Close up of addicts using drug pills

How to Create a Trust for Children with Substance Abuse Problems 

Law Office of Robert L. Firth  Aug. 18, 2023

Similar to a last will and testament, a trust can designate beneficiaries to receive your assets when you’re gone, but it has several additional benefits. For one, a trust avoids probate court proceedings -- it is private -- by eliminating public hearings or public records. Also, trusts have the flexibility of safeguarding assets when you do not feel confident the child will make wise money decisions. You can have the trustee overseeing your trust monitor and determine what is given out to your heir or heirs if they can’t be trusted. 

This is especially important if one of your heirs has a drug problem. If they get a load of cash up front, it could be gone quickly. While, of course, it’s essential to help that child get the rehabilitative help they need, it’s also important to protect them against themselves and their darker instincts.

If you’re looking to set up a trust for a loved one who may abuse their inheritance because of an addiction or bad habits with money in Cathedral City, California, contact the Law Office of Robert L. Firth. With our 35 years of experience, we have created more than 1,500 trust agreements. We will help you establish a trust that will help shield your beneficiary from abusing what they inherit. 

The Law Office of Robert L. Firth also proudly serves clients in Palm Springs, Palm Desert, Desert Hot Springs, Rancho Mirage, and throughout the Coachella Valley. 

Possible Inheritance Concerns for a Child With a Drug Problem

Let’s assume you leave assets to a child with a drug problem through a last will and testament. The child receives cash and perhaps other items of value, such as furniture, paintings, etc. The cash could quickly disappear feeding their drug habit.   

It is possible they sell or trade tangible assets to further their addiction. Worse, the beneficiary could run up debts, and the debtors – drug dealers perhaps – could have a claim on their inheritance.  

In a worst-case scenario, a sudden windfall could tempt the child to become reckless and overdose on the drugs they can suddenly purchase. An overdose, needless to say, can have serious health implications, even leading to death.  

This is where setting up a trust is so vital. The trustee can be given instructions only to make limited outlays at periodic intervals or make the beneficiary bring bills, receipts, or other sources of proof of where the money is going to be used. 

Spendthrift Trusts and How They Work

A spendthrift trust is like any other trust -- except in one regard -- it includes a spendthrift provision that limits the beneficiary’s access to the assets. This provision gives the grantor – the person creating the trust – the power to dictate how the assets will be distributed to the beneficiary. For instance, the grantor can stipulate that only a certain amount be distributed monthly or as mentioned above, on an as-needed basis.  

When creating a spendthrift trust, you, as the trustor, must also consider whether to empower the trustee you name to withhold payments if, for instance, it’s clear the money is only going toward drugs. And this brings up the question of whom the grantor should appoint as the trustee.   

Obviously, you can’t appoint a drug-addicted son or daughter to be the trustee. You have to choose a family member, friend, or associate whom you can trust to carry out your dictates. It might even be best to name a professional fiduciary.  

Another benefit of setting up a spendthrift trust is that any debts run up by your child will be their responsibility. The assets in the trust cannot be touched by creditors since they belong to the trust and not the person who ran up the debts. 

We’re Here to Provide Compassionate Legal Help

If you’re near Coachella Valley, California, and wish to discuss how to set up a spendthrift trust, we will listen to your concerns and needs, and walk you through the process. We will create the legal trust document to reflect your decisions and provide you with peace of mind. Reach out to us at the Law Office of Robert L. Firth.