Is it safe to leave an inheritance to my son/daughter who is struggling with alcohol/drug addiction? I don’t want to leave him/her out of my will, but I also don’t trust him/her to use an inheritance wisely.
If you have a child who is struggling with addiction, one of the last things you may want to do is to leave them a sudden cash windfall when you die. Not only is there a good chance that the inheritance would be squandered, but the money could easily be used to further enable destructive drug use or other addictive behaviors.
Inheritance via Trust
A testamentary trust or a living trust may be used as part of a Utah estate plan to protect your children’s inheritance by placing restrictions on how, when, and for what purposes the assets may be used. Both a Utah living trust and a Utah testamentary trust can give you a great deal of flexibility in the conditions that can be placed on a child’s inheritance.
Possible uses of a trust can include giving authority to the trustee to make decisions on how the money will be used, or delaying distribution of any inheritance until the child has completed a treatment program and demonstrates that he/she is in recovery.
Testamentary or Inter Vivos (Living) Trust?
Both testamentary and living trusts can be used to manage a child’s inheritance. An important distinction between the two is that a living trust is created by you during your lifetime. You can only plan during your life to establish a testamentary trust – but the testamentary trust itself is created only by the action of your last will and testament. In other words, the testamentary trust does not come into existence until you die.
A key disadvantage to using a testamentary trust is the time and expense needed to go through probate. Unless there is a specific compelling reason to use a testamentary trust, it will almost always make more sense to establish a living trust.
Trust Benefits Beyond Inheritance and Drug Addiction
Even a child who is not dealing with drug addiction may benefit from receiving an inheritance through the structure of a trust. In a standard will or through intestate succession, a child who is 18 years old will normally be entitled to receive their full inheritance in one lump sum. An eighteen-year-old may not be ready to properly manage large sums of money. A trust can protect your child’s inheritance until he/she has the maturity or experience to manage it wisely.
Finding an Estate Planning Attorney
By properly drafting a living trust (“inter vivos trust”) or including a testamentary trust as part of your Utah estate plan, you can help ensure that your children will receive the maximum benefit from the inheritance you leave. To learn more about Utah wills, trusts, or other estate planning tools, contact Salt Lake estate planning attorney Stephen Howard today to schedule an initial consultation.