A Pennsylvania estate planning attorney got a question four years ago that he hadn’t anticipated. They asked what they could do with a child who had a substance abuse disorder.
The Pittsburgh Tribune-Review’s recent article, “Pittsburgh attorney sets up 'opioid trusts' for beneficiaries with addiction issues,” reports that the American Family Survey, commissioned annually by the Deseret News and conducted by YouGov, found that 12% of families in 2017 said they had an opioid-addicted relative. Opioid overdoses nationally are the leading cause of death for people younger than 50, according to the Centers for Disease Control and Prevention in 2017.
The opioid epidemic has led some attorneys to get creative and establish what are being called “opioid trusts.” Some folks don’t want to leave anything outright to a child with a dependency issue, because of what can happen to the money.
Estate-planning attorneys are regularly asked to create trusts for beneficiaries with intellectual disabilities, who are entitled to public-health benefits through Social Security or Medicaid and receive supplemental trust payments that add to those. However, the so-called opioid trust is somewhat different.
Parents may be paying for the child’s basic support needs. However, is that money going to buy drugs? If so, have they cut him or her off completely?
With an opioid trust, there’s no support to the child. This sounds cruel, but medical experts say it’s to get the child to embrace recovery. The goal is to get him into recovery and, eventually he might be able to stay clean long-term. An opioid trust is created to pay recovery-related expenses, such as rehabilitation bills, therapist payments and treatment bills. Optimally, the child gets a job. It’s this “tough love” that’s the only way this type of trust will work.
The money is never distributed directly to the beneficiary, nor is any property that could be easily converted into drug money. However, you can give them other, in-kind benefits, like the use of a car—but not the title to the car.
Another challenge in these scenarios, is selecting a trustee. One option is Pittsburgh-based Achieva. Founded in 1951, it has grown to include a number of services and organizations, including The Arc of Westmoreland. The Achieva Family Trust does standard trust disbursements. However, they also have a team of social workers and counselors who are available to work with trust beneficiaries.
We have been creating trusts like this for years. We don't call them Opiod Trusts but we assist the parents in leaving their assets in trust to their children with another person appointed to manage the assets (i.e. a Trustee) and determine when distributions can be made to the beneficiary. To give direction to the Trustee, the parents will often put in language such as a drug test periodically or no funds other than for health care or rehabilitation. Also, the Trustee is encouraged to make distributions for the benefit of the beneficiary, such as paying the rent directly to the landlord, instead of giving the beneficiary the assets in hopes he or she will pay the rent.
Contact an experienced estate planning attorney and ask about this unique estate planning tool.
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Reference: Pittsburgh Tribune-Review (August 21, 2018) “Pittsburgh attorney sets up 'opioid trusts' for beneficiaries with addiction issues”