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Revocable Living Trusts and Your Problem Child

Maximizing a Revocable Living Trust for Your Problem Child

How do I handle my child who is a mess?

This is a common question for parents who have an adult child with a mental illness or an addiction. One of the most heartbreaking scenarios in my office is when a couple come in and have to make decisions on how to handle their adult child who has a mental illness or is an addict.

Let’s step into Jack and Christina’s shoes for a few moments. Jack and Christina got married 25 years ago. They have 3 sons, John, (24 years old), Patrick (23 years old) and Shawn, (21 years old). Patrick just finished college and got a great starting job with a financial institution. Shawn is a college junior, hoping to go to law school.

Sadly, John is a different story. John started using heroin in high school. As soon as Jack and Christina became aware of his addiction, they sought out rehab, counseling and any treatment options they could get and afford. Thousands of dollars were spent on programs for John. This upset Patrick and Shawn a bit since when they applied for colleges, Jack and Christina sadly had to tell them to take out student loans since so much of the college savings had gone to try to help John. John would do better for a while, then fall off the wagon again. While getting treatment, several counselors determined that John is bipolar and self-medicating.

Jack and Christina make good money. They very much want to do right by their children. There are so many moving parts in this scenario:

  1. Patrick and Shawn are angry at John for putting them behind the eight ball with substantial student loans. They do not think it is fair that John has received so much and in their estimation, they have received so little. It upsets Jack and Christina that there is this rift between their 2 sons and their eldest son.
  2.  Jack and Christina want John to get his act together, more than anything else in the world. In their minds they think, if they just put X amount more toward treatment, etc., it will make the difference.
  3. Jack and Christina wonder if they should leave less money to John than to Patrick and Shawn to make up for the college tuition situation or should their Revocable Living Trust include LEAVING more money to John since he needs more to get his act together? Or should they leave the same amount to each son as that would appear to be the fairest resolution? What should dictate the distributions—fairness? equality? need?

There are no easy answers for Jack and Christina. I find most of my clients will err on the side of giving equal amounts to John, Patrick and Shawn. However, they may put something like this into their documents:

“We leave everything equally to John, Patrick and Shawn. Patrick and Shawn can receive their inheritances outright, which means that no one needs to babysit their money until they get older. However, John’s inheritance will be held in trust, i.e. in an account, for him. Steve, Jack’s brother, will take care of that account for John. Money in John’s account can be used to pay for necessities, like rent, food, medical and all treatment costs. If John has gotten his act together within ten years after Jack and Christina die, then John can get his inheritance outright. This is how John will prove he has his act together:

He will prove to Steve that he can maintain steady employment, maintain a steady residence and take care of the basic necessities of daily life. Steve can ask John to produce documentation proving he has steady employment, a steady residence and takes care of the basic necessities of daily life.

Steve can ask John to submit to periodic and/or random drug tests.

If John fails to comply with Steve’s requests, within a reasonable amount of time, Steve can conclude that John cannot maintain steady employment, maintain a steady residence, and/or take care of the basic necessities of daily life.

At that point, Steve has the authority to give John’s remaining undistributed inheritance to John’s kids, if any, or to Patrick and Shawn.”

Just realize that these types of provisions for John must be in writing in a Last Will or a Revocable Living Trust. It is not legally enforceable if Jack and Christina simply tell Patrick, Shawn, Steve or anyone else that this is their intention.

Get in contact with me today to help create or review your Revocable Living Trust. Make sure your estate planning wishes are properly documented.

Where There’s A Will, There’s A Way

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