John Collins, Director of Investment Advisory & Principal of Aspiriant, recently published an article titled, “Addiction and Financial Management”, in which he discusses the difficult situation that a wealth advisor sometimes finds himself or herself in when a client has an addiction problem. He references an instance in his career where his client’s addiction became a financial burden, not just for the addicted individual, but for the entire family. The impact of addiction is never limited to one area of life or even just one person’s life. It tears families apart emotionally, it diminishes career aspirations, and it drains financial assets.
John points out that financial advisors can actually have a very impactful role in helping to mitigate the devastation often caused by addiction. Fincancial strain is often both a trigger for addiction and a result of it. With a little planning, you and your advisor can create a strategy to deal with an unexpected event, even a serious addiction.
Here are some ways you and your financial advisor can work together:
Hold assets in trusts — First of all, consider trusts for children and your excess capital. Keeping your money in a trust offers automatic protections. Boilerplate trust documents include “spendthrift” provisions that allow trustees to adjust or control spending during a mental health crisis.
Enable your advisor to intervene — You may want to consider additional language in trust documents and agreements with your advisory firm, such as a power of attorney, that allows the firm to speak up if they see something odd and help other family members take control in the event of a health crisis. Also, some states allow for additional financial controls with estate plans or trusts. Florida, for example, is one of the few states where if someone is incapacitated due to substance abuse and mental health disorders, a conservatorship via the Marchman Act may be initiated. It is best to seek legal counsel with someone who is knowledgeable about individual state rules regarding temporary incapacity or conservatorships.
Arrange for treatment — An advisor may also be able to help research treatment facilities, make sure contracts are reviewed by a lawyer, and financially arrange for admission. Let your advisor handle the financial details of the treatment.
Find other resources — Your advisor should be able to recommend suitable legal help and insurance policies to further protect your assets and financial responsibilities.
You can read the full article here: https://aspiriant.com/fathom/wealth-planning/addiction-financial-management/