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Home >> Protecting the Inheritance You Pass Down

Protecting the Inheritance You Pass Down

October 15, 2020 by Robert Kulas.

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For most parents, deciding how to distribute their estate is typically rather straightforward. Usually, estate assets are divided amongst the children and gifted to them outright if they are adults. What happens though, if one of your adult children struggles with addiction? A Port St. Lucie trust attorney at Kulas & Crawford discusses how to protect the inheritance you pass down.

Addictions Are Expensive

Drug addiction is a problem that knows no boundaries, striking the wealthy and the poor, the educated and uneducated, the famous and not so famous in equal proportions. If you have a child who is struggling with a drug or alcohol addiction, you are hardly alone. The Federal Reserve’s Report on the Well-Being of American Households in 2017 reveals that one in five Americans knows someone who is addicted to opioids or prescription painkillers – and that accounts for only one class of addiction. One of the realities of addiction is that addictions are typically not cheap. In fact, addicts often spend a considerable amount of their time trying to fund their addiction. Consequently, inheriting a large sum of money can do more harm than good for someone struggling with addiction. The story of banking heir Matthew Mellon illustrates all too well what can happen when an addict is handed a large sum of money.

The Story of Matthew Mellon

Mellon was an heir to one of the country’s biggest banking dynasties. His father committed suicide just before his high school graduation, which led to Matthew inheriting a total of $25 million from several trusts when he turned 21 years old. By then, Matthew had already been diagnosed with bipolar disorder and been through several rehab programs. For the next three decades, Matthew struggled with addiction, most recently to the prescription drug Oxycontin. At one point, Mellon said he was taking as many as 80 pills a day at a cost of $100,000 per month. Thanks to his inheritance, however, he could afford such an expensive addiction. Sadly,  Mellon flew to Cancun, Mexico, purportedly to check into yet another rehab facility, but was found dead in his hotel room.

Protecting Your Child’s Inheritance

Watching your child struggle with an addiction is never easy. You still love them though, and disinheriting them doesn’t sit well with you. Deciding how to handle that person within your estate plan is even more difficult. You may be reluctant to just gift them a large inheritance for fear it will be squandered on the addiction. At the same time, setting them up to squander their entire inheritance doesn’t seem like a good idea. What can you do? The he following tips may help:

  • Be realistic an objective – step back and look at the situation realistically. Is gifting assets directly to the beneficiary in question too much of a risk? If the answer is “yes” then do not do it.
  • Think about using a trust to protect the inheritance –pass down your child’s inheritance using a trust instead of handing down a large sum of money. A trust can protect the assets and even protect your child from his/her own self-destructive behavior.
  • Choose your Trustee wisely – one of the biggest benefits of using a trust to pass down the inheritance is that a Trustee administers the trust. Choose your Trustee wisely as he/she may be responsible for discretionary decisions, such as whether to disburse trust assets to the beneficiary in question.
  • Stagger distributions – only disburse small amounts at a time to the beneficiary. This could be a monthly “maintenance” amount or smaller amounts every few years.
  • Use the trust terms to create conditions – here is where the benefits of a trust can really be seen. Using the trust terms you can create all kinds of conditions, if you choose to do so. You could require completion of a rehab program, monthly drug testing, or any other condition you wish to include as long as it is not something illegal or unconscionable.

Contact a Port St. Lucie Trust Attorney

To learn more, please download our FREE solid estate plan checklist. If you have additional questions or concerns about the best way to protect the inheritance of a child with an addiction, please contact an experienced Port St. Lucie trust attorney at Kulas & Crawford by calling (772) 398-0720 to schedule a consultation.

Filed Under: inheritance planning

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I have known Robert Kulas for 20 years since I was co-executor for friends who had Mr. Kulas prepare a Trust for them. When I felt I needed a trust also, I came to him. I have always been completed satisfied with his work and that of his charming, competent staff.

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Mr. Kulas and his staff have been extremely helpful & knowledgeable for the over 3 years we have been associated. They are easy to talk to and explain everything without feeling rushed. Very competent and professional.

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I have worked with Mr. Kulas & staff before. And they are very professional. I am very satisfied with Mr. Kulas and his staff and give them the highest satisfaction and 5 star rating.

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Robert Kulas and staff made making a will an easy to understand process. They were very knowledgeable and attentive to my wishes. All my documents were provided in an organized binder which will be a great asset to my family. I would definitely recommend them.

~Krissy L
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August 25, 2020
    

Everyone treated us extremely well.  Robert explained how a trust works and the benefits of having one.  We decided to move forward and complete the process.  He was very kind and knowledgeable.  Julie was also very helpful and very patient with our questions.  We felt very comfortable with this firm handling our affairs.  We would highly recommend this firm to our friends and family.

~Janice M
Client Review
August 25, 2020
    

"Everyone treated us extremely well.  Robert explained how a trust works and the benefits of having one.  We decided to move forward and complete the process.  He was very kind and knowledgeable.  Julie was also very helpful and very patient with our questions.  We felt very comfortable with this firm handling our affairs.  We would highly recommend this firm to our friends and family."

Janice M
Client Review
August 25, 2020
    

Robert Kulas and staff made making a will an easy to understand process. They were very knowledgeable and attentive to my wishes. All my documents were provided in an organized binder which will be a great asset to my family. I would definitely recommend them.

Krissy L.
Client Review
August 25, 2020
    

I have worked with Mr. Kulas & staff before. And they are very professional. I am very satisfied with Mr. Kulas and his staff and give them the highest satisfaction and 5 star rating.

Leo C.
Client Review
August 25, 2020
    

Mr. Kulas and his staff have been extremely helpful & knowledgeable for the over 3 years we have been associated. They are easy to talk to and explain everything without feeling rushed. Very competent and professional.

Mildred W.
Client Review
August 25, 2020
    

I have known Robert Kulas for 20 years since I was co-executor for friends who had Mr. Kulas prepare a Trust for them. When I felt I needed a trust also, I came to him. I have always been completed satisfied with his work and that of his charming, competent staff.

Joan C.
Client Review
August 25, 2020
    

We began our estate plan process in 2004 (12 years ago) and have been pleased with the periodic reviews we have gone through and when changes have been needed the firm has been thorough and professional in making those changes.

L.G.K.
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