Since the beginning of sheltering-in-place in response to the pandemic, there have been concerns about the impact the response has had on drug and alcohol recovery programs and their clients. This is to the extent where some are seeing substance abuse as a “pandemic within a pandemic”.
Even prior to the pandemic, planning for current or future substance abuse of a family member, when drafting estate planning documents was a dilemma. The World Drug Report for 2017 reported that a quarter of a billion people worldwide use drugs, with 29.5 million being addicted, and 2 billion people globally consume alcohol, with 76 million affected by alcohol abuse. The pandemic has widened the substantial gap between the estimated people who need treatment, and the places available in specialized treatment facilities. The likelihood is high that any client has, or will have, a beneficiary of a trust who needs treatment and recovery from drug and alcohol abuse.
Filling the gap in available treatment is a policy issue that has to be addressed by society, but trusts can be drafted so as to increase the likelihood of long-term (two-plus years) recovery from less than 25% to 92%.
In his paper, “Using Leverage to Support Sustained Recovery,” William F. Messinger describes how two recovery programs, one for physicians and one for airline pilots, has achieved as high as a 92% long-term success rate. This starts with the fact that drug or alcohol abuse is a chronic illness, not a moral weakness; that people are vulnerable and not willfully abusing; and that the trauma for both the individual and the family continues long after the usual 28-day treatment.
To have success in recovery, not only is a supportive family and access to expertise in treatment necessary, but also accountability for their actions—immediate and significant financial penalties—to maintain compliance with the recovery process. In Messinger’s paper, the threat of losing their professional license provides the financial leverage to insure good behavior. For beneficiaries of a trust, it is the threat of losing access to income or principal from the trust.
Although most trusts have asset protection provisions, the so called “spend-thrift clause,” trusts must go beyond preventing the beneficiary’s creditors from reaching the assets. The trustee must be authorized, by the term of the trust, to use financial leverage early, maintain that pressure for many months, find and use qualified experts, and provide a support even when some financial benefits are cut. This includes paying for housing, support for the spouse and children, and paying for private therapy.
The trustee must be free to require that the beneficiary agrees to open communication, including drug testing, medical information releases, meetings and other required conduct in their recovery plan. This way, beneficiaries are never completely cut off, but they recognize that harmful behavior has immediate and significant effects.
I would like to assure my clients that they will never have a beneficiary who has a substance abuse problem. Statistically, however, it is likely that, sooner or later, a present or future beneficiary of a trust will fall victim to this disease and will need three things: family support, access to expertise and accountability for their behavior.
Trusts need to be drafted in such a way that a trustee can provide that accountability through leveraging access to the financial benefits. Consider it as insurance you may never need it, but if it’s needed, it could save someone’s life.
Matthew Erskine is managing partner of Erskine & Erskine, which provides legal and fiduciary services for unique assets.