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 relationship of the United States 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.

Let’s say you have directed your assets, once you and your spouse are gone, to go to your daughter “in trust.” You have given your daughter the role as trustee and beneficiary. The standard she has to follow in making distributions is for her needs related to health and maintenance in her accustomed manner of living.

You have also inserted a spendthrift clause which will serve to insulate the trust assets from attack in the event she is sued for anything from a car accident to divorce.

Let’s further say that you have dictated that upon her passing, what is left will go to her children. You also direct that if her 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 those grandchildren? If you name the natural parent – which we do in probably 80% of the cases where the issue is raised – then it might be wise to consider naming a “trust protector” who will make sure the natural parent is acting properly.

So, let’s consider that Robert and Jennifer have one child, Samantha. Samantha has one child named Sam. Samantha’s husband is Frank.

Robert and Jennifer could state that if Samantha passed, her share would go to Sam in trust for his health and education until he turns age 30. They could also direct that Frank would be the trustee, but as trustee he would have the mandatory obligation to report bi-annually to an independent third party of all receipts and disbursements from the trust.

Let’s say they have required Frank to report bi-annually to their lawyer, James, who will be that third party.

Now, that is a situation of trusting Frank but also wanting to verify his actions are faithful to the terms of the trust. Here, Robert and Jennifer have chosen to trust Frank in that unlikely circumstance, but they have also built into their plan a check against his authority. This check is oversight to verify his actions.

Since Frank needs to report bi-annually of all receipts and disbursements to James, the odds are increased dramatically that Sam’s funds will be properly managed for his benefit. Now, that’s good planning.

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.

Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney.