Did you know that a revocable living trust can be a substitute for a will in many cases? But unlike a will, the trust does not need to be probated at death, which may avoid a potentially costly and/or lengthy court proceeding. But did you also know that since the trust takes effect while you’re living, it allows you to state who your successor or back-up trustee will be in the event of incapacity? That is news to many.

The Heritage or Dynasty Trust is emerging with divorce rates hovering around 50%. It solves a newer set of planning problems where middle-class people are leaving gifts of hundreds of thousands of dollars to their children. With larger estates now and to protect assets and keep them in the family, many retirees are setting up trusts for their children that:

• protect the assets in the event of a divorce;
• may provide creditor protection, if desired; and
• while giving the son or daughter lifetime access to income and principal, pass whatever's left by blood (usually to the client's grandchildren) instead of by marriage.