Parents and other close family members typically want the best for the next generation. They may work hard jobs with the intention of offering their children a better future. Oftentimes, older generations pave the way for the success of younger family members by leaving them an inheritance.
Access to intergenerational wealth is a major factor in economic stability. Those who inherit property generally enjoy a better standard of living than those who can only leverage their personal income and resources. Most parents hope to provide valuable resources for their children when they pass.
However, some parents worry about how a loved one might misuse an inheritance. When a child struggles with alcohol abuse or drug addiction, they may have an unstable life. Addicts have difficulty maintaining housing, employment and intimate relationships. They may engage in coercive or abusive behavior in their attempts to access their preferred substance.
How can someone concerned about a family member’s substance abuse include that individual most effectively in an estate plan?
Trusts can prevent the misuse of inherited resources
Even those who have never struggled with addiction can potentially misuse inherited resources. People frequently burn through thousands of dollars in a short amount of time after receiving a lump-sum inheritance. Trusts are a useful way of preventing the frivolous dissipation of inherited resources.
The trustor funding the trust can include specific rules about when beneficiaries can use trust resources. The trustee may be responsible for distributing assets directly to outside parties instead of giving funds to beneficiaries. Requiring direct payments and limiting the circumstances in which beneficiaries can request distributions are both means of reducing the likelihood of the misuse of an inheritance.
Some testators establishing trusts for family members struggling with addiction go so far as to require substance abuse treatment or drug testing prior to any distributions from a trust. By arranging to limit the use of inherited resources, testators can provide support for struggling loved ones without contributing to the vices holding them back in life.
Adding a trust to an estate plan is one of several viable options for those navigating complicated family circumstances. Adults who take the time to create custom estate planning paperwork can leave a meaningful legacy without endangering their loved ones.