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Protecting A Beneficiary With Substance Abuse Issues

Orange County estate planning attorney

If you have a beneficiary with a substance abuse problem, you may be concerned about leaving money to them, but with the help of an Orange County estate planning attorney, you can add provisions to your estate plan to limit that beneficiary’s access to their inheritance.

Creating an estate plan gives you the chance to make important decisions about what happens to your assets after your death. It is also possible to provide a more practical provision that will protect the beneficiary from wasting their money by establishing a special trust that will fund only their necessities.

Reasons To Limit Access To Assets

If you’re aware that a beneficiary of yours has substance abuse issues, it’s in that person’s best interest for you to limit their access to funds. A sudden large distribution from a trust could quickly be spent on drugs, enabling your beneficiary's addiction and potentially allowing them to squander large amounts of money. 

Someone with substance abuse issues might not have the capacity to make wise decisions about money in other areas of life, either, and may not be equipped to handle your investments or other assets included in the trust. 

If you want to avoid this outcome, you have options other than leaving this person out of your will entirely. Instead, you can use a trust to limit their access to funds and prevent them from using their inheritance to fund their substance problems. That way, you can support your family members without letting them use your money on self-destructive behaviors. 

Using A Trust To Hold An Inheritance

When people think of estate planning, they typically think of wills before anything else. However, a trust can be very effective for passing assets on to your beneficiaries. 

For one, there are potential tax benefits, depending on the type of trust you use. Using a trust also allows for an immediate transfer of assets to your beneficiaries, which allows them to avoid probate, legal fees, and long waits. 

Trusts also give you, the grantor, the ability to set many stipulations and provisions that affect how assets are distributed to the beneficiaries. In this way, you can continue to protect your beneficiaries even after you pass away.

The use of a trust can also limit your beneficiaries’ access to their inheritances in order to protect the wealth. People facing substance abuse issues often don’t have the judgment to manage their funds wisely. 

Estate planning allows you to limit access to an inheritance until your beneficiary has a change in lifestyle, such as entering rehab or maintaining sobriety for an extended period of time. Putting an inheritance in a trust makes it easier to manage and grow your wealth while also protecting it from misuse.

Adding Provisions To Your Estate Plan

A provision in your trust can limit how assets are distributed to your beneficiaries. Provisions can require that beneficiaries complete certain tasks before they receive an inheritance, such as completing college. 

When you are dealing with someone who abuses substances, you can direct their inheritance into a special trust designed to protect them from themselves. This trust will keep the money safe and prevent your beneficiary from accessing cash and valuable assets. 

Provisions For Care And Necessities

Another approach you could take is to include a provision that will directly take care of the beneficiary’s primary needs directly. This entails giving instructions regarding their inheritance which would flow right into a special trust that will cover their care and basic needs. 

A probate attorney in Orange County can sit down with you and make sure that your trust will cover any essential bills your beneficiary needs. Instead of allowing your beneficiary to access cash and make those payments themselves, a trustee will make payments directly to third parties, such as a landlord, medical provider, or other institution.

This provision will prevent the beneficiary with substance abuse issues to squander the money or use it to harm themselves further. Some of the basic necessities that are often overlooked when one is suffering from substance abuse issues include paying basic utilities like rent, electric and water bills, as well as cell phone bills. 

Establishing trust with this provision will also make it easier for them to complete larger monthly payments such as car payments and insurance. If you are actively undergoing a rehab program or seeking mental health care, the provision will cover all medical bills and insurance for continuous care.

It’s important to note that the beneficiary does not have control of the funds meant to cover their needs and overall medical care. A person is named a trustee to pay the bills and other payments for the person’s benefit and care until they reach full recovery.

Incentives For Sobriety And Healing

You can include incentive provisions to their trust as well. This will allow distributions from the trust fund to reward sobriety or other positive behavior. Restrictive provisions can also end distributions in the event of a relapse. However, provisions need to be detailed and thorough, because it can be a challenge to determine if a person is abusing drugs or not. 

A legal professional with expertise in trusts can help you write a provision that is legally sound and gives your trustee a clear plan of action. Trust assets can then be disbursed or managed by a skilled trustee, who handles them according to the terms you specify when you set up the trust.

Appointing A Trustee

A trustee plays an important role in this type of trust. They will need to work closely with the beneficiary to track their drug use or recovery. The trustee may also need to perform special tasks, like administering drug or alcohol tests to check your beneficiary’s sobriety. 

Though it may be tempting to choose a family member to fill this role, some prefer to use an impartial third party, like a bank or a professional trustee. An experienced trustee can also potentially oversee investments and maintain assets; it all depends on your preference. 

However, when your beneficiary has a substance abuse problem, it’s important that the trustee is able to look at the situation honestly and limit the beneficiary’s access to funds when necessary.  Choosing a reliable trustee can give you peace of mind and ensure that your beneficiary is taken care of financially as much as possible.

Seek Out A Professional Estate Lawyer In Orange County

Our law offices can help you create an estate plan and add provisions that will protect your beneficiaries. We specialize in the estate planning of all kinds, and we can help you put limits on trust distributions. 
Hiring the right attorneys at Park Law Offices means ensuring people who need help with estate plans, trust administrations, probate matters, and other related matters are met with utmost professionalism and years of expertise. Contact us today to set up a consultation and learn more about estate planning services at Park Law Offices.

Maria Parker assists her clients plan for their end of life health care wishes and the ultimate distribution of their wealth after death. She personally experienced the importance of planning at the time her father passed away.

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