The people we care about are not always perfect. It can be painful to watch a loved one engage in self-destructive behavior. Leaving funds to a beneficiary with an alcohol, gambling, or substance abuse problem, has the potential to cause that beneficiary more harm than good. A frank, open conversation with an estate planning attorney is the best starting point to address this type of issue.
A trust can be a powerful tool in addressing beneficiary issues because it enable you to direct the flow of distributions to beneficiaries. Giving a trustee the discretion to make an otherwise authorized distribution is a good starting point. Structuring the trust to reflect concerns regarding alcohol or substance abuse, if done correctly, has the potential to protect your bequest and the beneficiary.
A key component to trustee discretion, is making sure your successor stays current on the status of a troubled beneficiary. If there is a known problem, the trustee can obtain a HIPAA consent form from the beneficiary to gain information on any health evaluations or rehabilitation efforts. Requesting this type of disclosure will also indicate whether the beneficiary will be combative or cooperative moving forward.
If a beneficiary demonstrates signs of addiction, prompt and proper action by a trustee can make all the difference. The choice of trustee in this situation is critical. The ideal candidate will be able to make difficult decisions and act in the best interest of the beneficiary. Working through these types of estate planning issues, and addressing all related questions, should be accomplished with an estate planning and administration attorney. As always, the attorneys at MH are available to discuss your concerns.
Contributed by MH Phoenix Estate Planning Attorney, Andrea Claus.
Why Choose Morris Hall:
You have a number of options when it comes to estate planning, so why pick Morris Hall? First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters. Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others – which means that we can better protect your assets and your loved ones. We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in New Mexico that has been granted membership. If you have assets and loved ones that you want to protect, you are in good hands with MH. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.