As always, but especially during Mental Health Awareness Month, it is important to check in on your loved ones. When a loved one struggles with mental health or personal issues, it can take a toll on the whole family. You may even doubt if they have the responsibility to handle money or any assets you may want to leave them in a way that is beneficial for them overall. When faced with these challenges there are a few options for what you can do, some far more helpful than others.
Some suggest that if the beneficiary of your assets is a minor, you could place money in a custodial account for them, allowing someone else to help manage it on their behalf until they are an adult. The drawback of this plan is that it that the child receives the money as soon as they legally come of age, whether or not they are actually ready to handle that amount responsibly. Additionally, if they are in need of any governmental benefits or services, having money in their own name could jeopardize their ability to obtain these benefits and services.
You can also leave their share of your estate to a person that you trust who can distribute the money to them as requested. This way the money can be used more appropriately and with supervision, and can be distributed to the beneficiary when this person thinks they are ready to use it well. The serious disadvantage of this scenario is that there is no legal requirement to use the money for your beneficiary, so technically the “trusted” individual could take the money and not distribute it. They could also use it in ways differently than you would have wished or intended.
The last option we are going to discuss, and by far the best option for the beneficiary, is to place any assets in a trust. When placed in certain kinds of trusts, the assets will not disrupt the governmental benefits or public assistance that the mentally ill relative may need. This will also allow a Trustee to oversee the distribution of the money to the beneficiary as needed, while still maintaining a legal requirement that the money be used for the benefit of the individual you intended and in the way you specify.
If you need guidance about how to care for loved ones facing mental health struggles through an estate plan, or if circumstances have changed since you first created your plan, please give our office a call for an update or complimentary consultation.
