Law News and Tips

Addicted Beneficiaries

Fred Vilbig - Thursday, August 03, 2017

Addicted Beneficiaries

 

ADDICTED BENEFICIARIES

Fred L. Vilbig ©2017

     I try not to repeat topics in this column, but it’s been a while since I wrote about the complications from addiction, and the problem keeps raising its head. I keep seeing articles and hearing stories about the opioid crisis, and I encounter it time and again when meeting with clients. My mom was in her 70s which she told me that she still wanted a cigarette after dinner, and I had no recollection of her ever smoking. Nicotine is terribly addictive, but I understand that narcotics are even worse.

     From what I hear, people can get hooked on narcotics by using prescription painkillers while following doctors’ orders. And then there are some doctors who allegedly sell prescription painkillers to make some extra money. The US attorney general is looking into that now.

     But those “safe” drugs can be expensive. Heroin on the street is apparently pretty cheap, although you may not be comfortable with the level of quality. That is evidently not that important when someone needs a fix.A funeral director recently commented that people would be surprised to know how many deaths now are drug related.There are so many drug related deaths the County has had to rent temporary morgues to hold the bodies. Addiction is a horrible thing.

     What you don’t want is for an addict to receive a lot of money outright, but even basic trust planning may not be enough. We recently settled a dispute between a trustee and beneficiary.  I had written the trust when the client’s son was still a toddler, and now her son was approaching 22. She had died in a car wreck, and the son was the beneficiary of the trust.It was what is called a discretionary trust (the beneficiary did not have an absolute right to the trust funds), and the trustee refused to give the beneficiary any money outright. We tried to set up a plan where the trustee would directly pay the beneficiary’s landlord, health insurance provider, utilities, tuition and books, and the rehab clinic. She was willing to pay the beneficiary an allowance for food, but that was pretty small, only enough to buy basic food.

     That wasn’t enough for the beneficiary. He hired a newly minted attorney and proceeded to make the trustee’s life pretty miserable. She finally just resigned. The funny thing is that knowing what happened to her, none of the successor trustees wanted to serve. The trust is stuck in limbo until they petition the court to appoint a successor trustee. The trust has been paying a lot of legal fees, and it looks like it’s going to continue.

     When parents have children or family members with substance abuse problems, planning is critical. You don’t want to give money to the beneficiary outright. That could be like a death sentence. Instead you can provide that the trustee will only distribute trust income and principal to the beneficiary on a discretionary basis for their health, education, welfare, and support. That can put a trustee in a difficult position, so it’s probably best not to have a sibling as the trustee who will be making those decisions. I always try to keep families together, and that almost certainly will create a lot of tension in that relationship. Sometimes I’ve required beneficiaries to submit to drug testing before any distributions are made to them. Trustees can also require receipts for how previously distributed money was spent. This requires a lot of work, but it is a pretty serious situation.

     It’s sad that so many people need to deal with these issues, but it is a reality. Ignoring the problem can be deadly. Plan accordingly.

     If you would like to confidentially discuss these issues further, please feel free to contact me.

Contact Fred now about your situation. The first consultation is free. Or call him now at (314) 241-3963

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