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Estate planning for parents of kids with substance abuse issues

Increasingly, Californians doing their estate planning have to deal with the reality that they have a child with a substance abuse problem. Even when children are in recovery, parents may be understandably concerned about what could happen if they inherited a large sum of money or considerable assets. Even a few thousand dollars given in a lump sum to an addict could lead to tragic consequences.

There are a number of options for parents of addicts. Some involve trusts. It's essential to have a trustee whom you can rely on to oversee the trust responsibly. Your child's well-being and even life may depend on it. It may seem obvious to choose another child or other family member for this responsibility, but that's not always wise. It can complicate an already difficult family situation.

One option is a spendthrift trust. As the name implies, these are often used for children whom parents don't feel are responsible enough, for whatever reason, to handle a large inheritance. There are variations of this trust, but essentially the trustee has control of giving part or all of the money to the heir as he or she sees fit. The trustee can use the funds to help ensure that the heir has enough for housing, food and necessities, but not enough to feed the addiction.

Some parents use incentive trusts, also known as conditional trusts, for children with substance abuse issues. They determine the conditions under which money can be disbursed, by the trustee, such as completing rehab and remaining sober for a year. They may set a condition where if the child relapses, funds are cut off. These conditions help protect the funds from being misspent and, more importantly, can provide a needed incentive for continued sobriety.

Addiction and legal experts often discourage choosing to disinherit children because of substance abuse issues -- even if you've given up hope of them ever recovering. People may leave children out of the will with the intention of including them if they turn their lives around, but don't get to it before they die.

Many people are ashamed to talk about their child's substance abuse problems with anyone, including their estate planning attorney. However, your attorney needs the facts to help you draw up an estate plan that you feel is best for your family.

Source: Beginnings Treatment Centers, "Inheritance, Estate Planning, and Addiction," accessed Feb. 27, 2018

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