Using Trusts to Help Protect an Adult Child with a Substance Use Disorder (SUD)
by Don Drake, Connelly Law Offices, Ltd.
"With the increase in substance abuse in our society, it's essential to understand how appropriate estate planning can help an adult child's recovery. Like most of us, it's not hard to find someone who has not been impacted by an individual they care about who has a substance abuse problem," said certified elder law Attorney RJ Connelly III. "Because of this, we like to update and repeat this blog we previously published."
"Certainly, the most immediate option for someone with a substance use disorder (SUD) is seeking treatment, not only for the abuser but also for the family. Even with treatment, relapse is a common part of SUD, and the number of relapse episodes one can expect to occur before drug and alcohol abuse issues are resolved is unknown, as it is unique to each individual and dependent upon any number of identified and unidentified external and internal factors."
"We also know that these factors can trigger a relapse episode," continued Attorney Connelly. "One of these triggers is easy access to money when relapse is on the horizon. Stress and emotions are two others, especially when a loved one has passed away and guilt becomes overwhelming. So, the question becomes, how do parents deal with estate planning regarding inheritance distribution with an adult child who is a substance abuser, and how do they provide for them without enabling their drug use? We will discuss this in today's blog."
A Family's Struggle
When an elderly Cape Verdean woman entered this writer's office for her first counseling session, it was easy to see the distress in her eyes and a lifetime of struggle etched in the wrinkles on her face. Her name was Branca, and the story she told was unique yet typical of the plight of families living with an individual with a SUD.
She had three children, two daughters and a son. One of her daughters, Helena, had died from an overdose of drugs. Her youngest daughter, Valeria, was a nurse at a hospital in the greater Boston area. Her son, Davi, seemed to follow in his sister's footsteps.
Branca spoke about an early life of abuse perpetrated by her husband and the father of her children, Afonso, who had long since disappeared upon entering the United States. And it wasn't just she who felt the abuse; her children were also victims of an angry and alcoholic father.
"Helena," said Branca in broken English," she gets worse because she was the oldest. She left home when she was seventeen and never come back." She spoke of the troubles with her oldest daughter, the regular weekend visits to the emergency room where she often lay close to death because of an overdose of heroin.
"Every week, I get called and must go to the hospital. She died so many times but was saved by the doctors that I did not believe she was dead when I was called the last time. But when I got there, she was gone forever," said Branca.
Then came a startling but understandable statement. "My girl, she's buried about a mile from here. I'm at peace now because I know she is at peace. No more weekends of crying and waiting for phone calls. I know where she is all the time now," said Branca without much emotion, obviously jaded from the years of the emotional roller coaster.
She spoke with pride, though, about her youngest, Valeria. "She goes to school and becomes a nurse, and I'm proud of her. She gave me two grandchildren and a nice son-in-law. It makes me feel good, you know?"
Then came the real reason she had come to see me, her continued problems with Davi, who was struggling with a severe drug problem. He used "just about anything he can get," she said. Branca stated that Davi has been to programs in this country, and she even sent him out of the United States to a program in France, but nothing seemed to work.
"Even with my problems," explained Branca, "I still manage to buy property here in Massachusetts and my homeland. I also have a lot of money saved. I'm old, and I know when I die if Davi gets his hands on money, he will get worse. Can you help?"
This request was new to me. Branca did not need counseling. She needed advice from an elder law attorney who could provide the safeguards she sought.
Legal Help Not Counseling
What can help someone like Branca and hundreds of thousands of others in the same predicament? Putting a trust in place is the most appropriate choice in these situations. Still, it must be the correct type of trust, and the attorney developing it must know the issues associated with substance abuse.
When a trust is developed, it must have a purpose. In the case of Branca, the objective was to provide her son with money from her estate but try to keep him from spending it on drugs and, in the worst-case scenario, killing himself due to an overdose.
Branca met with an attorney in Boston to discuss this, and as a team, we provided her with financial advice and a treatment plan to try and keep Davi under control, no easy feat if you are familiar with those with a SUD.
The attorney told Branca that he felt the trust needed to play a part in Davi's recovery. It could be a passive (operating independently from any recovery activity) or an active role with a trustee (where funds would proactively pay for treatment and any costs involved in that treatment). If an active role were chosen, all distributions would be related to his recovery efforts.
There was also a discussion about making money distributions based on a series of incentives. This plan would involve a series of goals outlined in the treatment plan, which must be accomplished. This outcome, however, is wishful thinking.
Ways to Keep Him Clean?
The attorney handling this matter wanted to meet with the family and me to discuss how best to set up an "incentive" based trust that, quite simply, was bribery for Davi to stay clean and sober. As I told the attorney then and will continue to say to anyone who uses this approach, there are no incentives that consistently work to keep someone with an addiction clean long term, and even if it did work, who would be responsible for carrying out the implementation and monitoring of the rewards-based interventions needed for the individual outside of the treatment environment?
Let's digress for a moment and discuss this approach. This type of planning is called contingency management (CM) in treatment. Although this may have some success when a person is in a residential treatment program where an artificial and controlled living environment exists that allows the individual to earn privileges based on designated behaviors and clean urine screens, there exists limited evidence that such programming is successful in the "real" world. In a 2019 study, "Examining Implementation of Contingency Management in Real-World Settings," results were mixed at best, with many shortcomings cited in how programs implemented CM and the lack of consistency among providers.
From a practical standpoint, using an incentive-based trust would be impossible to manage and enforce outside of the controlled institutional environment. For instance, who would be responsible for managing the conditions of the incentives, which would require, at the very least, attendance and active participation in counseling, clean urine screens, appropriate behaviors in and out of the home, and more, depending upon the presenting situation? Those who are not treatment professionals would have a challenging time making this work given that even professional counselors need help using a CM (incentives) based system in residential and outpatient settings where more control is present.
But Branca, like all family members, wanted to believe such a plan would work. She wanted Davi to attend counseling weekly, get a job and prove he was not using through weekly urine screening. As stated earlier, who would be responsible for monitoring Davi? It certainly was not going to be our agency. As I explained, substance abusers can fake work records and urine screens, especially when it lacks the same stringent safeguards as court-ordered screening and reporting.
And, I said, attendance at counseling is far different from making progress in counseling. The overwhelming number of those with SUDs who are forced into counseling lack the motivation to take advantage of what they are offered. They may show up, but it doesn't guarantee they will actively participate in their treatment because it is not their choice.
And I told the attorney those who know addiction and those with SUDs are very aware of the outbursts and manipulation that can occur. From this counselor's viewpoint, such an incentive-based trust would be unmanageable and ultimately fail the individual with the addiction and the family trying to make it work. And should it fail, and the individual loses government benefits, it may be exceedingly difficult to get them back.
Is Addiction a Disability?
At one time, alcoholism and drug addiction were considered disabilities, but this changed over 26 years ago. It was 1996 when Congress amended the Social Security Act to eliminate eligibility for disability benefits based on drug addiction and alcoholism. Before that date, individuals could get Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) benefits if their alcoholism or drug addiction were so severe that it prevented them from working.
"The way the law works today is that a person cannot receive disability benefits if drug addiction or alcoholism is a material factor in their disability," Attorney Connelly stated. "However, someone can be found disabled if the applicant has medical conditions that aren't caused or made worse by the misuse of substances, or if damage has occurred that would not be reversed if the person applying for disability benefits stopped using drugs."
Advocates for substance abusers think this is unfair, citing that addiction is classified as a disease, but there are reasons why this change occurred.
Before 1996, those with addictions exploited the Social Security system with impunity. For example, alcoholics and drug addicts would receive their checks, spend them within a week or even one weekend on substances, then spend the rest of the month in detox until the next check arrived. Those who worked in the treatment field referred to it as "Uncle Sam's Merry-Go-Round." It was predictable and made a farce out of those providing treatment and detox services as treatment programs became nothing more than "holding areas" until the next pot of money arrived, and the cycle began anew.
Even more troubling, retailers got in on the action. Homeless alcoholics often used a liquor store or bar as their "home address" so the proprietors could serve them "on credit" and ensure they got their money when the checks arrived. The abuse of the system was rampant, and changes were needed.
But even with these changes, ways have been found to work around "the rules." Today, those with addictions seek a mental health disorder diagnosis that, providers say, is the "cause" of the substance abuse disorder and not the other way around. If substance abuse is a material contributing factor to the mental health disorder, they will not qualify, and those with primary substance use disorders know some highly creative ways to manipulate "the system."
Losing Government Benefits
Let's take a quick look at the system today and why using a trust is a valuable tool for parents who want to protect their adult children with substance use disorders.
For a child over eighteen who receives Supplemental Security Income (SSI) and Medicaid, all of which can help to pay their living and recovery-based expenses, losing this aid if an inheritance occurs could be detrimental to them in the long term.
An individual with a chronic substance abuse disorder will eventually suffer other medical conditions requiring treatment and long-term government benefits. Those who abuse intravenous (IV) drugs could contract illnesses like Hepatitis C, HIV/AIDS, various skin conditions, and other infections.
Long-term use of drugs like cocaine and crack can cause severe damage to the heart, liver, and kidneys. Users are more likely to have infectious diseases. Chronic use causes sleep deprivation and loss of appetite, resulting in malnutrition. Cocaine also can cause aggressive and paranoid behavior and severe depression due to changes in brain chemicals.
When it comes to alcohol abuse, the entire body comes under assault. Not only can drinking cause temporary complications such as memory loss and coordination, but it can also lead to long-term, sometimes irreversible side effects.
Heavy drinking can weaken the heart, impacting how oxygen and nutrients are delivered to other vital organs in your body. Excessive alcohol consumption can increase triglyceride levels – a type of fat in the blood. Elevated levels of triglycerides contribute to the risk of developing dangerous health conditions such as heart disease and diabetes.
Heavy drinkers are also at risk of harmful, potentially life-threatening liver problems, including alcoholic hepatitis, fibrosis, and cirrhosis. The pancreas is also at risk as long-term alcohol abuse eventually causes the blood vessels around the pancreas to swell, leading to pancreatitis. This condition increases the risk of developing pancreatic cancer – a type of cancer that spreads rapidly and is usually deadly.
Women with addictions often turn to prostitution and may contract sexually transmitted diseases, including Hepatitis B (sexually transmitted and a significant cause of liver cancer) and HIV (which could lead to AIDS). Other STDs like syphilis and gonorrhea can result in pelvic inflammatory disease and additional complications.
So, you can see the importance of ensuring government benefits are not interrupted. Because SSI and Medicaid are needs-based programs with strict resource limits in place, should an individual lose these benefits because of an inheritance, it is exceedingly difficult to regain them if needed.
This year (2023), eligibility for SSI will entitle the person to receive a monthly benefit of $914 for an eligible individual, $1,371 for a qualified individual with an eligible spouse, and $458 for an essential person from the federal government and a smaller amount from the state to supplement this income (in Rhode Island, it is about $40). Once SSI is approved, the individual automatically qualifies for Medicaid, which covers many medical and counseling costs, and makes them eligible for other community-based treatment and support services for the SUD. This may include SNAP benefits and subsidized housing for those with disabilities.
SSI and Medicaid eligibility also requires that the individual have "countable resources" that total no more than $2000. These assets include cash on hand (such as a checking or savings account) and assets that can be converted to cash (see what this includes and does not include by clicking here).
The second benefit an individual can access is Social Security Disability Insurance (SSDI), which pays a monthly benefit based on the applicant's work history. The eligibility for benefits depends first on whether the adult child has a "disability," as defined by the Social Security Act, and has worked the required number of quarters.
As far as the government is concerned, it means that they are unable to engage in any substantial gainful activity because of a severe, medically determinable physical or mental impairment and that the disability has lasted, or is expected to last, for at least one year or to result in death.
An individual with substance use disorder will not qualify for SSDI if the basis for disability is the SUD alone. However, if they claim a mental health condition, they must show that the substance abuse resulted from the mental health issue and did not contribute to it.
The next question is whether that child could work if they stopped drinking or using drugs. For example, if someone claims chronic pancreatitis or another condition recognized as a disability by the Social Security Administration, and it would not improve if he or she stopped drinking, a disability may exist. However, should he or she quit drinking and a doctor feels that pancreatitis would improve, this condition would not meet the test for disability.
For SSDI, an inheritance would not affect the benefit, but access to this money could trigger a relapse if not managed by an outside entity.
Developing a Trust
There are many rules associated with putting together trusts, and it is best to consult an experienced elder law or disability attorney when doing so because each state may have different rules. The need for developing trusts to deal with an adult child with such a diagnosis is gaining popularity with the increase in addiction disorders. But remember, these trusts come with stringent guidelines, and for some family members acting as trustees, an emotional toll. Let's discuss this further.
So now let's imagine a workable trust is in place for the substance-abusing adult child. Who should be the trustee (the person or the entity who developed the trust)?
There are two categories of trustees, individual and institutional. For an individual trustee, it is usually a family member or someone who knows the person. An institutional trustee could be a bank, agency, elder law attorney, or financial advisor.
Now, let me say that I am not a legal person, so my comments are based on my experience as a licensed addiction treatment professional in the Commonwealth of Massachusetts, with over three decades of providing treatment for substance abusers. When administering a trust for someone with a substance use disorder, I believe using an institutional trustee is the most appropriate choice. To understand why, it's essential to have some knowledge of the dynamics within a family where a member has a substance use disorder. Let's look at some of these problems.
The Family Member as Trustee - Problematic
As a family tries to cope with the family member's addiction, the unit itself is put under tremendous stress and begins to fracture. Although many families tend to focus on the person with the SUD, the often-forgotten victims of addiction are other family members and the relationships that occur between them. The substance user is adept at exploiting these stressed relationships and causing internal battles that can strain even the strongest bonds. Add money to this equation, and it's like pouring rocket fuel on a fire.
One family I worked with from a town north of Boston best exemplifies what can happen when a family member oversees a trust or is a rep payee for someone with a substance use disorder.
The individual with the substance abuse disorder, I'll call Charles, had multiple relapse episodes despite the family's best efforts to keep him clean and sober. Eventually, he moved in with his sister and her family, and she became his rep payee.
If Charles' request for money were meant, all would go well, but the relationship went south quickly after a relapse. Charles ended up stealing jewelry from his sister, a piggy bank belonging to his niece, and pawned tools that he stole from the garage that belonged to his brother-in-law. These behaviors caused a significant rift in the family unit when the brother-in-law told Charles to leave the house and move into a homeless shelter, something his sister disagreed with.
Soon, Charles was calling the house non-stop, at all hours of the day and night, demanding money from his SSI account. When his sister refused, he began calling her job multiple times daily, nearly resulting in her losing her job. When his brother-in-law stepped in and threatened to obtain a restraining order, Charles backed off and instead began loitering around his niece's high school, accosting her and asking her to convince her mother to give him money.
One afternoon, Charles became aggressive, scaring his niece, who ran back into the school, fearing for her safety. The principal contacted the police, and Charles was arrested and sent to detox and treatment. His sister gave up the rep payee position to an agency specializing in this work.
"I love my brother," she said, "but what he put me and my family through was sheer hell. He used every emotion imaginable, from guilt to anger, to access his money, even stating that my husband was spending the money on himself. It was something I would never want to experience again."
These are the typical emotions that a family of a substance abuser experiences - over years and sometimes decades. On the one hand, the family understands how addiction can change a person, but on the other hand, the constant lies, manipulation, and abuse that a substance abuser can put their loved ones through daily results in immeasurable pain and untold emotional damage.
Most family members want to help a loved one when they are in trouble. But these acts of love for a substance abuser often turn into enabling behaviors. The activities may range from lending money and paying rent or utilities to other actions allowing the person with the SUD to continue their destructive lifestyle. Often, enabling results from guilt about the loved one's addiction and the enabler's feeling that they are somehow responsible, so they want to make things right when this often makes things much worse for all concerned. This situation emerged in another case I dealt with.
A gentleman from the south coast came to counseling to find out ways he could help his sister. Carl, a corporate executive, was the trustee for a special needs trust for his sibling, Anne. Anne had been addicted to crack cocaine for years. Before her mother's death, a trust was developed to ensure Anne's needs were met, and because they feared if she obtained a considerable sum of money, she would eventually overdose.
Anne was continually harassing Carl for money while he tried to live up to the rules of the trust. Eventually, Anne went to Legal Aid in Boston and sought an attorney, accusing Carl of misusing the funds. Not only did Carl not misuse the money, he also had to hire a lawyer to deal with the accusations tossed at him, including theft and neglect. Because Carl neglected to keep an accurate ledger of money and expenditures on his sister, he struggled to answer questions from the Legal Aid attorney.
In the meantime, Anne enlisted some of her "street friends" to confront Carl while leaving the gym and even made threatening calls to his job. Still, Carl understood addiction, made excuses for her behavior, and continued to try and support her. Eventually, Anne broke into his house and stole a coin collection and several valuable paintings.
In counseling, Anne insisted that Carl was not "helping her" maintain her recovery and did not "support" her when needed. Then came the turning point for Carl. He asked Anne why she stole the items and offered to forgive her if she just apologized.
Instead, Anne looked at Carl and stated, "At my last NA (Narcotics Anonymous) meeting, I heard a story about a guy who rescued a poisonous snake from drowning, and when he put it down on the shore, the snake bit him. While the dude was dying, he asked the snake why he bit him after saving its life. The snake said it was because he was a snake, so what did he expect him to do?"
Carl became angry, looked at her, and said, "Are you blaming me for all of this?" Anne sat back and said, without emotion, "Well, you shouldn't have shown me your coin collection. I'm an addict, and you know what we do." At that point, Carl walked out and, the next day, turned over control of the trust to an attorney. Several months later, Carl told me it was his best decision.
The strain placed upon a family member when trying to deal with and cope with a substance abuser's out-of-control behaviors and accusations cause other family members to lash out at each other, and they eventually begin to engage in the same behaviors as the abuser, including manipulation, lying and even stealing. It is a cycle that destroys even the most loving and caring family.
"Our firm has developed hundreds of such trusts over the years for families in these challenging situations," said Attorney Connelly. "For the well-being of all concerned, I advise an institutional provider to administer it. This action takes the emotions out of the equation and allows time for the entire family to heal."