Our Pittsbugh trust lawyers are often asked by parents if it is possible to protect an inheritance for an adult child who battles Bipolar Disorder. Unfortunately, one of the hallmarks of the condition is excessive financial spending while in the mania phase of the disease. Parents often worry that if they leave an inheritance outright to their adult child that it will be lost or squandered quickly, and that mom or dad will no longer be around to help deal with the fallout of such spending.
Fortunately, there are legal tools that parents can utilize to safeguard an inheritance for an adult child with Bipolar Disorder to ensure that the money lasts as long as possible. This is especially important if the child’s illness is severe enough to prevent him or her from working. The most common tools that we recommend in order to achieve these goals are Living Trusts and Third-Party Special Needs Trusts.
Third-Party Special Needs Trusts can be used to safely protect assets for individuals with disabilities, which often includes severe and disabling mental disorders such as Bipolar Disorder. Essentially, the funds held in a Third-Party Special Needs Trust can be used to supplement any benefits received from government programs such as Supplemental Security (SSI) and Medicaid. If drafted properly, a Third-Party Special Needs Trust will allow the beneficiary to continue to receive such government benefits while simultaneously receiving funds from the trust.
If the adult child does not receive disability benefits, parents can still utilize a Living Trust to safeguard the inheritance they plan to leave to their son or daughter someday. The trust can contain specific provisions as to when the payments from the trust are given to their son or daughter so that the funds last as long as possible and have the least chance of being misused.
Likewise, the parents will be able to handpick a Trustee who will be responsible for overseeing the money in the trust when mom or dad is no longer around. This allows the parents to choose someone who will have their child’s best interest at heart and will not be easily persuaded to give the adult child money in such a way that would be detrimental to his or her future. If there is not a family member or loved one who the parents feel is capable of serving in such a role, a professional trustee may also be chosen.
It’s important to note that all trusts are complex legal documents that should be created with the assistance of a qualified estate planning attorney. There are specific laws that must be followed when setting up the trust, and the attorney will need to educate the family on how to administer the trust properly, so as not to jeopardize any public benefits if the adult child currently receives them.
What is most important to know is that there are options availableto protect the resources a parent wants to leave behind for their adult child’s future. A Living Trust and Third-Party Special Needs Trust are two such tools that can help to provide stability, safety, and peace of mind.
If you have questions about setting up a Third-Party Special Needs Trust or a Living Trust for a loved one with Bipolar Disorder, please feel free to contact our main office at the law firm by calling 724-841-1393 to schedule an appointment.