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Estate Planning For Adult Children with Mental Illness or Addictions

When their daughter had a breakdown while attending college, there was nothing that Keisha Sacher's parents could do when she refused to come home. At age 19, she was an adult. They had no legal control over her. When she finally did return to their home, the family endured a nightmare of her drug addition, homelessness, hospitalizations and worse. The Sacher's were aging, and they needed to plan for their daughter's care in the future.

For parents watching helplessly while adult children struggle with mental illness and addition, there is another layer of worry. What will happen when the parents are no longer alive? In"For Parents With Troubled Adult Children, Financial Hurdles Abound," The New York Times examine the financial challenges of helping loved ones stricken with mental illness. The solution must provide for care without placing assets in the ill person's control, must not jeopardize their government benefits and must not worsen their condition. One solution is the special purpose trust.

A special-purpose trust is different from a special-needs trust, which is frequently implemented to pay for additional needs of those receiving government benefits where the government has strict restrictions on the recipient's assets. A special-purpose trust can be used to provide children more of the life they might have enjoyed without mental illness or addiction, and it allows the parents the flexibility to make changes with the distributions.

Special-purpose trusts are more complicated to establish than regular trusts because of the powers they give to the trustees and the restrictions they place on distributions. However, the toughest part of creating a special-purpose trust is getting parents to accept them as necessary: parents must first acknowledge that their children will never fully recover.

Parents are advised to set out some very specific criteria for distributions into trust documents, for example, staying on medication or staying sober for a certain period of time. In addition, those with a family history of mental illness and addiction issues should get a power of attorney and health care proxy for children over 18 who are away at college. In the event that something happens to their child, the parents will have access to medical records and will be able to help.

Work through these issues with an experienced estate planning attorney to make sure that you are doing your best to help your child.

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