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How estate planning can protect an addicted beneficiary

On Behalf of | Jan 22, 2019 | Estate Planning

Those who create an estate plan here in Florida do so generally in good faith. There is an assumption that beneficiaries will use any inheritance to care for themselves and anyone or anything else designated by the person who created the plan. Unfortunately, some potential beneficiaries may have difficulty handling such a responsibility, especially if the beneficiary suffers from an addiction to drugs and/or alcohol. Yet, leaving such a person out of a will may not be an option either — it could result in the addicted person spiraling further into turmoil. Experts do have some recommendations for those considering estate planning who find themselves in such a situation.

Many families willingly spend all of their savings hoping that they can help a family member overcome an addiction. Some individuals may worry that an inheritance will be spent solely on the addictive substance that their family member struggles with. Financial experts say that an estate plan that contains an incentive trust is one way to avoid this. A trust can dictate exactly how certain assets are distributed, and an incentive trust can be tied to specific behaviors or conditions. For example, money can only be received by a beneficiary after he or she has completed a drug treatment program.

Experts also say to designate a trustee who can be counted on to ensure that funds are distributed — or withheld — depending on the beneficiary’s actions. The trustee may need to get a Health Insurance Portability and Accountability Act (HIPAA) waiver in order to properly help the beneficiary by gaining access to medical records. As in any delicate situation, open communication is vital to ensure that everyone involved knows the exact situation.

Those individuals here in Florida who have a loved one who suffers from addiction will understandably worry in any circumstances. However an attorney experienced in estate planning can help assuage any fears regarding how one’s assets may be managed after death. It may be the best way to help someone who struggles with addiction, and give him or her the best chance at an improved life.