Creating a Trust for Children With Substance Abuse Problems
Sept. 25, 2023
Trusts are vital estate planning tools that are often used to keep away assets for children until a future date. Essentially, upon the trustor's death or sudden incapacitation, the named trustee will administer the trust and distribute trust property to beneficiaries in accordance with the provisions of the trust document. However, when a beneficiary has substance abuse problems, the trustor must put various provisions in place to limit the beneficiary's access to the trust and ensure the judicious use of trust assets and funds.
At Rutkin & Wolf PLLC, we're committed to guiding clients through the complex procedures involved in establishing living trusts for beneficiaries with substance abuse issues. Our seasoned New York State estate planning attorneys can advise you about your available options and enlighten you about the benefits of spendthrift trusts. Also, we can guide you through the procedures involved in creating the spendthrift trust and help you navigate key decisions. Our firm proudly serves clients across White Plains, New Rochelle, the Bronx, and Lower Westchester County, New York.
Possible Inheritance Concerns for a Child With a Drug Problem
Having a child with a substance abuse problem can be a huge concern for the parent. The parent can become worried that the child, grandchild, or dependent can do the following:
Use the trust fund to fulfill their illicit substance abuse habit.
Increase the level of indulgence with more money available. This may result in accidental overdose.
Sell off houses, personal belongings, and other assets to raise money to buy drugs.
Waste their inheritance and become homeless.
Be unable to manage their money and accumulate massive debts from their substance abuse habits.
Creditors can repossess or withhold the child's inheritance to cover the unpaid debts.
Participate in crime to hide their addiction issues.
Fail to seek the necessary drug abuse treatments.
In order to prepare for when the parent will be unavailable or unable to manage the child's affairs, it is important to take preemptive measures to safeguard property, assets, money, and other forms of inheritance. An experienced attorney can advise you about your possible options and help you understand what a spendthrift trust can do for you and your children with substance abuse problems.
Spendthrift Trusts and How They Work
What Are Spendthrift Trusts?
Spendthrift trusts are living trusts that allow the trustor or grantor to limit access and control of the beneficiary over trust property. Once created, the trustee will retain absolute control over how the trust assets are managed and distributed. Thus, the beneficiary will not be able to give out, sell, or transfer assets, property, and money in the trust. Also, creditors won't have access to the trust property.
How Do Spendthrift Trusts Work?
The major advantage of the spendthrift trust is that it allows gradual and monitored transfer of assets and funds to beneficiaries. Here's how spendthrift trusts work:
The trustor will create and fund the trust.
The trustor will appoint a trustee or successor trustee to manage the trust property.
The trustor will give specific instructions regarding how the trustee will make trust property and money available to the beneficiary during recovery or after a relapse.
The beneficiary won't have direct access to the trust property.
The trustee will provide the beneficiary with all benefits needed for their recovery and general well-being.
In addition, the grantor can leave instructions that the trustee should only cover the living expenses and cost of substance abuse treatment of the beneficiary.
Benefits That Can Be Received From Spendthrift Trusts
Here are some common benefits that a beneficiary can receive from a spendthrift trust:
monthly payments for basic needs
cost of medical and dental checkups
drug abuse treatment expenses
professional services needed for treatments and recovery.
However, the trustor will provide instructions about when and how the trustee can make payments to the beneficiary.
The Role of the Trustee
Some roles and responsibilities of a trustee during the administration of a spendthrift trust are as follows:
Receive trust benefits on the beneficiary's behalf.
Handle financial matters and document all transactions.
Monitor how trust assets and benefits are used.
Decide the right conditions to approve or withhold payments.
Determine how to make payments for goods and services received or needed by the beneficiary.
Determine the frequency of disbursing payments to the beneficiary.
Pay all fees, bills, and administrative expenses incurred during trust administration.
Distribute trust property and money effectively.
Create a reserve fund to cover expenses used for estate or trust administration.
If you have been appointed as a trustee to a loved one's spendthrift trust, a seasoned New York State trusts attorney can fully explain your duties and guide you diligently through the trust administration process.
Let Our Experience Guide You
Getting proper guidance is crucial when creating a spendthrift trust for your children with substance abuse problems. At Rutkin & Wolf PLLC, we have the diligence and skill to advise and guide clients in estate planning and trust-related matters. Our reliable team can establish the spendthrift trust with your exact instructions and help ensure that your child receives the adequate support, resources, and treatment they need to recover.
Contact us at Rutkin & Wolf PLLC today to schedule an initial consultation with seasoned estate planning lawyers. Our trusted team can offer you the dedicated advocacy and experienced legal guidance you need to protect your child's inheritance and help them recover. We're proud to serve clients across White Plains, New Rochelle, the Bronx, and Lower Westchester County, New York.