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What if your heir struggles with a drug problem?

On Behalf of | Jan 5, 2023 | Estate Planning

There are some cases in which people would like to leave their assets to a specific heir, but they worry that the heir may have habits or behaviors that will be detrimental to their future. 

For example, perhaps you have three children, and two of them are financially stable and responsible, with jobs and families. But your third child struggles with a drug addiction. You would still like to leave them an inheritance, but you don’t want them to simply use it to fuel that addiction. You would rather that the inheritance helps them to turn their life around and find future success. Is it possible to do this, or is your only choice to cut them out of the will?

You could use a discretionary trust

You do not necessarily have to disinherit someone to keep them from wasting the money or fueling a habit. This goes not just for drug addiction, but also for expensive issues like gambling addictions or risky investment trading.

A discretionary trust allows you to give a trustee power over the funds being held by that trust, and they decide when your heir gets the money. In many cases, the trustee may simply use the money on the heir’s behalf. For instance, they could use it to pay college tuition costs or to buy a home. But having the trustee in between the funds and your heir ensures that they are not simply going to waste it or use it on their addiction.

An estate plan like this can become complicated, and it’s important to know exactly what steps to take to set it up.