one who has demonstrated that he or she can't be trusted to handle money appropriately, you can still make provisions for him or her in your living trust.
You can also make provisions for a mentally or physically challenged person without jeopardizing their benefits under state or federal assistance programs. If you are facing the issue of providing for a difficult beneficiary, don't hesitate to discuss your options with an attorney because there are ways to properly provide for those with challenges.
The "spendthrift" provision common in many trusts is designed to provide some support to a loved one without giving him or her direct access to that support. For instance, you can stipulate that support may be given only for a specific, well-defined purpose such as paying rent directly to the landlord. For young adults, it is common to set up an educational subtrust within the trust so that money will be used first and foremost for post-high school education.
Today there are so many different addictions that can lead to self-destruction. If you know that a loved one is suffering from an addiction, you can offer them some assistance in your living trust. For example, for a beneficiary with substance abuse problems, a living trust can be designed to require that a beneficiary get treatment and be sober or drug free for a period of time before he or she can receive distributions. This can be powerful motivation for your loved one to get help.
Some people making their estate plans are concerned that a beneficiary who has already shown signs of laziness will be further discouraged from finding productive activities. There may be a concern that even a person who is otherwise responsible will be tempted to engage in unsuitable lifestyle changes by receiving a windfall. In cases such as these, there are provisions that can restrict distributions. Distributions can be staggered over time, restricted to certain expenditures, or conditioned upon certain occurrences. For example, it is common for trusts to provide that a young adult beneficiary receive the inheritance in three payments spread over a ten year period. A trust can also provide that payments will only be made to match a beneficiary's income.
It is possible that by very strict provisions in a trust, a beneficiary can actually be motivated to get a job or to make solid plans for spending his or her inheritance wisely.
The keys are: 1) Be honest with yourself if you know your loved one is engaging in self destructive behavior -- don't pretend the problem doesn't exist. 2) Don't be ashamed to discuss the issue with your estate planning attorney. He or she deals with these issues every day and is legally bound to keep such discussions strictly confidential. 3) No matter what the issue is, a trust can provide flexibility and creativity concerning distributions which will allow you to do what's best for your loved one under the circumstances.