For parents of adult children who suffer from mental illness or addiction to drugs or alcohol, the planning challenges combined with the strong emotions involved can seem overwhelming. The last thing you want to do is provide your loved one with assets that enable addiction or, in the case of mental illness, violate limitations on the number of assets a person can have and still qualify for government benefits.
A major problem faced by parents of troubled adult children is admitting that their son or daughter is not simply “going through a phase” and will “come around” over time. Another is trying to picture the child’s future. When children suffer from addiction or a mental illness such as schizophrenia, it is very difficult to make any type of prediction about what they will need financially or the type and level of care that will be required down the road. Periods of lucidity can end suddenly with a breakdown. As for addition, relapse is always possible, even after years of living drug-free.
Special Purpose Trust
One estate planning option is a special purpose trust, also known as a special treatment trust. This trust can be used to provide adult children with the financial assistance they need to enjoy a semblance of the life they might have had without mental illness or addiction.
Another important consideration is who will have the authority to make distributions from the trust to the troubled adult child. While parents, family members, or corporate trustees may be able to handle the administration of the trust, a distribution adviser such as a social worker with specialized training can assess the child’s condition and offer valuable counsel.
If you are concerned about planning for a troubled loved one, we invite you to contact us for a personal meeting to discuss your particular concerns and goals.