The role of a trustee is one that people often find confusing. A trustee has a fiduciary duty, but it is not to the person who created the trust. Their duty is to the trust itself and its beneficiaries.
As the person named as trustee, your job is to manage the assets used to fund the trust and oversee distributions of those assets to beneficiaries. People create trusts for many reasons, but an increasingly common reason is a family member’s struggle with addiction.
What should you be aware of if serving as a trustee over a trust where the beneficiary is an addict?
Cash disbursements could be a major mistake
As a trustee, you generally have an obligation to follow the trust rules as established by the person who created and funded the trust. Hopefully, because they created the trust to address a loved one’s addiction, their rules include limitations on the use of assets.
Giving large amounts of cash to someone, even a few hundred dollars to cover rent, could feed their addiction. As a trustee, you will need to ensure that funds go to the appropriate place. Making checks payable directly to a landlord or handling the transfers yourself can eliminate the risk of a beneficiary using trust funds for drugs, gambling or other vices.
Ask for (and keep) records of all financial requests
Is the beneficiary going back to college? Have they asked for money to enter rehabilitation? You will want receipts, contracts and other forms of documentation to validate everything from where they claim to live to the cost for the rehabilitation facility.
When there is a large amount of money involved, a desperate addict could go to great lengths and possibly involve other people in an attempt to trick you. Using the internet to locate accurate phone numbers and reaching out directly to companies and professionals theoretically working with a beneficiary can help you protect them from their own worst impulses.
Serving as the trustee overseeing a trust for an addict is not easy, but the service you provide can help protect someone’s life and the legacy of someone who loved them.