Maybe you have a spouse who no longer has access to some of your property because they have previously tried to use shared assets to buy illegal drugs. Perhaps you have had to have some very uncomfortable conversations with your middle child because of their alcohol use. If you have someone in your family who struggles with substance abuse or chemical dependence, you may feel powerless to help them overcome their challenges.
The sad truth is that no amount of support from friends and family will force someone struggling with addiction to be honest with themselves and take accountability for their actions. They are the only one who can take control of the situation, ask for help and change their behavior.
When you offer to help or support them, you may accidentally contribute to their substance abuse issue. Is an incentive trust a possible solution for your estate plan when you have to consider a loved one’s addiction?
Trusts are safer than direct inheritance for those who struggle
If you leave a third of your estate to your child with a drinking problem, their inheritance might make them feel comfortable quitting their job or going on a two-week bender. A direct inheritance can lead to poor choices by even the most diligent person.
For someone struggling with addiction, it could lead to a relapse. Not only will they potentially make bad choices with what they do with their inheritance, but they could hurt themselves.
An incentive trust is a special kind of trust that provides specific rewards as an incentive for someone meeting certain criteria. You could move the inheritance for your loved ones struggling with addiction to an incentive trust and could require that they be in treatment or verifiably sober to access trust assets.
You may want to limit their access to physical property or cash that they could convert into their substance of choice at the local pawn shop. Instructing a trustee to directly pay rent or educational costs can be a way to provide them with tangible support while also preventing the potential misuse of that inheritance.