“Trust but verify” is a practical reality-based point of view on how to deal with foreign powers. Ronald Reagan made the statement well-known when he was describing the United States relationship with the Soviet Union back in the 1980s.
In essence, he was saying we trust the Soviet Union, but we require proof that our trust is not misplaced.
And so it goes with estate planning.
Imagine you have directed your assets, once you and your spouse are gone, to go to your son or daughter “in trust” so that it stays in the family, protected from most lawsuits. Your child is trustee and beneficiary. He or she can get all the income and principal for their needs.
There is a spendthrift clause that will protect trust assets from most lawsuits. When your child passes, what is left will go to their children (your grandchildren).
You also direct that if those children are under age 30 when they inherit, that they will have their share held in trust until they attain age 30.
Now, who will serve as trustee for that grandchild? The biological parent/in-law, or another one of your children?
If you name the biological parent/in-law, then it might be wise to name a trust protector. When there is no oversight, then power can become absolute, in a sense. When power becomes absolute, there can be corruption.
And so the moral of the story is, when planning your estate you can trust your in-laws and you can trust their judgment, but it is wise to be realistic – like Ronald Reagan was with the Soviet Union in the 1980s – and make sure to verify.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney. mwinnesq.com