How many of you have estate plans? And how many of you worry about how to protect your assets especially when a loved one has a substance use disorder or has the potential to be a problematic beneficiary?

Probably the hardest decision you have to make is how to protect your estate.

As part of the work we do with high wealth clients we often consult with Estate Attorneys, Wealth Managers and Bank Trustees to ensure the inheritance of a potential beneficiary is protected.

Money – More Harm Than Good

A great deal of time and money is spent on funding one’s addiction. Consequently, a large sum of money can do more harm than good. The story of Matthew Mellon illustrates all too well what can happen when an addict inherits a large sum of money.

Mellon was the heir to a large banking dynasty. His father committed suicide just before his high school graduation and by the time Matthew was 25 years old, he inherited 25 Million dollars. Like other family members, Matthew experienced mental health issues and for the next three decades Matthew struggled with addiction. At one time he reported that he spent over $100,00 per month on his 80 day a pill habit. Thanks to his inheritance Matthew could afford his addiction. Tragically, he flew to Cancun purportedly to check into yet another rehab and was found dead in his hotel room.

In our own practice we have seen the deleterious effects of parents overindulging, giving inheritances away.

I have seen repeatedly that handing over money and paying for everything in the name of love leads to disastrous consequences when a loved one is in the throes of a mental health disorder for example mania combined with abusing mind-altering substances legal or otherwise. Young adult men and young adult woman as well those in their 40s have blown their inheritances up in smoke literally with alcohol , marijuana , cocaine, opioids, methamphetamines etc. only to find themselves penniless and friendless.

Protecting At Any Age Your Children’s Inheritance

Watching your children, adult children or even grandchildren struggle with mental health and a substance use disorder or process addiction (shopping, gambling, digital, disordered eating ) is never easy. You may be reluctant to gift them a large sum of money or your grandchildren money for fear they may squander. Such was the case with a beautiful 30 something daughter who in her disease not only spent her inheritance but spent that of her children’s ‘as she dived deeper and deeper into shopping and self-medicating herself. Likewise, an older adult who inherited his family wealth squandered his fortune on booze, hotel rooms, women and gambling.

You can take action – protect your wealth , set healthy boundaries & provide opportunities for treatment and for recovery.

We often work with estate attorneys and with private wealth management firms that can help guide you. If you are reluctant to gift a large inheritance for fear a loved ones’ addiction will gobble it up, or if you fear you are setting your loved one up to recklessly spend here are some tips:

  1. First ask yourself am I helping or hurting my loved one?
  2. Does the money do more harm than good ?
  3. Does my loved one know how to earn their own money? Do take care of themselves?
  4. Are mental health and addiction issues getting in the way of my loved one thriving
  5. Am I being objective and realistic about gifting my assets directly to my loved one? Is that too much of a risk?
  6. Am I being realistic in giving any money right now to my loved one? Am I facilitating or hampering growth while they continue to abuse drugs and alcohol?
  7. Do I need to establish a trust that facilitates growth and protects my assets?
  8. If you plan on developing a trust do so wisely. We work collaboratively with Estate and trust attorneys who are sensitive to alcohol and other drug problems. Choosing a trustee is very important as he/she might be responsible for the allocation of discretionary funds
  9. Stagger Distributions – only disburse small amounts to the beneficiary . Monthly increments are best Giving lump suns in the tens of thousands is risky.
  10. Use the trust to set boundaries and facilitate growth- Using the trust you can create boundaries in lawyers’ terms conditions that must be met before any distribution. For example, you can require the completion of behavioral health rehab program, require random drug testing, the use of sober link etc as long as it is not illegal or unconscionable.

Setting boundaries and conditions with loved ones is always the right road to take. Truth is money is a powerful leverage which can be used to facilitate health and to protect hard-earned assets.

My team and I enjoy collaborating with clients, their trust and estate attorneys and wealth management advisors. Working together we create scaffolding that allows your loved one and your assets to grow.

Please reach out with questions. My team and I are available to consult with families, estate attorneys, bank trustees and wealth advisors . We have a proven expertise on helping loved ones get the correct help they need.