• Tim Lofton

Estate Planning When Your Beneficiary is an Addict ...


Timothy P. Lofton, Managing Partner — Cornerstone Consulting Group | CEO — The Retirement Blueprint™ | Author | Speaker


Published on January 11, 2019


The opioid epidemic has ravaged the country and created unique planning needs for family's


Estate planning should always take into account not only the wealth to be transferred from one generation to another, but the unique issues of each family for whom a plan is being created. Unfortunately, those issues may increasingly include the dilemma of planning for the well-being of a loved one who is struggling with some form of addiction. You want to make sure your loved ones have the means to provide for their needs, but you don't want to give them the means to destroy themselves. Let's talk about the complexities of estate planning when your beneficiary is an addict.

If you've watched the evening news in the last few years, you've heard the words "opioid epidemic." Where once it seemed that drug addiction was something that happened to "other families" or in "bad neighborhoods," it seems most people now, in all walks of life, know someone who has fallen prey to opioid addiction. Many who have studied the phenomenon point to the over-prescription of opioid pain medicine such as OxyContin in the last couple of decades. A patient might see the doctor for an injury, receive a prescription for pain management, and become addicted. When refills of the medicine were no longer available, they might turn to more readily available, and less expensive street drugs: heroin.


Heroin is an extraordinarily difficult drug to quit. Users can become addicted after just one use, and withdrawal is agonizing. Continued use, professionals observe, is not to keep getting high, but simply to survive and avoid the pain of withdrawal. Of course, if you are the loved one of an addict, you probably know all this already. Your concern is how to make sure your family member has food, shelter, and treatment for their addiction, but not money for drugs. Addicts are notoriously creative in their efforts to get a fix; you need to be equally creative in your estate planning in order to protect them.

Protecting an Addict With Trusts and Guardianship


First things first: if you have a loved one with an addiction, you must have an estate plan. Otherwise, they will receive any assets to which they would be entitled upon your death in a lump sum. The inheritance will almost surely go to feed their addiction. This could easily result in an overdose, and if not, will almost surely lead to the addict burning through their inheritance in a short time and becoming destitute.


Simply having a last will and testament is not enough to protect your addicted beneficiary. With a will, they would still receive their distribution as a lump sum, and would have complete control over it. A much better option is to put money in a trust for them. Even this may not be enough. While a trustee can control the timing and amount of distributions, he or she may not be able to protect the addict from using the distributions for heroin or other drugs. Therefore, it may be necessary to ensure that the addicted beneficiary has a guardian or conservator to handle their financial matters.


Guardians represent the interest of those who are legally incompetent. A court may or may not find an addict legally incompetent, or may terminate the guardianship if the protected person, or ward, seems to be doing well. Some legal professionals, therefore, endorse making distributions from a trust contingent upon the beneficiary agreeing, in writing, that a guardian is necessary. In this way, the trustee manages the flow of distributions, and the guardian ensures they are used in a way that benefits the addict. Perhaps even more important, a guardian can manage any assets or funds that the addict has acquired outside of his or her inheritance.

Choosing a Trustee for an Addicted Beneficiary


Making a trust is one thing; choosing a trustee is another. Family trusts are often managed by a family member, but this may not be the best option in the case of an addict. Let's say your older child is responsible and well able to serve as your trustee under ordinary circumstances. In a situation where the beneficiary of the trust is your addicted younger child, serving as a trustee places your older child in an untenable position. If he or she withholds distributions, the younger child will likely be resentful, and may even become angry and threatening. In any case, serious harm to their sibling relationship will be done by the power differential. If the older sibling were to give in to the demands of the addicted younger sibling, and the younger sibling relapsed or overdosed when they got their hands on the money, the elder sibling would be wracked with guilt.


For these reasons, you may wish to consider working with a professional fiduciary who is not a relative. It may be challenging to find someone who is willing to work under these circumstances, but it can be done. An experienced estate planning attorney can help. While you may feel embarrassed to discuss these concerns with your estate planning attorney, rest assured that he or she has likely dealt with many families struggling with this issue. Addiction is a problem that affects not just individuals and families, but all of us. If you have concerns about planning for a loved one with addiction, we invite you to contact our law office for a clear-eyed, but compassionate, consultation.


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