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The financial realities of living with an addict

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For David Sheff, there is nothing worse than the sheer terror of witnessing your own child slip away into a life of drug abuse.

The San Francisco writer felt helpless as his son Nic became addicted to substances like methamphetamine and heroin over the course of a decade, beginning in 1997 when Nic was around 15.

Nic eventually triumphed, and has now been clean for more than five years, to his parents' great joy and relief. But his lengthy struggles with addiction had another long-term victim: Their family budget.

"Credit cards would disappear, checks would disappear, stuff would go missing," remembers Sheff, who wrote the 2008 book "Beautiful Boy" about his family's experiences. "Eventually he even broke into his little brother's piggy bank; that's how bad it got," he said in an interview.

"Then he would disappear, and we would be terrified for him, and just send more money," he says. "I did that until someone told me that sending money to a drug addict is like giving a loaded gun to someone who is suicidal."

But even when his son began to turn a corner, it wasn't the end of the family's financial challenges. Next came the rehabilitation programs, which can cost $25,000 or more every month, and be required multiple times when relapses occur.

Sheff's son went through six such programs, and Sheff's insurance ran out early, leaving him with towering bills. He spent $60,000 on his son's care, $28,000 of that in installments that he only recently finished paying.

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.

(Read more: Have you reviewed your 401(k) plan lately?)

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

"I've heard of relatives literally selling everything, mortgaging everything," says Sheff. "Then you're not only dealing with the terror of losing a child, but with being broke as well, with no idea of what's going to happen in the future.

"And since relapses are part of the deal, what if you sell everything to help, and then you're faced with the same crisis all over again? Then you have no options left."

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.

(Read more: Budget or bust: How to avoid empty pockets at 80)

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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 of the National Endowment for Financial Education. "That's why you need to be hyperaware of your personal finances."

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. That doesn't mean spouses necessarily have to give up anything—the usual state rules would apply to splitting up marital property in the event of a divorce, for example, says Matt McClintock, vice president of education at WealthCounsel, a membership organization for estate planners.

But it 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.

"It can be sensible to have a third party as a co-trustee, since spouses can sometimes be bullied, or throw up their hands in frustration," says Bill Conway, a tax attorney specializing in wealth preservation with Conway & Pannell in McLean, Va.

A trust could also help if a parent is planning an estate with concerns for a drug-addicted child. "A trust could buy a home for the person to live in, or always provide money for food, while making sure those funds aren't being converted to pay for drugs," he says.

(Read more: Year-end a good time to ponder your pension plans)

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 should be handled case-by-case, likely with the help of addiction specialists.

Sheff recommends targeted assistance aimed at keeping the person off the streets.

"You want to do everything you can to help them get well," says Sheff. "But you don't want to lose your house or spend every penny you have, because that's not going to do anybody any good."

—By Reuters.

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