Planning When Substance Abuse Or Addiction Is Involved – Wills/ Intestacy/ Estate Planning

24 August 2022

Fischel Kahn

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More people that you think have a connection to someone with a substance abuse or addition issue. This situation can present a few twists when putting together an estate plan. I have recently worked with clients for whom this is an issue.

One woman has recently divorced her spouse. The spouse has alcohol and gambling issues. They have two young children and the concern for my client is that none of her money goes directly to the hands of the spouse with substance abuse concerns. We established a trust under her will to provide for her children in the event of her death and if expenses there are to be covered by her estate, she required that the ex-spouse present receipts for expenditures on behalf of the children before funds being disbursed . She also required any distributions for housing or education of the children to be paid directly to the landlord, mortgage company or the educational institution. When the children turn 18 or are no longer living with the former spouse the restrictions lighten up.

Another client is a couple with two adult children, one is a healthy normal 30 year old and the other child is a 35 year old adult who has a history of making poor life and money choices and is still an active alcoholic. The concern for this client is not to punish the child, but to keep money out of his hands to prevent himself from having additional means to harm himself. When both parents have passed, they will pay for his rent, utilities and medical treatment or rehab should he choose. If he maintains a year of sobriety and maintains steady employment the restrictions on distributions will be altered to allow him to obtain more assets from the trust. If he relapses, the restrictions are reinstated.

Other things to address are the issue of who will be the trustee for a trust when there is either a beneficiary of third party involved with substance abuse issues. Do you want to have a sibling of the person in this position? Is there resentment between the siblings? Will it cause more friction? Will it bring the siblings closer together? Do you want to use a bank or other commercial or professional trustee or trust department as Trustee? This is an alternative that can be used to give to help keep the family peace.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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