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Your Finance: Protecting assets from addict in the family

Having an addict in the family presents a deeply troubling dilemma for spouses and parents. How do you help those you love while protecting your own financial future?

After all, a serious substance abuser is likely to do whatever it takes to feed an addiction. That might include tapping a partner's savings account, home equity, 401(k) or individual retirement accounts, or even the college savings -- and piggy banks -- of their kids.

Even if the addict isn't sneaking money, relatives might spend every penny they have willingly to help fund a successful recovery.

It's an alarmingly common problem. According to the 2012 National Survey on Drug Use and Health, almost 22.2 million Americans had abused or been dependent on drugs or alcohol within the previous year.

So what is a loving spouse, parent or child to do in such a situation? Here are some pointers.

Get info: Check your financial accounts carefully to get a handle on exactly what is going on. "Addicts are very skilled at hiding transactions and siphoning cash away," says Brent Neiser, the Denver-based senior director with the National Endowment for Financial Education.

Some red flags that an addict is at work, according to Neiser: savings accounts being depleted more rapidly than usual, regular payments going to organizations you're unfamiliar with, and home equity lines of credit being tapped.

Keep an eye out for cash advances, evidence of payday lending, credit card or bank statements being rerouted to different addresses, and changes to credit reports, he says.

Keep them separated: If you suspect something is up, couples should establish separate financial accounts in each spouse's name. Doing so would act as a barrier to any short-term raiding by the addict, who might have more trouble getting to money in an account that didn't have his or her name on it.

In the absence of trust, use a trust: In some situations it might be worth setting up a trust. You could arrange for large assets like a home or planned inheritance to be housed in the trust and have it administrated by a spouse or a third party such as an attorney. That would help prevent a user from tapping those sources to fuel addictions.

When to say, enough? The key question: Do you use up your own financial resources to keep a roof over your child's or partner's head? Or do you practice tough love and cut them off, which would restrict their cash but could precipitate a crisis? These are questions with no easy answers, and they should be handled case by case, likely with the help of addiction specialists.

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