Life comes at you fast; addiction, disease, and disability come at you faster.
Effective LifeCycle Planning Can Help You Deal with Life’s Issues Better
Do you have a family member who may be addicted to something (alcohol, drugs, sex, gambling, or whatever else) or suffering a medical or mental disability (including undiagnosed or untreated schizophrenia, bipolar disorder, or depression) when they may be receiving property or money from you in the future?
An impaired or disabled person, regardless of age, takes a significant emotional, physical, and financial toll on all of the people who endure the burden of supporting them. Caring for impaired people becomes more difficult to handle when people who normally support them both logistically and financially, age and/or become disabled themselves. Having to react to such changes without having a plan can, and often does, lead to more anger, frustration. and conflict.
One person, serving in loco parentis, may want to cut off the beneficiary while the other responsible person could never consider doing so. One guardian may want to kick the child out of the family home, while the another may believe doing so would make matters worse. These conflicts bread stress and anxiety to everyone concerned including principals, agents, beneficiaries, and bystanders.
Grandparents may have different opinions than the parents. Siblings may already be resentful of their addicted sister or brother. In many families, the troubled child has already received significant emotional and financial assistance. His troubles have already taken center stage at the dinner table. His presence in the home and attitude toward the family may have already created constant disruption.
LifeCycle Planning Tools and Options
As complex and emotional as these issues are, families must address them proactively now so they can appropriately respond reactively when called upon to do so. Having an impartial, yet compassionate and experienced, LifeCycle lawyer to provide guidance, suggestions, and choices all along the way often helps obtain the best results in the worst situations.
One easy LifeCycle planning tool for parents to immediately consider is to draft a will naming a series of responsible guardians for the person and property of or trustees of any testamentary or inter vivos trusts that have been created or may be created for any minors or disabled adults who may become dependent on them in the future. Another easy LIfeCycle planning tool for such an adult child is to have the adult child designate the same series of responsible people to serve as the adult’s agent as healthcare agent and attorney-in-fact under the durable powers of attorney for both general and healthcare purposes. These documents give the responsible people designated legal access to the disabled person’s health and financial records, which could be extremely important if it becomes necessary to apply for government benefits.
Almost no person responsible for a person suffering disabilities, even supposedly self-inflicted ones such as addictions, no matter how angry and frustrated they are, desire to completely abandon such a ward. Those responsible for disabled people almost always, when actually called up to do so, still want to provide some sort of safety net for a disabled person, even an addicted one.
And there are plenty of trust provisions to use to provide appropriate support to a disabled person and these are more important when addictions and mental diseases come into play.
Establishing a Trust
Rather than abandoning a disabled heir or beneficiary, a common solution usually involves establishing a trust that includes the disabled person as a permissible beneficiary or is only for the disabled person’s benefit during his or her lifetime. The hard decision, however, is who will serve as trustee after the testator or trust grantor dies. Parents are understandably reluctant to place that burden on their other children or on other relatives, but sometimes this is the best thing to do.
If those leaving property for disabled people don’t want to burden individuals, and there are significant assets involved, then choosing a corporate trustee is a simple choice. The other children or trusted friends or advisers can then be given have the right to remove or replace that trustee during the trust’s duration.
If there are not sufficient assets to warrant a corporate trustee, then the testator or grantor must identify friends or trusted advisers who should be paid for their services. The trustee should review the trust document to ensure that he has the right to resign from his office and understand the mechanism for subsequent trustee appointments. The document should provide the trustee with the authority to expend funds for purposes such as counseling, detectives, drug testing, and private security.
Trust Terms and Provisions
After deciding on the line of succession and identifying who will operate the trust, testators/grantors need to focus on the various purposes for which the guardian(s)/trustee(s) may distribute income and/or principal from the trust to the beneficiary and in the presence of which facts and circumstances they will distribute less assets and/or distribute those assets in ways other than giving them directly to the impaired person.
If the beneficiary could possibly require government assistance, then the terms of the trust must anticipate that using standby supplemental needs trust language. The trust document should also describe specific circumstances that will require the trustee to withhold payments if the trustee deems it advisable.
From a holistic standpoint, testators/grantors usually prefer incentivizing a beneficiary become and remain drug-free. Nonetheless, substance abusers usually know ways to make such a determination pretty hard.
The testator/grantor could enhance distributions if the beneficiary finishes high school and/or college in a course of study that allows them to hold down a “real” job full-time job with advancement potential. In addition, the documents could allow bonuses for regularly attending meetings and counseling sessions.
Using both restrictive and affirmative distribution provisions, both under the trustee’s sole control can help protect an impaired or disabled beneficiary’s assets from the troubled child’s creditors and, more importantly, from any of the many “friends” and acquaintances who might take advantage of him if they believe there he has gobs of money in his pocket.
Many parental testators/grantors have a sense of shame or denial that compels them choose not to make their loved ones’ troubles public by putting them in put a document that others can see. Those people may, however, wish to write an annual side letter to the trustee that describes their observations and offers details that they are reluctant to share while living. This letter could be placed in a sealed envelope, kept with and referred to by the original estate planning documents and updated/revised as the facts and circumstances on the ground change. Providing the trustee with detailed understanding of the parents’ concerns, goals, and objectives from the testator’s/grantor’s own voice can be a big comfort to all concerned.
Those dealing with this type of situation should speak with a LifeCycle lawyer to get the understanding help they want, need, and desire.
Call a LifeCycle lawyer at 410-525-3476, that’s 410-LCL-FIRM and get a free LifeCycle consultation today.