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Creating an estate plan to help a child with drug addiction

On Behalf of | Dec 28, 2018 | Uncategorized |

Sadly, many Americans suffer from drug addiction. In 2014, 21.5 million Americans over the age of 12 had suffered from a drug addiction problem to some capacity. 

When you create an estate plan, you naturally want to leave whatever money you have to your loved ones. However, you may be wary of leaving behind money to a child you know has a problem with drugs. Receiving such a large amount of money all at once can lead to problems if the child does not know how to be responsible. You do not want to cause more harm than good with the inheritance. There are steps you can take to protect your children from making poor decisions. 

Do not leave behind a lump sum

Many parents leave their children lump sums of money, so kids receive thousands of dollars all at once. This may be fine in many circumstances, especially when the parents trust their children fully. However, when one child has drug problems, this may not be the best course of action to take. Instead, parents can leave behind a trickle of money. They can break up the money, so the child with addiction issues receives smaller amounts of money throughout the years. This can help prevent the son or daughter from wasting all the money at once and endangering him or herself. 

Create incentives

In addition to breaking up the lump sum, you may also want to consider establishing incentives. This means the child only receives money if he or she meets certain milestones throughout the years. The trustee of your account keeps tabs on the individual and dispenses the money when appropriate. For example, you can state in the trust you want the child in question to go through a drug addiction program and submit to regular drug testing. In the event the child fails these requirements, then he or she does not get anything out of the trust.