Addiction is a growing national problem -- and if you're the parent of an addict, you may be afraid of what happens when you die. Not only could everything you've worked to provide your child with once you're gone be rapidly depleted in order to feed his or her habit, the ability to pay for more drugs could cost your child his or her life.
A special needs trust might be the best solution.
Special needs trusts have traditionally been used to provide an inheritance for children who suffer from mental disabilities that make it difficult or impossible for them to handle their own funds. These trusts are designed to be managed by a trustee and don't interfere with the ability to receive certain state or federal benefits, like Supplemental Security Income (SSI), if beneficiaries are eligible.
In the case of an heir with an addiction, there are a number of benefits to this kind of trust:
- The trustee can be someone in the family or someone appointed by the state if no one in the family is willing to take on the responsibility of handling the addict's money.
- The trust can be set up either in your lifetime or at your death. If it is set up in your lifetime, you can contribute to it as you see fit over time.
- The trustee would be able to keep the money from the trust out of the addict's hands. It wouldn't be unusual (or unreasonable) for the trustee to pay the addict's bills directly and only give the addict minimal amounts of actual cash.
- The trust can require the addict to submit to drug testing in order to prove that he or she should receive any direct cash payments.
- The trust can be directed to provide payment to drug rehab treatment programs at the addict's request.
- You can include a clause that will require the trustee to disburse the remainder of the trust to your child if he or she gets off drugs and remains off them for a certain period of time. For example, if your child stops using drugs and tests clean for a full year, that might trigger the clause.
An attorney can answer your questions about how to craft an estate plan to fit your unique needs.
Source: Findlaw, "Special Needs Trusts FAQ's," accessed July 21, 2017