People put off their estate planning for many reasons. One of them is that they have an adult child who is an addict or alcoholic. They want to leave them the same amount of money and other assets as their other children, but they fear that their child would spend the money carelessly or — worse – – use it to feed a dangerous habit. However, they don’t want to disinherit them.
If you’re in this situation, you’re not alone. Arizona estate planning attorneys often help clients with children who are struggling with substance abuse. There are ways to include them in your estate plan while putting safeguards in place to protect them and your assets. Disinheritance is probably not the best option. If the child conquers their drug and/or alcohol problem, the only way to undo your choice to disinherit them is to redo your estate plan.
However, you can set up a trust that will allow assets to be distributed under the terms you designate and under the supervision of a trustee. One of these, commonly known as a spendthrift trust, lets the trustee distribute funds the beneficiary may need for housing, food, child support and other necessities while protecting the bulk of the trust’s assets.
This can also be beneficial if your child owes money to creditors, as they can’t take funds that haven’t been distributed. You may be able to set up this trust in a way that allows your child to continue to receive government benefits.
Another option is an incentive trust. Also called a conditional trust, this is established with terms that require a beneficiary to meet certain requirements, such as completing a recovery program and remaining sober for a designated period before receiving their inheritance.
The choice of a trustee can be tricky. Often, people want to choose a family member — perhaps even another one of their children. However, family members can be the worst choices in these situations. Their feelings about the beneficiary — negative or positive — can prevent them from making sound decisions about the disbursement of funds. A corporate trustee with no personal connection to the family may be a better choice.
Your Arizona family law attorney can help you set up a trust that will allow you to provide for your loved one who’s struggling with substance abuse or other issues while protecting your hard-earned assets.