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NC and SC Estate Planning and Elder Law Firm

Monday, December 10, 2018

Providing For Loved Ones With Substance Abuse Issues

The opioid epidemic is ravishing the nation and North and South Carolina are being hit particularly hard. In response, more and more families in our area are drafting estate plans with trusts that prevent loved ones who have substance abuse issues from fueling their addiction with inherited funds.

A good example of how this is done can actually found in Hugh Hefner’s estate plan. The Playboy mogul set up a trust to distribute his wealth which includes provisions that will cut off any beneficiary who is dependent on drugs or alcohol. It states:

“If the trustees reasonably believe that a beneficiary of any trust routinely or frequently uses or consumes any illegal substance so as to be physically or psychologically dependent upon that substance, or is clinically dependent upon the use or consumption of alcohol or any other legal drug or chemical substance that is not prescribed by a board-certified medical doctor or psychiatrist in a current program of treatment supervised by such doctor or psychiatrist, and if the Trustees reasonably believe that as a result the beneficiary is unable to care for himself or herself, or is unable to manage his or her financial affairs, all mandatory distributions to the beneficiary, all the beneficiary’s withdrawal rights, and all of the beneficiary’s rights to participate in decisions concerning the removal and appointment of Trustees will be suspended.”

The document goes on to say that the trust’s trustees have the authority to request beneficiaries undergo drug testing or treatment if they suspect abuse. The trustees also have the authority to reinstate a beneficiary that has previously been cut off if the beneficiary is sober for 12 months, and the trustees think the beneficiary is able to care for himself or herself and manage his or her financial affairs again.

Anyone who has a loved one that is struggling with addiction should consider putting a similar trust, known as an “incentive trust” in their estate plan. Plenty of people whose loved ones have no known drug problems are also including such language just in case.

It is also possible to craft incentive trusts that withhold payments unless a beneficiary holds a job, buys a home, graduates from college, or any number of things. Courts and trustees have become fans of these trusts because they take some of the hard decisions trustees are forced to make when beneficiaries are making poor life choices out of their hands.

The assets you leave to your loved ones should be a boon, not a burden. If you are concerned that your loved ones will not be able to handle the assets you are leaving them, creating an incentive trust is your best option. If you are interested in including an incentive trust in your estate plan, please consider setting up an appointment with our firm to discuss your options. We have years of experience drafting custom estate planning documents that fit our client’s needs.

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Monk Law Firm, PLLC assists clients throughout Charlotte, Rock Hill, Fort Mill and the surrounding areas.



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| Phone: 803-594-4453
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| Phone: 704-369-9977

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