Sunday, August 30, 2015
When a family has an adult child that suffers from addiction or mental disease they will want to ensure that the child's well being is protected after the death of the parents. However, some precautionary steps should be taken to ensure that the child will be taken care of for the longest possible time. First, a trust that is established should have limitations set on the distributions made to the child with the problem. For example, distributions should be premised on need and remain within the discretion of the trustee since a fixed sum might provide more than is needed and help support an addiction.
In addition, a statement by the settlor explaining the circumstances of the child's problems should be provided so that future trustees known the circumstances behind the formation of the trust. Finally, serious consideration should be given to a trust that never distributes in full to the troubled child even if the mental condition or substance abuse remains dormant for years. Both problems may be triggered by unforeseen life events, even after years of successful treatment, which could lead to financial disaster if the corpus of the trust is in the child's hands. Ultimately a trust must be tailored to the reality of each situation with the history and severity of any afflictions being carefully considered when fixing the terms of the support trust.
See Paul Sullivan, For Parents With Troubled Adult Children, Financial Hurdles Abound, New York Times, August 28, 2015.
Special thanks to Matthew Bogin for bringing this article to my attention.