Category Archives: Estate Planning Blog

Do you really need a trust?

trust 91024Although many people equate “estate planning” with simply having a will, there are many advantages to having a trust as the centerpiece of your estate plan. While there are other estate planning tools (such as joint tenancy, transfer on death, and beneficiary designations, to name a few), only a trust provides comprehensive management of your property in the event of your legal incapacity (not being able to make financial decisions for yourself) or death.

One of the primary advantages of a trust is that it provides the ability to bypass the publicity, time, and expense of probate. Probate is the legal process by which a court decides the rightful heirs and distribution of assets of a deceased through the administration of the estate. This process can easily cost tens of thousands of dollars (and sometimes hundreds of thousands) and take a year or longer to resolve. Or course, not all assets are subject to probate. Some exemptions include jointly owned assets with rights of survivorship as well as assets with designated beneficiaries (such as life insurance, annuities, and retirement accounts) and payable upon death or transfer on death accounts. But joint tenancy beneficiary designations don’t provide the ability for someone you trust to manage your property if you’re unable to do so, so they are an incomplete solution. And having a will does not avoid probate.

Of note, if your probate estate is small enough – or it is going to a surviving spouse or domestic partner – you may qualify for a simplified probate process. In California, if your assets are worth $150,000 or more, you will likely not qualify for simplified probate and should strongly consider creating a trust. The cost of probate should also be a factor in your estate planning as creating a trust can save your heirs both time and money, not to mention emotional stress. Moreover, if you own property in another state or country, the probate process will be even more complicated because your family may face multiple probate cases after your death, one in each state where you owned property – even if you have a will. But beyond all of that, probate is a court proceeding and a matter of public record. That means your loved ones will have zero privacy. A trust, on the other hand, creates privacy which helps avoid conflicts, legal challenges, and keeps assets and beneficiaries hidden from potential predators.

A common reason to create a trust is to provide ongoing financial support for a child or another loved one who may not ever be able to manage these assets on their own. Through a special needs trust, you can designate someone to manage the assets and distribute them to your heirs under the terms you provide. Giving an inheritance to an heir directly and all at once may have unanticipated ancillary effects, such as disqualifying them from receiving some form of government benefits, enabling and funding an addiction, or encouraging irresponsible behavior that you don’t find desirable. A trust can also come with conditions that must be met before someone receives the benefit of the gift. Furthermore, if you ever become incapacitated your successor trustee – the person you name in the document to take over after you pass away – can step in and manage the trust’s assets, helping you avoid a guardianship or conservatorship (sometimes called “living” probate). This protection can be essential in an emergency or in the event you succumb to a serious, chronic illness. So unlike a will, a trust can protect against court interference or control while you are alive and after your death.

Remember, trusts are not simply just about avoiding probate. Creating a trust can give you privacy, provide ongoing financial support for loved ones, and protect you and your property in the event you are unable to manage your own assets. Simply put, the creation of a trust puts you in the driver’s seat when it comes to your assets and your wishes as opposed to leaving critical life decisions to strangers, like a judge.

Dedicated to empowering your family, building your wealth, and securing your legacy,

Do you really need a will?

Marc Garlett Estate Planning Attorney

Most Americans do not have a simple will as part of their estate plan. You might believe that a will is only for the rich and famous, and not the average person who has a far smaller net worth. Or, you may think that a will is entirely unnecessary if you have a trust, jointly owned property, or have named beneficiaries on your insurance.

So, to the question of the day – do you really need a will? The short answer is “yes.” In fact, everyone who owns anything – no matter how much or how little – should have a will. This is because a will puts you in charge of directing your wishes and the distribution of assets upon your death. Without a will or other estate plan you forfeit control and state law determine who gets what after your death. Even if you have a trust, jointly owned property, or have named beneficiaries on your insurance, a will is critically important as a “backup” plan.

As a practical matter, the simpler your affairs are (and the fewer assets you own) the less complicated your will and overall estate plan needs to be. But keep in mind, it does not take much to complicate your estate, legally speaking. For example, if you have minor children you must name a guardian for those children in the event of your death – and not only in your will as most traditional estate plans do, that leaves holes which could cause your minor children to be placed into temporary foster care, something which no parent wants.

Many people believe if they have made beneficiary designations on life insurance policies, property deeds or retirement accounts that a will is not necessary at all.  While it is true those particular designations ensure the people you intended receive benefits or inherit those assets, the distribution stops there. If there are other assets you own – such as a car, a china set, or jewelry for examples – or if you would like to give part of your estate to a charitable organization, a will becomes essential.

Furthermore, when a person dies without a will (referred to as intestate), the estate goes into probate. Probate is a judicial process by which the court decides the rightful heirs and distribution of the assets of a deceased person. Going through probate without a will can be both more time consuming and expensive than it is with a will. This is because your will can waive certain probate requirements (like having the executor post a bond or obtain judicial approval to have an estate sale). And again, probate without a will follows the state’s intestacy laws which may likely result in a less-than-perfect split of assets that may not be in line with the deceased’s wishes and often leaves many surviving loved ones unhappy.

Family dynamics also play a part in estate planning, something state intestacy laws do not account for. Many people have blended families. There may have been second or third marriages. Older couples may choose to cohabitate after a death or divorce and never legally get married. You may have to treat your children differently on current accounts due to distance, and without a will, those assets will not be distributed equitably.

It is important to note that a will can also include a no contest clause, reducing the likelihood of potential heirs arguing over its contents.

Creating a will as part of your estate plan is primarily about passing your wealth to your loved ones only after you die since a will only “works” after it’s gone through the probate court process. A will gives you both independence and control of what happens to your assets after your death. Instead of leaving the distribution of your property to California’s intestacy laws, a will can put your wishes down on paper and direct a selected person to carry out your desires exactly as expressed.

But before you decide a will is all you need, read my article next week to learn more about another, more comprehensive strategy — the revocable living trust.

Dedicated to empowering your family, building your wealth, and securing your legacy,

Marc Garlett 91024

Doesn’t Everything Automatically Go To My Spouse And Kids When I Die Anyway?

Probate-court-hearingMany people think that if they die while they are married, the law dictates everything they own goes directly to their spouse or children. They’re thinking of state rules that apply if someone dies without leaving a will. In legal jargon, this is referred to as dying “intestate.” In California’s case, the specifics will vary depending on the type of property held and the number of children you have, if any. However, the general rule is that your spouse will receive a certain share and the rest will be divided among your children.

Now that may seem like, “So far, so good,” right? Your spouse is getting an inheritance and so are the kids. But wait. Here are some examples of how the intestacy laws can – and do – fail many common family situations.

First off, if both parents of minor-aged children die intestate, then the children are almost always left without a legal guardian. Kids won’t automatically go to a godparent, even if that’s what everyone knew the parents had intended. Instead, a court will appoint someone to be the children’s guardian. In such situations, the judge may not make the decision that you, as a parent, would have made. In fact, sometimes the judge appoints the last person you would have wanted to have custody of your children.

It’s important to note that when it comes to asset division, in most cases, state intestacy law presumes that a family consists of a husband, wife, and their natural-born children. But, that’s not the way all families are structured, and things can become legally complicated for those other families quickly.

According to Wealth Management, one analysis counted 50 different types of family structures in American households – 50! Almost 18% of Americans have been remarried, and through adoption and stepfamilies, millions of children are living in blended families. The laws just haven’t kept up, and absurd results often occur for these types of families if they’ve relied on intestacy as their estate plan. For example, stepchildren that you helped raise (but didn’t legally adopt) may end up with no inheritance, while a soon-to-be-ex-spouse may inherit everything from you.

Of course, with proactive estate planning, you can control your assets and essentially eliminate the risk of these crazy results.

Also, keep in mind that intestacy provides no asset protection or preservation benefits. Without any protections in place, an estate’s assets are vulnerable to creditors, lawsuits, and others who may claim entitlement to the property. These claims would take precedence over the statutory requirements for inheritance. In other words, the family won’t be first in line; they’ll be last. They’d only be able to inherit the scraps and leftovers.

The best way to safeguard and pass along what you’ve worked so hard to build is to do your own estate planning rather than leave things to the laws of intestacy. Protect yourself, your family and your assets by talking to a qualified estate planning attorney today.

Dedicated to empowering your family, building your wealth and securing your legacy,

Marc Garlett 91024

What is Portability and How Can It Benefit You and Your Family?

TaxBill-91024The legal concept of “portability” is still relatively new in estate planning, having become available only after 2011. Since then, it’s been both a blessing (for its tax saving benefit) and a curse (because of rules that seem to be constantly shifting). Fortunately, the IRS has recently clarified some important details about portability.

So how can a portability election benefit you and your family? It could help save hundreds of thousands of dollars of estate and gift taxes for your family if you lost your husband or wife within the last few years. Although the exact mechanics of the tax remain complicated, portability makes it much easier for estate planners and tax professionals to save taxes for you and your family. But be aware, portability is not automatic (even under the new regulations), so you must take action to claim it.

Why should I care?
Portability allows a surviving spouse to inherit and use the estate tax exemption from a deceased spouse. If you’re planning isn’t as good as it could have otherwise been, portability can save hundreds of thousands of dollars of estate and gift taxes. And for those who are proactively planning, it also makes crafting your trust or will much more flexible so we can tailor the plan more towards you and your family’s needs, and less to the needs of the IRS.

What’s new with portability?
Under a new IRS revenue procedure, you now have additional time to take advantage of portability. In the past, you had only 15 months after the death of a loved one to file for portability. Now, you now have two years after the passing of a spouse to file for portability, making this option much easier to use than before.

The IRS is also allowing a unique opportunity to file a late portability estate tax return, as long as you meet certain requirements and have it submitted by January 2, 2018.

On the other hand, if you have a substantial estate (over $5.49 million) or are not a US citizen or resident alien then the traditional 15-month rule will continue to apply to you. Also, like any legal or tax issue, it’s always a good idea to obtain qualified assistance as early as possible so you can have the widest possible set of options and the best likely outcome.

What do I need to do now?
If you lost your spouse after 2011 and haven’t yet spoken with an estate planning attorney about your options, now is the time. As the stock market and housing markets have recovered in the last few years, it might be worth a second look to see if a portability election is right for you and your family, even if you previously decided against one. But whatever you decide to do, do it sooner rather than later. January 2, 2018, will be here before you know it.

Dedicated to empowering your family, building your wealth and securing your legacy,

Marc Garlett 91024

Tips for Getting the Most Out of Working with a Law Firm

estate planning 91024When you hire an attorney for estate planning, help administering a loved one’s estate, or any other legal matter, you want to make sure the work gets done as quickly as possible and at the best possible value.  Here are some tips to have the most useful and value-oriented law firm experience.

  • Get to know the lawyer and the law firm You’ll be working with the entire team, so it’s a good idea to know who to reach out to at the office. Paralegals and office assistants are employed by the lawyer to help you. Make sure you are comfortable with each person on the team.
  • The more organized you are, the easier and more efficient the entire process will be. Provide copies of documents as soon as possible when they are requested. This will save the lost time and delays caused when your lawyer must wait for documents before proceeding with your matter.
  • Keep your original documents in a secure place and only bring in copies (unless the original of a particular document is specifically requested). It’s always a good idea, however, to bring the original will to the first meeting when you need to probate a loved one’s estate or administer their trust. Your lawyer will also need an original death certificate in those situations.
  • Be brutally honest with your attorney about your situation. Give the whole story so that the advice you receive (and pay for) is information based on real facts and not a sanitized version of them. Your attorney is not there to judge, but rather to develop solutions to the issues you and your family are facing.
  • Bring a list of goals, concerns, and questions to each meeting so you can cover everything you want to discuss. Feel free to take notes during the meetings and ask your attorney to explain anything you don’t fully understand. Remember, it’s your meeting and your case – your satisfaction and peace of mind should always be a priority, both for your lawyer and for you.
  • Carefully review your fee agreement so you understand how you’ll be charged for services rendered. Ask about fees for phone calls, emails, plan reviews, amendments, or special circumstances. Where possible, avoid hourly billing as this inhibits attorney-client communication, gets in the way of trust, and doesn’t give you a clear picture of the total cost involved to work with the law firm.

In summary, when you hire a law firm, you gain access to a team of attorneys, legal support staff, and administrative professionals who are there to help you achieve your legal goals.  You should feel confident your entire legal team is working together on your behalf to provide the best client experience and the best value for the price. If you’re not sure that’s exactly what you’d be getting from a firm, walk away and find one that gives you that confidence. Trust and estate matters are far too important to settle for anything less.

Dedicated to empowering your family, building your wealth and securing your legacy,

Marc Garlett 91024

5 Ways to Ensure Your Estate Plan Expresses Who You Are

children's inheritanceMost people know estate planning can help you pass along your material wealth, but what about your intangible wealth like your wisdom, values, and life experiences? Studies show that intangible wealth is valued by heirs even more highly than tangible wealth. It is also the wealth that lasts the longest, and the wealth that’s lost forever if care isn’t taken to preserve and pass it along.

Don’t get me wrong. The money’s important. But focusing on the money alone squanders an incredible opportunity during the estate planning process to account for the most important part of your wealth – the human capital you’ve accumulated during your life. With that in mind, here are five things which should be included in every comprehensive estate plan, but often aren’t:

  1. Your rich life story

You may think it’s all been said before, but this is the perfect time to schedule or conduct recording sessions about your own personal life narrative. These recordings will be treasured while you’re still here and long after you’re gone, too. It doesn’t have to be scripted or scary. You can just talk about particularly fond memories, knowing you’re creating a time capsule of sorts that will contain the uniqueness of your personality and the experiences that shaped you into the person you are today. And perhaps most importantly, this gives you the opportunity to share the valuable lessons you’ve learned from those experiences. Your family will be better for it.

  1. How you’d like to be honored

Estate planning involves considering some weighty decisions when it comes to long-term care, powers of attorney, and other situations that may arise should you become mentally incapacitated. Although these are not the sunniest of topics, it’s important to express to your family why you feel most aligned with the choices you’re making. This will ease the processes for your loved ones, should these things ever come to pass. And once you get this part of the conversation out of the way, there are better things to come.

  1. Your family tree

Your family might be curious about more than just your own life story. Take this time to go over your family tree and inform the younger members of your family about the details of your heritage. Getting a who’s who on paper and/or in a digital format is an excellent gift to your heirs, as they’ll be able to reference it and build upon it throughout their own lives.

  1. Significant heirlooms

Every family has heirlooms, and every piece tells a story. It’s common for estate plans to contain physical objects that matter dearly to their owners, such as furniture, garments, jewelry, hobby collections, and memorabilia. Keeping the story of the object alive is more important than transferring its monetary value to the next generation. So rather than just document who gets what, I encourage my clients to take a picture of each heirloom and then write about why that item means so much to them, and why they want to give it to the particular beneficiary they have chosen to receive it.

  1. Your core values

Your estate plan can be customized to include specific language (such as a family mission statement) that carries your values along with it while still leaving room for your beneficiaries to grow and explore on their own terms. Educational, incentive, and charitable trusts are other great tools available to you to express your values through your estate plan.

You know there’s much more to you than the material wealth you’ve accumulated during your life. As such, your estate plan should be about much more than just your financial worth. After all, what’s passed down from generation to generation amounts to something far greater than numbers on paper.

Don’t be afraid to insist that your estate plan includes a balanced representation of who you are and what you believe. And make sure you choose an attorney who isn’t only focused on your financial assets, but who wants to help weave your “whole wealth” into your trust and other critical documents so that the legacy you’ve built will mean something to your family for generations to come.

Dedicated to empowering your family, building your wealth and securing your legacy,

Marc Garlett 91024



Money Isn’t Everything in Estate Planning

How to Pass Your Stories and Values to the Future Generations

estate planning 91024Money may be the most talked asset within a person’s estate, but the riches of experience and wisdom can – and most of the time do – mean even more to family members down the line. Reinforcement of family traditions can be built into your estate plan alongside your wishes regarding your money, property, and belongings. After all, what really makes a family a family is its values and traditions — not the way its finances read on paper.

It’s an excellent idea to hold a family meeting in which you discuss the sorts of things that matter to you most. In addition to the value of sharing your wisdom, you can also make it more likely that your heirs will handle their inheritance wisely if they understand the motives behind your choices. This is just one of the many reasons to have a family discussion about your estate plan and your legacy.

How to tell your story through your estate plan

It’s a delight to get to hear your elders’ stories of their fondest memories and wildest adventures, as well as the struggles they overcame to get the family where it is today. This wisdom provides connection and meaning for a financial inheritance that otherwise might just be viewed as a windfall. So as part of your estate and legacy planning, I encourage you to record your own personal history. Here are a few ideas:

  • Audio files: With the broad range of audio formats available today, you can record in the way that’s easiest for you – anything from a handheld cassette recorder to the Voice Memos app on your iPhone. There are some easy-to-use digitizing services that can compile your stories into audio files to make available to your family and descendants.
  • Video files: The same goes for home movies and other video recordings. Older film formats can be easily digitized and organized along with the videos from your phone. Today’s technology also makes it easier than ever to add narration (and context) to a video, making the story all the richer.
  • Photo albums: Many families have prized photo collections that catalog generations. It’s a tragedy when something like this is lost in a fire or misplaced in a move. Creating a digital database is a gift to your family in more ways than one: Not only will they have access to these memories at any time, they can also feel secure knowing that these family treasures won’t be lost anytime soon and that multiple copies can be made for the different branches of the family.
  • Letters and other writings: If you enjoy writing, you can also include handwritten or typed letters or stories to your family members in your legacy plan to be received and read at the time of your choosing. You can also include past letters and postcards that might be tucked away in the attic. It’s not only a personal delight to relive the memories of the past by reviewing your old letters and postcards, but it’s also a great way for younger generations to get to know and sincerely appreciate your life journey and legacy.

Your financial assets are important. Protecting and planning to pass those assets is a key part of any estate plan. But focusing only on those types of assets leaves a hole for your loved ones and does a disservice to the biggest part of your wealth. Your estate plan becomes exponentially more valuable when it incorporates and showcases your memories, history, and values in a long-lasting way that truly benefits your heirs. And that is really what estate planning should be all about.

Dedicated to empowering your family, building your wealth and securing your legacy,

Marc Garlett 91024



How to Protect Your Child’s Inheritance from a Future Untrustworthy Spouse

Kids Protection 91024A big reason parents develop an estate plan is to provide for their children financially. It’s not the only reason. And if you’ve heard me talk about “legacy” you know I don’t think it’s the most important reason. But it is important! Most of us want to make sure hard-earned assets, family heirlooms, or closely held businesses stay within the family. Within that context I’m often asked how to protect children’s inheritance from a future spouse in the event of untrustworthiness or divorce. It’s a thoughtful and significant question. And thankfully, there are many ways to structure your child’s inheritance to help ensure it will remain in the family for future generations. Let’s look at a few of the options.

Create a Trust
A trust involves three parties: (1) the person creating the trust (you might see this written as the “settlor,” “trustor,” or “grantor.”), (2) the person or entity holding the trust property for the benefit of the beneficiary, known as the “trustee”, and (3) the person(s) that benefit from the creation of the trust, known as the “beneficiaries.” Choosing a trustee who is independent can be a great way to eliminate any arguments that one beneficiary has more control to receive assets than what is actually provided in the trust documents than other beneficiaries, a helpful situation when you have an untrustworthy son- or daughter-in-law.

A lifetime trust is a type of trust that – as is evident from its name – lasts for the lifetime of the beneficiary and passes to the next generation of beneficiaries upon his or her death. It is commonly referred to as a “generation-skipping trust” and can also dramatically reduce or eliminate estate taxes. Assets in a lifetime trust are protected against commingling in the marriage and, therefore, cannot be pursued by a spouse. When assets are held by a trust your children – and, by extension, their spouses – cannot access these assets. Therefore, even in the event of a divorce, an ex-spouse cannot pursue them.

Use Prenuptial Agreements
In addition to creating a trust to protect your children’s inheritance from an untrustworthy spouse, your children can use a prenuptial agreement as a tool for asset protection. A prenuptial agreement is a document that details an agreement between your child and his or her spouse about the characterization of assets owned at the time of marriage and those earned after marriage. This legal document also provides the couple to agree upon the division of assets in the event there is a divorce. This may be an uncomfortable suggestion to bring up with your children, but it can be an huge benefit in the event of a later divorce.

Other Planning Ideas
Beyond the actual legal tools, it is important for you to let your wishes be known to the family. One way to do this is to have a family discussion about your estate plan, explaining your intentions and reasons as to why it is set up in this manner. Additionally, using clear language in your estate planning documents that specify the intent or purpose in leaving the inheritance to benefit descendants – and not their spouses – can further solidify your wishes are followed. Finally, choosing a trustee that is independent will keep control over the funds in the trustee’s hands and not your child’s untrustworthy spouse. This will also allow you to manage or overcome any conflict that you may not have been expecting.

Bottom Line: Be Proactive
If you wish to make sure your descendants receive a portion of your estate, discuss these intentions with your children and devise an estate plan that will guarantee this desire is fulfilled after your passing. Whether you have no estate plan, or have one that’s more than a few years old, sit down with a trusted estate planning professional to create or update this plan to suit your goals.

Dedicated to empowering your family, building your wealth and securing your legacy,

Marc Garlett 91024

The Difference between Lifetime and Deathtime Planning… and Why a Comprehensive Estate Plan Must Include Both

estate planning 91024According to a March 2017 survey by, six out of ten Americans have no will or any other kind of estate planning in place. One in three said they didn’t need an estate plan because they didn’t have any assets to give someone when they’d died. So it’s all too clear that most of us think “estate planning” is a euphemism for “deathtime” planning.

However, comprehensive estate planning isn’t just about death. It’s lifetime planning, too. It’s about ensuring that your medical and financial decisions can always be made by someone you trust. Lifetime planning helps address potential tax liabilities, find benefit programs you may eligible for, and protect your family from costly guardianship or conservatorship court proceedings. And it allows you to choose who looks after and protects your affairs, if and when you’re not able to.

Lifetime Planning Tools

A good estate plan uses an array of lifetime planning tools, custom-tailored to an individual family’s needs. Here are a couple of the most common (and necessary) lifetime planning tools you should have in place.

Revocable living trusts

When people hear the word “trust,” they may envision “trust fund babies” or think that trusts are something only for the super-rich.

However, a trust is simply a legal tool that can help almost anyone with property – not just the wealthy. In a trust, assets you own are re-titled and transferred into the trust. When this happens, technically, you no longer own your real estate, stocks, bonds and similar properties. Instead, the trust owns them all. But you still control everything in the trust: You can still buy and sell these assets as if they were still in your name. In fact, revocable living trusts don’t even change your income taxes while you’re alive. You continue to file your tax returns as you always have. And as the creator of the trust, you can continue to make changes to the trust throughout your life as long you’re competent to do so.

Once you die, your chosen successor trustee distributes assets to the trust beneficiaries (the people, such as your spouse, children, a church, or other charity, you named to inherit from you). In many respects, the role of the trustee is similar to that of the executor of a will. But, a trustee of a properly funded trust doesn’t have to go through the public and expensive probate process. In fact, trusts are private, unlike wills, providing valuable privacy to your family.

Durable power of attorney

With a durable power of attorney, you legally designated an agent to act on your behalf, in the ways specified in the document. You can make the durable power of attorney broad in scope or quite limited, and it can become active as soon as you sign it, or only spring into action if you become incapacitated. Through the power of attorney, your agent may sign checks for you, enter contracts on your behalf, or even buy and sell your assets. But you control what they can and can’t do by what you authorize within the document.

Health Care Power of Attorney

In an instant, an accident can change a healthy, vigorous person into someone who can’t make her own healthcare decisions. Others face a long decline in mental capacity because of a disease like Alzheimer’s. But in either case, it is important to pre-empower those you trust to make medical decisions for you. This document is similar to the durable power of attorney, but authorizes an agent to make medical decisions for you if and when you no longer have the capacity to do so yourself. It should be incorporated with a health care directive to communicate your desired treatment and end-of-life care.

A Holistic Approach

Lifetime planning is a comprehensive approach to estate planning. And while it addresses needs of the living, comprehensive planning may also improve the after-death part of your plan as well, because it can reduce family conflict and preserve assets against court control or interference in the event of incapacity.

Dedicated to empowering your family, building your wealth and securing your legacy,

Marc Garlett 91024

How Your Trust Can Help a Loved One Who Struggles with Addiction

addiction 91024Substance addiction is by no means rare, impacting as many as one in seven Americans. Because of its prevalence, navigating a loved one’s addiction is a relatively common topic in everyday life. But you should also consider it when working on your estate planning. Whether the addiction is alcoholism, drug abuse, or behavioral like gambling, we all want our loved ones to experience a successful recovery.  And a properly created estate plan can help achieve just that.

The idea that money from a trust could end up fueling addictive behaviors can be particularly troubling. Luckily, it’s possible to frame your estate planning efforts in such a way that you’ll ensure your wealth has only a positive impact on your loved one during their difficult moments.

Funding for treatment

One of the ways your trust can have a positive influence on your loved one’s life is by helping fund their addiction treatment. If a loved one is already struggling with addiction issues, you can explicitly designate your trust funds for use in his or her voluntary recovery efforts. In extreme cases where an intervention of some sort is required to keep the family member safe, you can provide your trustee with guidance to help other family members with the beneficiary’s best interest by encouraging involuntary treatment until the problem is stabilized and the loved one begins recovery.

Incentive trusts

Incentive clauses can be included in your estate planning to help improve the behavior of the person in question. For example, the loved one who has an addiction can be required to maintain steady employment or voluntarily seek treatment in order to obtain additional benefits of the trust (such as money for a vacation or new car). Although it might seem controlling, this type of incentive structure can also help with treatment and recovery by giving a loved one something to work towards. This approach is probably best paired with funding for treatment (discussed above), so there are resources to help with treatment and then benefits that can help to motivate a recovery.

Lifetime discretionary trusts

Giving your heirs their inheritance as a lump sum could end up enabling addiction or make successful treatment more difficult. Luckily, there’s a better way.  Lifetime discretionary trusts provide structure for an heir’s inheritance. If someone in your life does (or might eventually) struggle with addiction, you can rest easy knowing the inheritance you leave can’t be accessed early or make harmful addiction problem even worse.

Of course, you want to balance this lifetime protection of the money with the ability of your loved one to actually obtain money from the trust. That’s where the critical consideration of who to appoint as a trustee comes in. Your trustee will have the discretion to give money directly to your beneficiary or pay on your loved one’s behalf (such as a payment directly to an inpatient treatment center or payment of an insurance premium). When dealing with addiction, your trustee will need to have a firm grasp of what appropriate usage of the trust’s funds looks like. Appointing a trustee is always an important task, but it’s made even more significant when that person will be responsible for keeping potentially harmful sums of money out of the addicted person’s hands.

Navigating a loved one’s addiction is more than enough stress already without having to worry about further enablement through assets contained in your trust. But you can take that extra burden off your shoulders by building an estate plan that positively impacts your loved one and doesn’t contribute to the problem at hand. That way, you can go back to focusing your efforts on the solution. Call us today if you’re in this situation and would like some help.

Dedicated to empowering your family, growing your wealth and securing your legacy,

Marc Garlett 91024