Creating a financial legacy can take many years. You often need to work hard and plan frugally to build up a substantial nest egg during your working life. After all those years of hard work, the ability to leave something behind for your loved ones is a beautiful reward.
Sadly, many people must now worry about how their heirs and loved ones will handle receiving a large sum of money as an inheritance. Addiction has always been an issue, but our society is struggling with unprecedented high levels of opiate, opioid and heroin addiction.
If someone you love has a problem with addiction, you may rightly worry about whether the money you have spent a lifetime acquiring will end up supporting that habit when you die. Thankfully, you have more options than just disinheriting your loved one.
A trust can protect your legacy without cutting off your addicted loved one
Addiction happens for all kinds of reasons. Maybe your child suffered a broken bone or had to have a surgery. After recovering, they may be struggling to give up the pain medication. Other people may use narcotic painkillers to self-medicate for mental health issues.
Regardless of what the root cause may be, chances are good that you don't just want to cut off your loved one over the addiction. You probably still hold out hope that they will eventually recover and move on with their life.
Creating a trust is the perfect way to include an addicted family member in your last will or estate plan without feeding their addiction. A trust, such as a spendthrift trust, allows you to put specific requirements on disbursement and limit how much an heir can withdraw in any given time period.
Pick the right trustee to protect the assets in your trust
When you create a trust, there are two important considerations. First, you must decide how to fund the trust. Some people use existing assets. Others choose to fund trusts with proceeds from their life insurance policy. Finally, some people set up a system to transfer assets into a trust upon their death.
Regardless of which approach you take, it is critical that you select a trustee who can live up to your expectations. You need someone who can withstand pressure from your heirs and uphold your wishes. In some cases, naming a couple different people as joint trustees may help ensure that no one abuses this position of authority or gives in to demands or pleas from your addicted loved one.
With a little bit of planning, you can still provide for a loved one who struggles with serious drug abuse without risking feeding that addiction. You can create a legacy to be proud of without cutting off someone because of a mental health issue like addiction.