Estate planning allows you to take care of your family members when you’re gone. It gives you peace of mind in knowing that all of your wishes will be carried out and that the needs of your loved ones will be met.
But many families face issues related to substance abuse. As a result, a family member may struggle with being financially responsible and looking after his or her own needs.
Thankfully, you can use a trust to provide for a troubled family member and ensure that your assets and their wellbeing are protected for the future.
Incentive Trusts Encourage Positive Changes
Many people use incentive trusts as part of their estate planning. These trusts are established to encourage certain behaviors on the part of beneficiaries using the distributions as incentives for these changes.
Incentive trusts are often used to encourage beneficiaries to work in a specific industry or obtain an educational degree. But they can also be used to encourage them to abstain from the use of alcohol or drugs.
Incentive trusts can be set up in a variety of ways. Some beneficiaries may receive distributions upon graduation or reaching a certain age while others may receive funds according to their income.
Asset distributions can be set up so that they are contingent on maintaining sobriety or entering and completing a rehabilitation program.
Trustees must actively monitor the behaviors of beneficiaries. In some cases, this requires the trustee to challenge the beneficiary’s claims in order to ensure that the requirements of the trust are being met.
Assigning a Trustee to Protect a Troubled Family Member
Assigning a trustee is essential to ensuring that a troubled family member has the financial support they need along with the supervision required to ensure that your wishes are carried out.
Trustees are responsible for making decisions related to the distribution and use of money allocated to a troubled family member. Many trustees oversee the investment of assets and complete accounting tasks related to the trust.
When creating a trust, you determine the guidelines for asset distribution, but it’s ultimately up to your trustee to determine when and how those funds will be provided to a family member.
Professional trustees may be used in order to protect family members from having to take on this responsibility. Although this can be more costly, it protects family members from having to make difficult personal decisions.
The duration of a trust can also be established. Beneficiaries can receive all of their inheritance upon reaching a certain age, or the trustee may have the authority to decide when a beneficiary no longer needs someone to oversee the distribution of funds.
Setting Up a Trust for a Troubled Family Member
Incentive trusts can be more complex as a result of the restrictions that are put in place to control distributions and the unique responsibilities placed upon trustees.
In many cases, those leaving assets behind may not be willing to acknowledge the problem of substance abuse in a loved one. They may struggle to accept a need for setting up an incentive trust.
Individuals establishing trusts for troubled family members should consult with a skilled attorney who is familiar with the needs of families who struggle with substance abuse. There are factors that need to be considered to ensure that these trusts work according to your wishes.
Understanding how to establish a trust for a troubled family member can benefit you and your entire family. It allows you to provide for the needs of your loved one while ensuring that they take the steps to improve their wellbeing after you’re gone.