and structuring the payments so that it is not all received at once, even once a beneficiary reaches the minimum age.
If you are concerned about what your child may do with a large amount of money, then you probably do not want them to receive their inheritance in one lump sum. If you prefer to have more continuous monitoring of the money, consider establishing a spendthrift trust.
Establish a Spendthrift Trust
A spendthrift trust is a type of asset protection trust set up for children to protect the beneficiary from frivolous spending and to prohibit the beneficiary from pledging the trust interest as collateral for a loan or debt.
Typically, an independent trustee is appointed to manage the trust assets on behalf of the beneficiary and has full authority to decide how the trust funds are spent. Having the independent Trustee will allow the trust assets to be preserved for a longer period of time, which helps ensure that your loved one will be taken care of for as long as they need to be. You can also set guidelines for the Trustee of the Spendthrift trust, like a suggestion of how much to distribute monthly or yearly.
Need to develop an estate plan that considers substance use disorder and debilitating mental illness?
Feeling overwhelmed trying to sort out your options? Many of our clients have told us that they felt overwhelmed when they first began planning, but with our help, we helped them make sense of the options and design a plan to fit their goals. We've empowered thousands of North Carolina residents to take complete control of their future with customized estate planning and long-term care planning solutions.
To get started, call us at 919-899-2606 or contact us online, and we’ll schedule a free consultation today. If you’re not ready to take the next step, we recommend registering for one of our upcoming seminars or downloading our free guide, Estate Planning Pitfalls & How To Avoid Them: Protecting Your Legacy, Lifestyle, and Beneficiaries.