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Addictions and beneficiaries, how to leave them an inheritance

Just because someone in New Jersey has an addiction, that does not mean he or she is not entitled to an inheritance. The question is how to provide for these beneficiaries. One of the safest ways to leave an inheritance to someone who struggles with an addiction is through a trust.

A trust will keep the beneficiary from directly inheriting monies that would likely end up squandered in support of the individual's addiction. The trust can be set up either during the life of the person wanting to leave an inheritance or upon that person's death. Either way, the grantor of the trust can control when and how the beneficiary receives distributions and the assets of the trust.

If the trust is executed and funded during the life of the grantor, the trust could contain a provision allowing others to contribute to the trust for the benefit of the individual with the addiction. Another provision of the trust could require the beneficiary to provide proof of rehabilitation before receiving any distributions. Periodic drug or alcohol testing could be required, and refusing to submit to such testing could bar the beneficiary from receiving any monies from the trust.

Depending on the terms of the trust, distributions from it could be used to pay for rehabilitation or to pay for the support and maintenance of the individual with the addiction. Choosing a trustee for this type of trust is crucial. Whoever is chosen needs to be able to say no to the beneficiary and have that person's best interests at heart. The trustee can be a family member, friend or an unbiased third party.

Providing for family members is one of the main goals of any estate plan. Many in New Jersey would argue that leaving any inheritance to beneficiaries with addictions is not going to achieve that goal. However, when the beneficiary is someone the grantor loves, simply writing off that person just is not possible. Therefore, using a trust fulfills the grantor's wish to leave the beneficiary an inheritance while controlling how it is received.

Source: lakeconews.com, Estate Planning: Beneficiaries with addictions, Abby Ellin, Feb. 14, 2014

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Law Offices of Nancy M. Rice
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