Substance use disorders are a sad reality that many families deal with in the United States. Determining the best way to leave assets to an intended beneficiary who has a drug or alcohol problem is challenging and requires the advice of experienced estate planning lawyers. These issues can get very emotional, so it helps to have an objective party assist you with making these vital decisions in a way that will truly benefit your loved one without enabling their addiction.
The Purpose of the Trust
Having an in-depth discussion with an estate planning or probate attorney about the role you want the trust to play in your loved one’s life and recovery is critical. For example, the trust may provide only extras for things like recreation or entertainment, which could be detrimental to someone coping with an addiction disorder. Many parents and grandparents are choosing to follow the “recovery model” when creating a trust, which means that the trust addresses their addiction and recovery head-on. A trust using the recovery model may include stipulations such as:
- The trustee will only authorize distributions if the beneficiary is earnestly pursuing treatment and recovery.
- Distributions will be based on the treatment plan as written by the beneficiary’s treatment team, however, the trustee has final distribution authority
- The trust will pay for the costs incurred in carrying out the treatment plan, such as therapy and rehabilitation services
The Stages of Recovery
It is important for the testator and the trustee to understand how recovery from a substance use disorder works. A person who is addicted to drugs or alcohol is not “cured” after attending rehab. Once someone accepts that they have the chronic disease of addiction, they can begin to work on changing themselves and their lifestyle. This is a process and recovery is an ongoing, lifelong process. Relapse is quite common for those in recovery, and it is crucial to plan for how the trust may play a role should they relapse.
Although you may want to allow for the trust to fund living costs such as rent and food, considering incentives such as vacations or a car when your beneficiary reaches specific goals is usually a better idea than providing cash as an incentive. Putting cash in the hands of someone with a substance use disorder often leads to relapse. You may even want to specify that any tangible assets in the trust may not be sold for cash. The trustee will have to monitor these goals, and should also have the ultimate authority to determine whether they have been met using reasonable objective and subjective criteria. If you are considering including real estate in the trust, speaking to real property lawyers about how this may work is advisable.
Choosing a Trustee
When creating a trust for someone with substance abuse issues, it is essential to choose a trustee who can perform the duties. Although a friend or family member may know the beneficiary, things can get tense if the trustee must deny demands that are not authorized by the trust. Instead, you may want to select a professional or institutional trustee, such as a trust company, a corporate trustee, or an attorney for wills and trusts. Some special needs trustees also handle substance abuse trusts and have access to resources such as social workers, case managers, and others who understand how to work with a beneficiary’s treatment team.
If you are interested in setting up a trust for someone with substance abuse issues, our wills and trusts attorneys at Carosella & Associates can help.