Incentive trusts useful when leaving money to addicted family

Many families in North Carolina have experienced firsthand the devastating effects of the nationwide opioid crisis. When people are addicted to opioids, their main focus seemingly is to secure drugs at all costs, even if it means stealing money for the drugs from other family members. The loved ones of people suffering from addiction are often in the position of having to spend money in the hopes of assisting in the addict’s rehabilitation while at the same time protecting the family’s finances from the addict’s urges to obtain drugs.

Estate planning presents a unique challenge for families who have loved ones struggling with addiction. Instead of leaving a substantial sum of money to a loved one addicted to opioids, these individuals may wish to put conditions on their gifts to loved ones from their estate. They may fear that their loved ones may use all of the money to fund their drug habit or even die from an overdose.

For such families, incentive trusts may be the solution both to provide money for addicted family members after the trustor’s death while simultaneously maintaining incentives for the family member to continue to seek treatment for their addiction. Incentive trusts allow the trustor to condition receipt of the money by the beneficiary to the completion of certain goals, such as completing drug rehabilitation or submitting to drug tests.

It may be beneficial for individuals who are interested in establishing an incentive trust for a family member suffering from addiction to seek the assistance of an attorney who has specialized experience in the formation and administration of incentive trusts. The trustee must have the experience and judgement to anticipate constructive conditions to be placed on the receipt of the trust funds, and the trustee should also be willing to withhold funds when those conditions are not met.

Source: Market Watch, “How to leave money to a family member with an addiction,” Angie O’Leary, January 14, 2019

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