For most people, inheritance planning focuses on the distribution of estate assets after death. As such, when you create your plan you will need to decide which assets to gift to which beneficiary. What do you do, however, if you have a beneficiary, who has a drug or alcohol addiction? Is gifting them assets from your estate akin to throwing those assets down the proverbial drain? If the beneficiary in question is your child, completely disinheriting your child may not be an option; however, neither is squandering the assets you spent a lifetime working to acquire an option. The Lincolnshire inheritance planning attorneys at Hedeker Law, Ltd. discuss tools and strategies for handling a beneficiary with a drug problem in your estate plan.
The Story of Matthew Mellon – How and Inheritance Can Fuel an Addiction
Drug addiction is a problem that knows no boundaries, striking the wealthy and the poor, the educated and uneducated, the famous and not so famous in equal proportions. If you have a loved one in your family who is struggling with a drug or alcohol addiction, you are hardly alone. The Federal Reserve’s Report on the Well-Being of American Households in 2017 reveals that one in five Americans knows someone who is addicted to opioids or prescription painkillers – and that accounts for only one class of addiction. For those who struggle with an addiction, accessing or finding the money to fund that addiction is a constant concern. The reality is that drugs are expensive. For an addict, inheriting a large sum of money can do more harm than good. Take, for example, the story of banking heir Matthew Mellon.
Mellon was an heir to one of the country’s biggest banking dynasties. His father committed suicide just before his high school graduation, which led to Matthew inheriting a total of $25 million from several trusts at the young age of 21 years old. By then, Matthew had already been diagnosed with bipolar disorder and been through several rehab programs. For the next three decades, Matthew struggled with addiction, most recently to the prescription drug Oxycontin. At one point, Mellon said he was taking as many as 80 pills a day at a cost of $100,000 per month. Thanks to his inheritance, however, he could afford such an expensive addiction. In April of this year, Mellon reportedly flew to Cancun, Mexico with the intent to check into yet another rehab facility; however, he was found dead in his hotel room before he could fulfill that intention.
Did Mellon’s huge inheritance, received at such a young age and not long after losing his father, contribute to his drug problem? Was there a better way to handle his inheritance?
Tools and Strategies for Handling a Beneficiary with an Addiction
Deciding how to distribute your estate assets can be difficult enough without adding in concerns about how those assets will be used after they are gifted. If you have a beneficiary with an addiction, however, you would be foolish to ignore the very real possibility that any inheritance left to that beneficiary may be squandered on the addiction. At the same time, if the beneficiary is a child, spouse, or other close loved one, you probably don’t want to completely disinherit them. In fact, leaving them nothing could trigger a Will contest leading to costly litigation during the probate of your estate. Fortunately, with careful inheritance planning, you may be able to avoid both of these unwanted outcomes.
A Trust May Be the Solution
Assets gifted in your Last Will and Testament become the property of the beneficiary, to do with as he/she sees fit, immediately after being distributed. Moreover, anything you leave to a beneficiary in your Will is distributed in a lump sum. For a beneficiary with an addiction that means receiving a valuable inheritance all at once with no oversight. A trust, on the other hand, offers a certain amount of control over the assets you gift to beneficiaries. Using the trust terms, you decide when assets are distributed and in what amount. This allows for staggered distributions. Even better is the ability to control how those assets can be used. For example, you could direct a monthly distribution paid out directly to a landlord or you could dictate that assets are only to be distributed for medical and/or rehab expenses. Finally, you have the ability to appoint a Trustee who will oversee the administration of the trust to ensure that your wishes are honored and your terms followed.
Contact Lincolnshire Inheritance Planning Attorneys
Please join us for a FREE upcoming seminar. If you have questions or concerns regarding the inheritance planning, contact the experienced inheritance planning attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.
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