When planning an estate, the primary focus for the vast majority of people is ensuring that their accumulated wealth passes down to loved ones without undue losses. Wills certainly play a role in that process, but they are not the only planning tool available. For many Georgia families, a reservoir trust can be a great option.
A reservoir trust works by holding wealth in a way that is tightly controlled. The individual(s) who set up the trust dictate the terms under which funds can be paid out of the trust. There are rules for how inheritors can access their inheritance, which makes this a very powerful estate planning tool.
The trust protects against loss through a lawsuit, such as a personal injury claim, or even a divorce. It also protects against an inheritor's creditors. No matter how much financial trouble a loved one is mired in, the inheritance remains protected.
Many families choose these types of trusts to protect their loved ones against poor judgment, lack of financial savvy or irresponsibility. But that is not always the case. If a greater level of freedom is required, it's possible to set up the trust in such a way that the beneficiaries are made their own trustees, giving them the ability to manage the trust.
When considering wills and other estate planning options, Georgia families should consider whether a trust is a good fit for their needs. A reservoir trust is just one of many different types of trusts that can be created. Even better, trusts can be customized to fit the needs of the family.
Source: wtop.com, "Estate planning: How to keep your money in your family", Sarah Beth Hensley, March 28, 2018