addict and estate plan

Old 09-23-2012, 06:13 AM
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addict and estate plan

I need to figure out how to allocate the proceeds of my life insurance after I die. I see 4 choices concerning my AS: half the proceeds without restriction (the other half going to my healthy son), token proceeds, no proceeds, half the proceeds in trust with restrictions on its use (addiction treatment, going back to school, etc.)

Currently, my AS would receive half the proceeds without restriction. But his self-destruction has accelerated lately, and not only is treating him equally not fair to my healthy son, I have come to believe that having virtually unlimited money to spend on drugs might end up killing my AS.

I am currently leaning toward a trust with restrictions (discretionary spendthrift trust). Has anybody here done that? If so, could you point me to resources for drafting the specific language describing how the money could be used?
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Old 09-23-2012, 06:31 AM
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My dad decided that over the past 20 years of subsidizing my meth addicted sisters existence, paying to bail her out of whatever situation she is in...etc; that she has spent her inheritance. I think he is leaving her a token and leaving everything to me in hopes I will have mercy if she needs money for rehab or something along those lines. As the child who has always been there for my dad, I don't think she deserves anything. That is my feelings.

Feelings aside, large amounts of resources in the hands of an addict is like signing a death warrant.
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Old 09-23-2012, 06:47 AM
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I appreciate your perspective as a sibling, and I feel sure my healthy son feels the same way.
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Old 09-23-2012, 07:02 AM
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My parents changed their wills over the summer. They have kept track of the money that they have spent on my brother over the years, and that amount will be deducted from his share of the inheritance. My parents also have your fear of what he would do with a large sum of money. For that reason, they set up my brother's portion of the inheritance in a trust of which I am the executor. They have made it clear that I am not to give him large sums of money, and wish for me to ensure that his basic needs are met. If necessary, I am to pay his bills directly so that he cannot have the money. My parents sought out the help of an attorney to do this. This is a huge responsibility for me, but I am willing to do it if it brings my parents some piece of mind. My husband agreed to do it if I was unable to do it for some reason. Of course when his inheritance runs out, he is on his own. My husband and I will NOT give him money that we have worked hard for. Good luck!
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Old 09-23-2012, 12:00 PM
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I had mine split between my two children but after my AS relapsed after his first rehab and stole from us again I changed it so my other child gets 100%. He has stolen enough from me to cover his inheritance.
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Old 09-23-2012, 12:06 PM
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I also thought about what happens when I die and did not want my AS to have those assets. I did not want to be enabling him from the grave!

What I did in my will was divide assets equally between my 3 children. The two healthy children will get their share straight out. The share that would have gone to my AS instead goes to a treatment center that I named (it is a long-term treatment center that exists on donations and does not charge the addict or family for treatment). Then I took Dave Ramsey's advice and told my sons what I had done - so there would be no surprises and to minimize sibling jealousy or guilt if they were to find out about it after I am gone. But I have to be honest here and say that I have not told the AS this yet. If and when he finds long-term recovery and I feel confident about that, I will be changing that will. By the way, I have spent very little money on this AS of mine - probably under $2000. So my decision was not based on the fact that he got his inheritance already - it is just based on my desire not to enable my AS from the grave.

A word of caution on involving your addict's siblings in the whole thing (as in being in charge of a trust and deciding when the addict is "deserving" of the release of assets). That pits sibling against sibling. How could it not?

Good for you for thinking about this whole thing long-term. It is healthy for you and healthy for you beloved addict and healthy for the siblings! Everybody wins!
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Old 09-23-2012, 01:43 PM
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I too have left my assets (which isn't much) just to my daughter and she will recieve 100% of my insurance policies and retirement savings as well. I agree with everyone else I have bailed him out, bought hiim cars and spent every dime I had to help him ..just to have him steal lie and manipulate ..and in death at least I will be able to teach him that one last consequence to his actions
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Old 09-23-2012, 02:15 PM
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Thanks to all for your responses. If I do go the trust route, the trustee will be a financial services company, not my healthy son.

And yes, I will consult my estate attorney for his suggestions on language, but I want to do my own research so I have a menu of options. The problem with relying blindly on an attorney is that you don't have any yardstick to measure whether your attorney has done a good job. If s/he hasn't, it won't be apparent til too late to do anything about it.

Here's an article I found that advocates very detailed provisions for distributions to beneficiaries with addictions (see pp. 18-20).

http://www.aureusinc.com/pdf/Demise_...iscrestion.pdf
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Old 09-23-2012, 02:26 PM
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My son has been missing 8 years, lost in his addiction somewhere.

My will does not including him for mostly the reasons given above, it might kill him. I don't feel guilty about that at all, we probably spent what might be his share, on taking care of him over the years or by what he stole from us to sell for drugs.

This is the kind of question that may have a different answer for each of us. It just doesn't make sense to me to leave money to an active addict, so I won't even consider it.

Hugs
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Old 09-23-2012, 02:42 PM
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"And yes, I will consult my estate attorney for his suggestions on language, but I want to do my own research so I have a menu of options. The problem with relying blindly on an attorney is that you don't have any yardstick to measure whether your attorney has done a good job. If s/he hasn't, it won't be apparent til too late to do anything about it."

An attornies job is to explain the law and the ramifications of said laws, and defend your position in court...that's it...we each are responsible to make the business decisions pertaining to our life. So, I agree with your thinking.
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Old 09-24-2012, 06:45 AM
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Back when my daughter was active in her addiction, she knew several trust fund heroin addicts. One had his rent paid directly out of a trust. He died of an OD last year. I think one of them had to periodically demonstrate evidence of a clean drug test to continue to receive payments.

Trying to control outcomes from the grave is the ultimate in codependency.

Any addict worth their beans knows how to game a pee test.
That someone was in rehab does not mean they were or remain clean.
That someone attends AA/NA does not mean they are clean.

Endowing adult children with an inheritence often contributes to a sense of entitlement. There are so many worthy organizations including the Salvation Army that can put donations to good use.
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Old 09-24-2012, 07:26 AM
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You might consider a trust, you could set it up so that one son gets it right off the bat, the other you can set it up for his health and well being only.
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Old 09-24-2012, 09:41 AM
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There are many things to consider here. Money fractures families. I can share my experiences.

My father was an alcoholic. His parents loaned him $30,000 to get him out of a major jam. They were very well off, and this was affordable. My father made payments on loan every week, but did not finish paying off the loan before he died. When he died, he was 11 months sober. When his father died 5 years later, the will stated that we (the grandchildren) were specifically excluded because they had "cared for their son during his life." The estate was much greater than 4x the 30K- even accounting for interest, and this created a rift between my siblings and the rest of the family who did inherit that exists 20 years later. My father was the black sheep, and we are all tarred with it.

My brother is an alcoholic, who lived with my mother until she was moved into assisted living for Alzheimer's. Because of her dementia, we (the children) had a lot of influence on her decisions about money. We had her set up a trust for my brother for his "share" and had another sibling manage it. My "healthy" brother had total discretion on how to dispense it, and he used it for rent, car payments, and health insurance, as well as some college expenses for my alcoholic brother's daughter. Given the pain we all felt at being "cut off", none of us would have been comfortable having my brother "cut off" from my mother's will. Although the situation was stressful for all, it was the best thing for us.

I have a friend who's son is 5 years clean. They spent over a hundred thousand dollars on his rehab, and have documented the costs- these are listed in the will, and will be used to adjust his "share" when they time comes. This is the way they felt it made sense to equalize things between him and his healthy sister.

Another friend just redid their estate plan. They are dividing assets equally between their son and his sister, who is currently an addict living on the streets. Their son (now 25) will be a joint trustee with a professional fiduciary firm. This will allow him to have some discretion in the care of his sister, but will also allow him to walk away at any time if it gets to be too much.

There is no one right way to handle this. Only you can decide what you consider fair and just, and what will give you peace. Whatever you decide, I think it's important to communicate the plan- with love- to all your children, so that they understand what you are doing, and why. If you do decide to leave money in trust, I'd suggest you to give the trustee broad discretion, and not try to micromanage things from the grave.

Best of luck.
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Old 09-24-2012, 11:00 AM
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100% to me so each sibling's share is the same, 0%?!

You are so wise in asking around, being in tune with your emotions, and educating yourself. I think that joint sibling-professional trustees and broad discretion is ideal if you go the trust route. The professional only need be involved for amounts over $X. State generally that the trust cannot be used to further AS' addiction, but don't micromanage it beyond that. There are too many factors. Just look at what people say they do and don't do about their loved ones' addictions here on SR! You either have wise trustees or you don't. That's the key.
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Old 09-24-2012, 04:17 PM
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Hi NoGround, I believe that SundaysChild gives some valuable advice. Each family and each addict is slightly different.

Frankly, I don't care for detailed rules for Trustees, because it can backfire. The link that you provided recommended that the Trustee doesn't distribute unless the beneficiary is two years clean and can prove it with drug tests. Well, that sounds reasonable, but after a bit of experience, my opinion is that an addict could game that system pretty easily and then use the trust distribution language to force the Trustee to distribute. All the while the Trustee and the beneficiary's family may realize that the beneficiary is still using. How many times have members here had that gut feeling that their RA was no longer recovering, but couldn't prove it with drug tests? I don't want to turn the Trustees into the drug police.

If you are fortunate enough to know someone who will make a good trustee, I find the best solution is to pick good Trustees, make sure that they understand the problem and give them full power to use their best judgment.

Another method and one I just adopted is that I created a trust and restricted all distributions until the beneficiary turns 55 years old. I figure if the child remains an addict or relapses, she will not live to see 55 and then the trust corpus will pass to her siblings, if she survives, she will have a nice retirement. I also told her about this provision in my will and warned her that I hope she remains clean and when I feel more certain about her future, I will change my will. However, presently she just better hope that I don't die before she has developed a good track record or she is going to be without funds for a very long time.

Finally, I really dislike disinheriting children. There are times when it is appropriate, but those are few. Its like a final slap from the grave and the child has no ability to respond. If a parent does take this action, I recommend a small bequest like a family memento that has no financial value and was important to the child. I also recommend preparing a private letter to the child listing your reasons in a non-angry manner and, if at all possible, assuring the child that he or she was loved.

Just my thoughts.
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Old 09-24-2012, 09:02 PM
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AndreaB, when you say you restricted all distributions until age 55, you mean no distributions at all til then, correct? A close friend has suggested this idea, too--only she said no distributions til 65. And if AS is still alive then and wants to blow it all on opiates, so be it.

OutToLunch, you make good points. Thank you for challenging my thinking. The goal as I see it is to give my AS--if the time ever comes when he chooses recovery--exactly what I would want to give him if I were alive: the best possible chance to make it, for example, treatment at a longterm recovery facility and the chance afterwards to go back to school without incurring debt. I am in no way considering allowing the trustee to pay his rent, etc. No recovery, no money. If no treatment and recovery, the contingent beneficiary would get every dime on AS's death.

What's tripping me up is the question of what long-term recovery looks like (if he ever gets that far). I'm in a quandary about trustee discretion, because a financial services company as trustee will not know my AS. Hence the idea of restricting trustee discretion, although I know AS could game any criteria. Plus, it does feel like "dead hand control." But the only other possible trustee would be my healthy son, and he wouldn't pull his brother out of a fire.

You guys are great--thank you so much! This is exactly the sort of discussion I was hoping for.
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Old 09-25-2012, 02:31 AM
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NoGround, thank you for bringing this up. It has been on my mind a lot lately too.

I am not keen on leaving AS totally out. I can see how he would interpret it that I never cared about him and it would drive a wedge between him and his brother forever. I also know that I cannot possibly give him access to money that will certainly let him spiral downward quicker.

I have toyed with linking it to his recovery, but as stated above, how would one ever know for sure? I like the idea of giving it to him when he turns 50, no matter what. I also think I am going to build something in that the money may be used to pay for his children's school fees if he ever has any.

There are lots of good food for thought brought up.
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Old 09-25-2012, 04:42 AM
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Sunshine2, you nailed the issue: I will not disinherit my child, but I don't want to enable from the grave.

I am thinking now of asking my AS what he would do in my shoes. That sounds crazy, I know. But when I was struggling about whether to continue to pay his health insurance several months ago, I talked to him about the conflict I felt about it, and he came right out and said, "Mom, I don't care if I don't have health insurance." After that answer, I was emotionally able to cancel his policy the very next day and have not looked back. Maybe I would get that kind of clarity from him here, too.
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Old 09-25-2012, 05:36 AM
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Many years ago when I was still active my folks set up their wills that my
share would go into a trust not tobe given to me until I reached age 65. If
I didn't make it to that age, it was to go to my children, divided equally
among them.

Now I have been sober for many years. After my father passed in 2000 my
mom sat my sister and I down, told us how she was going to divide the
estate. 1/2 to my sister and I, ie we each got 1/4 and the other half to be
divided equally among the 8 grandchildren, with certain 'age' payout dates
for them, ie 25, 30, 35, etc

She asked me if I wanted mine in a lump sum and I said no. I said,
knowing how serious my health was becoming, I would rather monthly pay-
ments in the middle of the month to enhance my Social Security at the
beginning of the month. My sis is 11 years younger than me and she
agreed to be the Executor of the Estate. It is working out great as far
as I am concerned. That trust payment every month, and my SS allow
me to live comfortably and by the time the trust runs dry I will just do
a reverse mortgage on my house, which is paid for.

I do believe that some type of restriction on your part is more than fair
and I do not believe it is enabling from the grave.

And please remember that as long as you are alive, should your AS find
and maintain recovery, you can change the instructions in the trust. And
once you set up the instructions in the trust, the Executor MUST follow it
to the letter, as there are yearly reports to the probate court in most
states and in some it is biannually.

J M H O

Love and hugs,
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Old 09-25-2012, 07:30 AM
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Good morning NoGround, in your above comment, you ask whether the terms of my testamentary trust exclude ALL distributions until the beneficiary reaches 55 years of age. Yes it does, except payments for her health insurance that are paid directly to the insurance company. I don't consider paying her health insurance enabling, because it will allow her to go to rehab and counseling, etc., should she want and need it. Also it kind of puts her on equal footing with addicts living in other first world countries that have universal health care. Fortunately, at this time I can still afford to keep up her health insurance.

Similar to your friend, I considered extending the distribution date until she reaches 65, but now that I am in my mid-fifties, I realize that the mid to late 50s are no picnic! My body is aging and I led a rather healthy life, so there is a real possibility that her body may be a little worse for wear at this age and she may really need it to survive.

I agree with the above posters, this is a very interesting subject and I am learning a lot.

Thank you.
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