Addiction is an unfortunate but common issue that many families have to deal with, and families in business together are no exception. When a family member has an addiction—be it drugs, sex, gambling, or alcohol—the issue must be addressed in order to have long-term family harmony and stability. This is especially critical if the addict is the anticipated successor. Un-addressed, addiction can wreak havoc on a succession plan. 

As a succession planner and family therapist, I’ve seen the results and consequences of addiction on families. The addict places a huge burden on the family; their erratic and irrational behavior takes an emotional toll on everyone, creating rifts between family members. And unfortunately for a family in business together, a lack of family harmony negatively impacts business success.

Two common ways families deal with an addict in the family are: 1) They pretend the problem doesn’t exist; or 2) They end up enabling the addict as a way of coping. In reality though, the problem does not magically disappear. If your family is facing this tough situation, here are some steps family members can take to effectively deal with an addict:

  1. Encourage (not threaten or force) the addict to seek proper treatment. The best case scenario is for the addict to enter treatment and take charge of his or her own healing.
  2. Regardless of whether or not the addict decides to seek treatment, you should attend support groups and participate in family counseling to learn how as a family member you can support the recovery. Support groups and counseling will teach you about: setting boundaries, consequences and compassion when it comes to dealing with an addict; not taking on the responsibility for the addict staying in treatment; being supportive versus enabling, and what to expect from the addict.
  3. Protect the business and your family’s wealth. Have all family member employees sign a Family Member Employment Policy that includes the requirement for them to be addiction free. You can stipulate in the policy that anyone found to be suffering from an addiction must seek treatment and show proof of successfully completing a treatment program as a condition of continued employment.

    You should also include provisions in your estate planning documents to reduce the chance of a beneficiary being in control of inherited assets while under the shackles of chemical dependency or a debilitating vice. Provisions can authorize a trustee to use their discretion and potentially require a beneficiary to undergo random drug testing, counseling, attend a treatment and recovery program, etc. in order to receive assets.

    These stipulations can be stringent, but the best documents give the trustee broad powers that will permit them to take care of the basic needs of a beneficiary. This can allow for a beneficiary to receive assistance from the estate when it comes to health, education, housing, etc. without having control and access to the assets. Until the trustee deems the beneficiary “clean” and capable of handling the assets wisely, this solution allows the money to pay for the needs of the beneficiary rather than being placed in the hands of an addict and potentially lost to their vices.

The third step is important for any business owner whether or not you currently have a member of the family suffering from addiction, in recovery, or even if everyone appears to be doing well. Implementing policies and safeguards to protect what you have worked so hard for is common sense. No one knows what tomorrow may hold, but planning for all possible contingencies will provide for the best chance of future success for both your business and your family.

 Sign up for our monthly e-newsletter to stay informed on how to overcome related succession planning issues.