Tax Issues With Pet Trusts
Are there any tax concerns to address with estate planning for animal owners?
Dottie Piqua, Ohio
Dottie, indeed there are…
We always recommend that you involve your CPA or tax adviser when you are planning for your pets.
Depending upon the type of trust or will clause that you use and the state where you reside, there may be gift, income, inheritance or estate tax consequences involved with this estate planning.
These various taxes may be assessed against either the Settlor of the Trust, the Trustee, the Caregiver or the Estate, via the Executor.
Careful tax planning is essential with any form of estate planning.
How Many Pet Owners Actually Prepare Pet Trusts?
How many pet owners actually prepare and actually implement pet trusts?
Pam Atlanta, Georgia
Pam, this is a good question that is a little difficult to answer, as most people do not want to appear to be unprepared or dilatory and may not respond truthfully when questioned about these issues.
However, the best estimates are that only approximately twenty percent of all individuals under the age of fifty have prepared estate plans for their business and families.
Moreover, the same surveys indicate that approximate twenty to twenty–five percent of all pet owners have established pet trusts.
Not an especially high percentage, but it appears that pet owners may be more proactive in this area.
Looking For a Solid Trustee for Your Pet Trust?
I recently had the pleasure of presenting a Florida Bar CLE class entitled “Estate Planning for Animal Owners,” to a group of attorneys, animal lovers and supporter of the Humane Society of Naples.
The gracious host was Jennifer R. Figurelli of Comerica Bank.
As you are aware, I do not endorse pet products, websites or promoters.
However, Jennifer is a true animal lover, a Trustee of a pet trust and just happens to be a Vice President and a Trust and Estate Administrator for Comerica.
If you have any questions on the administration of your pet trust or are considering the appointment of a pet trustee, you should be confident of any assistance that Jennifer can provide.
Connecticut Set to Become the Forty-First State To Approve Pet Trusts
I have written extensively on the proposed legislation regarding the new Connecticut Pet Trust here, here, here and here.
Well, the new bill has finally been passed out of the state legislature and only awaits the signature of the governor to become a law.
The trust is very comprehensive and even includes a provision for a trust enforcer.
You can read the entire statute here and welcome Connecticut as the forty-first state to have a Pet Trust.
Our Blog Featured in Upcoming Story on www.Bankrate.com
I had an interview this morning with Sheyna Steiner, a staff writer for www.Bankrate.com.
This site is all about financial information for everyday life.
She is preparing a story for Bankrate.com on pets and finances and is going to include a section on estate planning for pets.
Mr. Steiner advised that she located me via my blog and contacted me to discuss various issues regarding pet trusts. We discussed the role of the trustee and caregiver, the various funding options for the trust, the changing attitude of pet owners regarding the use of a trust and the education of estate planning attorneys and the role of pet trusts in their overall estate planning packages.
She was unsure as to the schedule of the printing of the article, as day-to-day economic hot flashes tend to dictate priorities.
I will provide access to the final article…assuming, of course, that she makes me sound good.
Update on The Newly Proposed Connecticut Pet Trust Legislation
John O’Brien is an experienced estate-planning and probate attorney in Wethersfield, Connecticut.
He is an active advocate of the newly proposed legislation regarding the passage of language to provide for Pet Trusts and has been keeping us apprised of the pending bill in that state,
In a recent post on his blog, the Connecticut Estate Planning Report, he wrote that there are actually two different bills that have been offered for adoption.
He also questions the real motive for the passage of one of the bills.
He wrote:
In large measure, the two Bills are similar. There is one significant difference from the perspective of a client that wants to establish such a trust -- any trust must be approved by the Probate Court. Apparently the Legislature sees this as an opportunity to generate revenue for the Probate Court because the Probate Courts will charge a fee of between $50-$750 to review the trust. This change creates all kinds of logistical problems for the implementation of these type of trusts, albeit ones that can be overcome, but certainly ones that are better avoided...."
You should go to his blog to view his entire article.
We will look to Mr. O’Brien to keep us in the loop as this law progresses…or not.
Visit Us At The FloridaPet.Net Newsletter
We wrote in March that our home link had been added to one of our favorite websites, FloridaPets.Net and we recommended that you sign up for their informative newsletter.
Even non-Floridians will find a wealth of valuable and entertaining information for safe travel, welcome lodging and easy dining with your family pets.
Now, we are very pleased to be included as a contributor to their latest newsletter.
Click here to read our article on Pet Trusts and return to their site often for good information.
Thanks to Patricia Collier and her entire staff for allowing us to work with their on line publication.
Maryland Passes Statutory Pet Trust
In February, I wrote that A. Wade Kach, a Baltimore County Republican, had introduced legislation that would provide for pet trusts in Maryland.
A previous bill that was introduced in the Maryland Senate in January of 2006 (Senate Bill 235) failed to pass.
Well this time the legislature got it right.
The newly passed law goes into effect on October 1, 2009 and reads as follows:
(A) A trust may be created to provide for the care of an animal alive during the lifetime of the settlor.
(B) A trust authorized by this section terminates:
(1) if created to provide for the care of one animal alive during the lifetime of the settlor, on the death of the animal; or
(2) if created to provide for the care of more than one animal alive during the lifetime of the settlor, on the death of the last surviving animal.
(C) (1) A trust authorized by this section may be enforced by a person appointed under the terms of the trust or, if no person is appointed, by a person appointed by the court.
(2) a person having an interest in the welfare of an animal the care for which a trust is established may request the court to appoint a person to enforce the trust or to remove a person appointed.
(D) (1) Except to the extent that the court may determine that the value of a trust authorized by this section exceeds the amount required for the use intended by the trust, the property of the trust may be applied only to the intended use of the trust.
(2) Except as otherwise provided under the terms of the trust, property not required for the intended use of the trust shall be distributed:
(i) to the settlor, if living; or
(ii) if the settlor is deceased, to the successors in interest of the settlor.
Note: The Rule Against Perpetuities does not apply to pet trusts under Est. & Trusts § 11-102 (b) (12).
Animal owners in Maryland, you can now join 39 other states that have passed statutory pet trusts.
I hope that the other will continue to follow suit.
You Think That Your Dog Has it Good?
The central concern of any estate planning for animal owners is to provide for the continued care of their pets, after the owners are gone.
Care requires money for boarding, vets, food, medicine and essentials, like new toys.
Perhaps the most famous story of animal wealth involves Leona Helmsley’s dog, named Trouble, who received millions of dollars from his owner upon her death.
We know that if the amount of money that is left to the pet is unreasonable or unrealistic, the trust may be challenged. The larger the amount left for your pet, the higher the percentage of a challenge, especially, by a disgruntled relative.
I have also noted that many individuals find the whole concept absurd and a waste of money.
Well recently, I was alerted to a website, called bankling.com, by my friend Stacey.
Bankling states that it is your guide to the intersection of three topics: money, the Web and life.
Bankling has a story by Miranda Marquit that reviews the world’s richest dogs.
Moreover, we are talking RICH dogs, beginning with Gunther IV, a German Sheppard commanding a wealth of over $350 Million.
You can read the whole article here, but I must warn you, it might make your take home pay stub look very small.
There Are Many Ways To Fund A Pet Trust
Can I use a bank account to fund a pet trust for my dog, Cheyenne?
Judy Boulder, Colorado
Judy, you may specify a bank account, savings or money market account, an annuity, an IRA, a payable on death bank account or other form of contractual agreement to fund a pet trust.
Of course, one of the most common forms of funding is through the purchase of a life insurance policy.
You should consult with your attorney, insurance broker, commodity broker or banker to correctly determine the name that should be placed on these accounts for the benefit of the trustee and Cheyenne.
Rescue Group Supports Connecticut Pet Trust Legislation
I recently wrote about the proposed legislation in Connecticut regarding statutory pet trusts and have received many different responses.
I posted some of them here.
Apparently, this issue has really struck a nerve during these difficult economic times, as I continue to receive additional comments.
The most recent one is here, written by Robin;
"I volunteer with an Animal Rescue group in CT and I also have seven cats of my own. I've seen, too many times, when an owner dies or goes into Assisted Living, that their pets are either euthanized or there's a crazy rush to find placement in a foster home or shelter for the animal. Often, those animals, themselves, are sick or elderly. It's difficult and time consuming to find older animals homes and many end up dying while waiting for placement. It hits the Rescue groups in the pocket since we can barely afford food and litter and now we have to come up with medical care costs, too. We could do far more to save more animals if we didn't have the burden of caring for pets without Trusts.
What this Bill would do is to allow Rescue groups to place animals with senior citizens (which rescue groups are reluctant to do now) without fear that those placements would be bad for the animal. This would also allow so many MORE animals to find homes, it might very positively effect the number of animals that die every year---and we're STILL looking at MILLIONS of animals being killed due to overcrowding in Shelters.
"Yes, the Economy stinks and there are many problems in this world. Regardless of the timing, it's something simple that can be done and put into effect NOW. It's a quick fix to a long term problem. Let's fix it and move on. I think it's a GREAT idea and I hope the Bill is passed and other states join us..."
You can visit their website here.
Additional Comments on Proposed Pet Trust Legislation In Connecticut
I recently posted a story concerning proposed new legislation for a statutory Pet Trust in the state of Connecticut.
I continue to receive responses from readers that are both for and against the bill.
Here is one of the recent responses.
"Pets have been proven to have positive mental and physical health benefits for the elderly. But often senior citizens forgo this benefit for fear their pets will be killed upon the owner's death. Pet trusts give peace of mind to the elderly and also help reduce the number of homeless animals. Getting old is hard enough. Why deny this comfort to the elderly? Maybe those who disagree are greedy relatives who hope to get something for nothing."
What do you think?
We will post your thoughts and attitudes as they are received.
How Much Money Is Needed To Fund A Pet trust?
I am often asked how much money is enough to adequately fund a pet trust.
Of course, there is no easy or simple answer.
There are many variables involved in the amount required and it certainly depends upon the type of life style that you anticipate for your pet and the specific animal involved.
Your pet turtle may live for 120 years and your parrot for 80, while your little mouse Michele, will provably have a relatively short time here of about four years.
I you want to review some guidelines for the life span of various animals go here and look.
It may provide some guidance to the answer to this difficult question.
Pet Trusts in Tough Times
Yesterday, a reader responded to a previous post that had expressed opposition to the newly offered statutory pet trust in the state of Connecticut.
The new response to the legislation is below:
"The economy is a major reason why people should be worrying about things like the care of their pets after they are gone. If everyone else is hurting financially then they cannot depend on friends and family to just willingly care for their animals. As I understand it, a pet trust will pay for the care of the animal instead of adding an additional burden on another person. Whether or not the statute is a priority at this time. It needs to be done. It is part of the whole picture."
Let us know your thoughts on this subject…do these tough economic times change your comfort level for your pet’s future?
Reader Opposes Pet Trust Legislation in Connecticut
On Thursday, March 12, in the Ridgefieldpress.com, a reader responded to a follow–up story that I posted about here on March 11.2009.
The reader’s response is to the filing of a bill in the Connecticut Legislature by State Senator Toni Boucher calling for the introduction oa statutory Pet Trust.
The readers comment is below:
"#1 marthamad
2009-03-1206:37:37 You kidding me? The world is falling apart and Boucher is worried about trust funds for dogs? People can't pay their mortgages and she's working to make sure Fido doesn't run out of Grey Poupon! This is why we elected her to the Senate?"
Let us know your response.
Connecticut Is The Latest State to Propose a Statutory Pet Trust
Just recently, I wrote that Maryland was the latest state attempting to pass legislation for a statutory pet trust
Now, it seems, that Connecticut may follow that trend.
Connecticut Senator Toni Boucher has proposed a bill that provides for the creation of trusts for the care of domestic animals. The bill would allow pet owners to create a trust that terminates when the last animal named dies or 90 years after its creation.
"The question of who cares for a pet after the death of its owner is troubling to many people," said Boucher in a press release.
"Some pets, like parrots, can live for 40 to 80 years," she said. "If a pet owner becomes ill, incapacitated or dies, it makes sense to have already decided ahead of time how to provide one's beloved pets with food, shelter, veterinary care and companionship."
A draft of the proposed legislation is below:
AN ACT CONCERNING THE CREATION OF TRUSTS FOR THE CARE OF DOMESTIC ANIMALS.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. (NEW) (Effective October 1, 2009) (a) A testamentary or inter vivos trust may be created to provide for the care of a domestic animal alive during the settlor's lifetime. Such trust shall terminate upon the earlier of (1) the death of the domestic animal or, if the trust was created to provide for the care of more than one domestic animal alive during the settlor's lifetime, the death of the last surviving domestic animal, or (2) ninety years after its creation.
(b) A trust authorized by this section may be enforced by a person appointed in the terms of the trust instrument or, if no person is so appointed, by a person appointed by the Probate Court. Any person having an interest in the welfare of the domestic animal may petition the court to appoint a person to enforce the trust or to remove a person so appointed.
(c) Property of a trust authorized by this section may be applied only to its intended use for the care of the domestic animal, except to the extent the Probate Court determines that the value of the trust property exceeds the amount required for the intended use. Except as otherwise provided in the terms of the trust instrument, property not required for the intended use shall be distributed to the settlor, if then living, otherwise to the settlor's successors in interest.
(d) Any person designated pursuant to the terms of the trust instrument may act as trustee of a trust authorized by this section. Any such trustee may also be designated as a remainder beneficiary of such trust pursuant to the terms of the trust instrument. For the purposes of this subsection: (1) "Person" means a natural person, corporation, limited liability company, trust, partnership, incorporated or unincorporated association or any other legal entity; and (2) "remainder beneficiary" has the same meaning as provided in section 45a-542a of the general statutes.
We will keep you advised as this bill winds through the legislative corridors.
What Happens When the Pet Trust Goes Bust?
What happens if the money that I set aside for my dog Lenny in a pet trust runs out before Lenny dies? Does the Trustee or Caregiver have to pay monies out of their own pocket?
Gina Las Vegas, Nevada
If that happens, Lenny will probably, unfortunately be turned over to a pet organization or euthanized, unless someone volunteers to adopt him.
Fortunately, at least, the trustee or caregiver would not be obligated to pay for any of Lenny’s expenses. An adequately funded trust will avoid this problem.
What Is An Inter Vivos Pet Trust?
After a recent tennis match, my partner asked me to describe the difference between a testamentary and an inter vivos trust.
I thought that was a strange request at that time and I inquired as to his interest. Jeff said that he was contemplating a trust for his horses and had read about the two different trust types.
I explained that the testamentary trust is created in the last will of the animal owner, springs out of, and only becomes effective upon the death of the owner.
The inter vivos trust, on the other hand, takes effect immediately and thus will be in operation prior to and when the owner dies. This type of trust can avoid all of the delay between the owner's death and the probating of the will and subsequent functioning of the trust. It is also effective in emergency or temporary situations.
Instant money may be available to provide for all of the need of your pets.
In addition, the inter vivos trust can be easily amended or changed.
The downside of the inter vivos trust is generally that is it is more costly and takes longer to prepare than the traditional trust that is included as the normal process in the estate plan.
Maryland Legislature Tries Pet Trust Again
The majority of States that allow for Statutory Pet Trusts may soon increase their number by one.
Currently, 39 states and the District of Columbia recognize some type of pet trust authorized by the legislature.
Recently, A. Wade Kach, a Baltimore County Republican, introduced legislation that would provide for pet trusts in Maryland.
The financial trust that has been proposed could be set up for the lifetime of the animal if the owner dies before their pet.
In light of history, this legislation may or may not pass. A previous bill introduced in the Maryland Senate in January of 2006 (Senate Bill 235) failed to pass.
Maybe this time, the politicians will get it right.
We will keep you advised.
More Good Reasons to Have a Pet Trust
San Diego Estate Planning Lawyer, Roy M. Doppelt's has a good post on Seven Reasons to Have a Pet Trust.
The first two reasons are here:
"1. You have pets with a long life expectancy. Some pets are almost sure to outlive you. Birds and reptiles have exceptionally long lives. Some turtles can live almost 100 years. A macaw for example can live to be 80. Horses have a life expectancy of twenty to thirty years.
2. You live alone. If you live alone with your pet, you need to consider who would step in and care for your pet if something happened unexpectantly to you."
Go to his website to read the rest of his reasoning.
If one of his ideas will move you to act on these issues, you and your pets will be much better off for your actions.
You Cannot Leave Cash To Your Pet
Why do I need to go to the expense of establishing a pet trust for my cat Erica? I should be able to just leave her X amount of dollars in my will. Right?
Betty Lou Pine Island, FL
Betty Lou, the answer to your question is very simple.
Although the attitudes of judges and juries in many states are slowly changing, the basic law is still that your pet is a piece of personal property.
Therefore, since Erica is still legally personal property, it is clear that personal property cannot own other personal property.
If you tried to give cash directly to Erica the result would be a legal impossibility and the gift would therefor be void.
Your Pet Trust Needs Liability Insurance
When you set up your Pet Trust, you need to consider the total amount of money that you will need to adequately fund the trust.
This will include calculations for yearly food, supplies and veternarian bills.
Alternatively, there may be costs for boarding, for pet insurance or to pay the caregiver or the Trustee.
Do not forget the possible costs of liability insurance.
This insurance should be purchased by the Trustee to protect the Trust assets, the Trustee, and the caretaker from potential liability for money damages that may be caused by your pet.
Whether accidental or by design, your pet may cause harm to property or to individuals.
Plan ahead and protect the Trust that you have established to protect your pet.
Add a Pet Trust to Your Estate Planning
If I have provided for my dog Derron in my will, why do I need to consider a Trust Agreement?
Chandra, Milroy, Indiana
Chandra, first of all, I applaud you for including your pet in your estate planning.
Second, keep in mind, that a will only becomes operative and effective when you die.
It can direct who will take care of your pets and how those tasks will be completed only after your death.
A valid Trust can provide for immediate care of Derron in the event that there is an emergency and you become ill or incapacitated.
You can nominate alternate caregivers for your pet and establish methods to fund and pay for the Trust.
A provision for your pet in your will is a good start; now begin the New Year with some planning and thoughts for a Pet Trust.
Talk With Your Attorney
I was told by a lawyer (not my lawyer) that a pet trust and a living trust are one in the same. He said they both have the same provisions.
He said by slightly changing the words in a few paragraphs, 95% of the trust articles and the length of both trust are nearly the same.
I am writing to get your opinion, not to try and prove anyone wrong.
1. If the lawyer is correct, and I already have a living trust, could I use that same document as a template, and have my lawyer draw up a pet trust for my pet?
2. Do I need a living trust and a pet trust or can I amend my living trust to take care of my pet?
3. If I can protect my pet by adding an amendment to my trust, what would you charge to draw up the amendment?
4. Can I provide for the care of my pet in my durable power of attorney, or should I have a separate document for that?
Thanks
Billie
Billie, I am not trying to avoid any of your questions or issues, but I cannot begin to answer your inquiries.
Each individual’s estate plan, financial needs and family situation varies tremendously.
A living trust, a trust, a statutory pet trust and a common law trust are very different entities.
You should discuss all of these issues with your attorney after he or she has had the opportunity to secure the necessary information and background to give the proper advice and guidance.
Idle conversation with an attorney unfamiliar with your situation is like securing medical advice on how to set your own broken bone from the internet.
What Is the Cost of a Pet Trust?
How much would a Pet Trust typically cost?
Billie Bob Crothersville, Indiana
Billie Bob, that is a question that I really cannot answer.
It will depend upon a number of issues.
Will you provide for the trust in a clause of a new will that you are writing?
Will it be a completely new simple trust of five or six pages or one of twenty to thirty pages for numerous animals?
If you already have your estate plan in place, is this a new document or a codicil (addition) to those documents?
Are you establishing numerous specific rules for the caretaker, or allowing a great deal of latitude?
If you are leaving your pet to an institution, do they have guidelines for your documents, do they prepare form documents or will they accept those of your counsel?
The needs and desires of each individual is different and therefore each estate plan will be different.
A competent professional legal advisor will be open and clear about the costs of the Pet Trust and how it interacts with the totality of your specific estate plan.
Just ask!
Choose a Professional Adviser for Your Pet Trust
Why do I need to hire an attorney?
I can just go download the form from the Internet and fill in the blanks.
Each day attorneys all across America hear this familiar refrain from potential clients.
Estate planning documents for pet owners are no different.
You need to consult your professional adviser if your want the documents to be legally correct and binding.
One example of this assistance is provided by Attorney Rachel Hirschfeld.
Ms. Hirschfeld has extensive experience in pet protection documents and stresses the need for caution and expertise when they are prepared.
"First of all, the word “incapacity” should never be used when filling in pet protection documents to describe the owner’s possible mental state because it may trigger, or be used as evidence in, a court proceeding. Specifically, the pet owner may become unable to care for one or more aspects of the pet’s life, yet not be legally incapacitated. For example, an arthritic owner may want the pet guardian to begin acting, in a limited role, simply because he can no longer adequately walk the dog. Another owner may want the pet guardian to act because she has difficulty remembering whether or not she fed her cat. Neither of these examples should generate a court appointed guardian."
Listen to the professionals.
Follow the advice of your attorney.
Do not try to prepare your own legally binding documents from a generic download from an unknown website.
For yourself…or for your pets.
Seperate the Caregiver and the Trustee in Your Pet Trust
I want to appoint my accountant as the Trustee for my Pet Trust because she has a full background and understanding of my financial condition. However, the accountant insists that she should also be the caregiver for Moxy, my terrier, so that she can combine duties to save time. Is this a good idea?
Rex Lavergne, Tennessee
The animal caregiver, custodian or guardian is an important component in the Pet Trust.
Usually a family member or close friend is appointed to this position. Someone who knows and cares for the pet. Perhaps, someone who has a history with your animal.
Professor Gerry W. Beyer has taken this position on the appointment of the Trustee as the caregiver. In 2008, he wrote:
"This is the most important decision because this person will provide the pet’s care. The pet, the prospective caregiver, and the caregiver’s family (human and nonhuman) should make sure they get along. It is important to name alternates in case the designated person is unable to care for the pet. The trustee may be given the ability to select a good home for the pet if none of the named beneficiaries can care for the animal. But the trustee must not be permitted to appoint him- or herself, as this would eliminate the checks-and-balances aspect of separating the caregiver from the money provider."
Heed the words of the experts in this field.
Separate the powers, duties and appointment of the caregiver and the Trustee in your pet trust.
Pet Trusts in Kansas
I live in the Jayhawk state of Kansas, the home of the 2008 National NCAA Basketball Champions. Any information on a pet trust for my cockatoo, Benke?
Laurie, Agra, Kansas
Laurie, the State of Kansas has a Pet Trust statute that was enacted in 2003. The trust language is very short:
"(a) A trust may be created to provide for the care of an animal alive during the settlor's lifetime. The trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime, upon the death of the last surviving animal.
(b) A trust authorized by this section may be enforced by a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court. A person having an interest in the welfare of the animal may request the court to appoint a person to enforce the trust or to remove a person appointed.
(c) Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Except as otherwise provided in the terms of the trust, property not required for the intended use may be distributed to the settlor, if then living, otherwise to the settlor's successors in interest."
It is interesting, in that the statute states, that a trust can be created for an animal and does not specifically refer to a “pet” or “companion animal.”
Anyone for an elephant trust?
Contact an attorney and your financial advisers and begin your estate planning for Benke
How Much Money Is Needed to Fund My Pet Trust?
I am in the early stages of thinking about a pet trust for my cat, Alabaster. How much money will I need to put into the trust?
Shelby Carmel, Indiana
Shelby, just about anyone that you ask will have a different answer to this question.
Attorney Nancy J. Burns, of the firm of Schwartz Manes Ruby & Slovin of Cincinnati has set the following guidelines:
"To determine how much money to put into (“fund”) your pet trust, consider the following:
• life expectancy of your pet
• cost of current or future medical treatment
• trustee fees
• whether or not to compensate the caregiver
• cost of basic care items such as food, medication, and grooming
NOT TOO LITTLE, NOT TOO MUCH
You will want to set aside enough so that the trust does not run out of funds during your pet’s lifetime, but not so much to cause your heirs to contest your trust. If you put too much property in the trust, a judge may determine that the value of the trust property exceeds the amount necessary to care for your pet and order that the excess property be given back to the person who created the trust or to others named in the trust, or according to your estate plan.
NOW OR LATER
You can fund your pet trust during your lifetime or after your death. Your pet trust needs assets in it to pay for the care of your pet. If you fund your trust during your lifetime there will be assets immediately available to care for your pet if you become disabled or die. If you do not fund the trust during your lifetime and you become disabled, there would be no funds in the trust to care for your pet. If you died before funding the trust, assets may first have to pass through probate causing a delay before your trust receives funds to care for your pet."
For additional information, you may go to her website here.
We will offer differing opinions and attitudes regarding pet trust funding for your review and consideration in the future.
Shelby, at least, you are in the initial stages of planning and that is the key to protecting your pet in the future.
Delaware Passes New Pet Trust Legislation
In May of this year, I wrote here that Delaware had no statutory Pet Trust, but that there were other options available for estate planning for pet owners, including the traditional pet trust
Now, Delaware has joined the ever growing list of states with a Statutory Pet Trust.
Professor Gerry W. Beyer is a faculty member of the Texas Tech University School of Law. Professor Beyer summarized the new legislation as follows:
o A trust for the care of one or more specific animals living at the settlor’s death is valid.
o The trust ends upon the death of all animals living at the settlor’s death which are benefit by the trust.
o The settlor may name a trust enforcer.
o If the settlor did not name an enforcer (or if the named enforcer is unwilling or unable to serve), the Court of Chancery may appoint an enforcer.
o A person with an interest in the animals may petition for the appointment or removal of an enforcer. This interest cannot be merely a general public interest; the petitioner must have an actual interest in the specific animals covered by the trust.
o Trust property may be used only for its intended use.
o When the trust ends, any remaining property passes according to the terms of the trust.
o The settlor (or other owner of the benefited animal) may transfer ownership of the animal to the trustee upon trust creation or thereafter.
o If the intended owner disclaims, the trustee becomes the owner unless the trust provides otherwise.
o The trustee must provide the animal with the care the settlor directs in the trust or, if the settlor did not provide instructions, the care that is reasonable under the circumstances.
o The trustee may employ agents to provide care to the animal and pay for the care from the trust property.
o The term “animal” is broadly defined to be “any nonhuman member of the animal kingdom.”
Interestingly the statute also states that "Plants and inanimate objects are not included. "
The entire statute can be found here.
Pet owners in Delaware now have more options than ever to plan for the future care and well being of their pets.
Use the tools that are available to you.
Pet Trusts Are American Decadence?
It is no surprise or secret that I am usually a very strong proponent of estate planning for pet owners, pet trusts and emergency planning for your pets in general.
I have also tried to present differing views of this philosophy.
Well, here is definitely an opposing view.
From the other side of the pond, Harvard graduate Christopher Caldwell, the Senior Editor of the Weekly Standard and a contributing writer for the New York Times magazine, comes an article in the London based Financial Times, in which he provided a strong opinion of Pet Trusts.
Mr. Caldwell wrote…
" But if the adjective “generous” needs to be treated with care when we speak of living benefactors, it is wholly irrelevant when it comes to bequests, for here the separation of the giver from his money is involuntary. Stockpiling that money into a foundation where it can “do some good” may be farsighted and it may be misguided. It may mean you care more for your pet projects (or your pets) than for your family. It may mean that you wish to spare your family from the curse of idleness. But “generosity” does not come into it.
The decadence that has lately characterised Americans’ treatment of their pets – dog bakeries, dog restaurants, doggy day-care outlets where dogs can watch dog-themed movies – has now found legal expression. Leaving money for the upkeep of a pet used to be done by naming a (human) beneficiary to take care of it. Today, pets such as Trouble ( the late Leona Helmsley’s dog) can themselves be made beneficiaries through “statutory pet trusts”. (This naturally raises the question of whether Trouble – a notoriously nippy pup – can be sued.) Through such trusts, testators can give specific instructions about favourite foods and so on. Trouble, it has been reported, continues to be spoon-fed by Helmsley employees off a silver platter. "
You may read his entire article here.
Seems to be a little harsh, but everyone is certainly entitled to their opinion.
I wonder if Mr. Caldwell has any pets.
California Enacts New Pet Trust Legislation
It has been said many times, that as California goes…so goes the country.
Well, in the area of estate planning for pets, California has not been a leader, but recently joined the enlightened ranks of numerous other states.
We originally wrote about the proposed legislation here
The Legislative Counsel’s Digest ( of California) states the following on the proposed changes;
"Existing law provides that a trust for the care of a designated domestic or pet animal may be performed by the trustee for the life of the animal, whether or not there is a beneficiary who can seek enforcement or termination of the trust and whether or not the terms of the trust contemplate a longer duration. ..
"This bill would repeal the provisions regarding domestic or pet animal trusts and would provide instead that a trust for the care of a designated domestic or pet animal is for a lawful noncharitable purpose and terminates when no…designated animal is living on the date of the…settlor’s death…unless otherwise provided in the trust …The bill would require a court to liberally construe a pet trust to bring it within the bill's provisions, to presume against an interpretation that would render the disposition a mere request or an attempt to honor the pet, and to carry out the general intent of the trust. The bill would provide an order of disposition of trust property upon termination of the trust and would provide authority for the court to name a trustee and to transfer trust property, as specified. This bill would permit…any person interested in the welfare of the pet animal or any nonprofit charitable organization…that has as its principal activity…the care of animals to… petition the court regarding the trust, as specified…"
We are now pleased to inform you that as of July 22, the proposed legislation has been passed and assigned by Governor Schwarzenegger.
The full legislation can be found here.
Welcome California, to the new millennium.
Put the new statute to use for you and your pets.
Pet Trusts In Ohio
Okay, I have been following your information regarding estate planning for my dog, Sir Dickerson. I live in Ohio and have not heard anything about estate planning in my state. Do you have any information to help me in this area? Thanks.
Judy Piqua, Ohio
Judy, although somewhat late to the party, since January of 2007, Ohio has had Pet Trust legislation.
We turned to the Ohio State Bar Association for more information in this matter. According to Cleveland attorney, Marc L. Stolarsky, the following question and answers will provide some guidance for you in this area:
"Q.: Is there some kind of legal device I can use to make sure my pet is cared for after I’m gone?
A.: Yes. House Bill 416 has been passed by the Ohio legislature and signed into law. Effective January 1, 2007, Ohio Trust Code (O.R.C.) Section 5804.08 allows you to create a trust specifically for the care of your pet.
Q.: Does the law cover all types of pets, or only dogs and cats?
A.: The law covers all animals, including dogs, cats, and even your pet tarantula if you choose to have one. However, the law covers only animals that were living when the person who created the trust (called the settler or grantor) was still alive. Also, the trust is effective for no longer than the duration of the lives of the animals it names.
Q.: Why didn’t Ohio law allow for pet trusts before now?
A.: Historically, pet trusts were invalid for two reasons. First, there was no human beneficiary who could be identified in definite and certain terms to enforce the trust. Second, the rule against perpetuities (a legal doctrine that was designed to prevent property ownership from being tied up for unreasonably long periods) requires a human “life-in-being” (the life of a person who can affect the vesting of the property interest) against which to measure the duration of the trust. Under the 2007 law, a pet trust is valid in its own right and is no longer considered an “honorary” trust. This means that the trustee no longer has the option of whether or not to enforce the pet trust. The trustee must administer the trust and make distributions for the benefit of the pet, or the court will appoint a successor trustee. In the past, trustees have sometimes taken money provided through honorary trusts that was intended to be used for the care of pets, and used it for other purposes, instead.
Q.: How does a pet trust work?
A.: A pet trust must be created for the continued care and maintenance of a particular animal. The trust must be funded with some amount of money or property, and a trustee must be designated to administer the trust. Although a pet trust offers a level of protection for the pet that exceeds the sort of protection that was available through the use of honorary trusts, there are limitations. For example, the court has the authority to reduce the amount of caretaking funds to an amount it deems is reasonable for the care of the pet. When creating such a trust, it is wise to name a person who would be willing and able, if necessary, to step forward to bring a legal action against the trust’s caretaker-trustee, should the trustee fail to honor the trust. The 2007 law does not change in any way O.R.C. Section 1721.12, which permits cemeteries to hold property in trust for the maintenance of animal gravesites.
Q.: What steps should I take if I want to prepare a trust for my pet?
A.: To create a workable pet trust, you should do the following:
• Select a trustee to administer the trust.
• Select a primary as well as a secondary caregiver.
• Prevent fraud by protecting your pet’s identity (for example, by inserting a microchip into your pet’s body, to provide proof that the animal named in the trust is actually the beneficiary. In one case, an unscrupulous caregiver replaced a deceased cat with one cat after another for 30 years.
• Put pet care instructions, such as food preferences and exercise routine, in writing.
• Identify any health problems, medication or treatments, and a schedule of veterinary visits.
• Require the trustee to make regular inspections.
• Provide sufficient resources to cover pet care expenses, and specify how funds should be distributed (e.g., annually, quarterly, bi-monthly). Do not invite a court challenge to your trust by over-funding it.
• Provide the funding necessary to administer the estate.
• Specify how any funds remaining after the animal’s death should be used.
• State how the animal should be treated after its death (e.g, burial, cremation, etc.). "
Ohio is now in the majority of states that recognize Statutory Pet Trusts.
Contact you local attorney for additional assistance and prepare to plan for the future for Sir Dickerson.
Remember The Guidelines For Your Pet Trust
If that amount is unreasonable or unrealistic, the Trust may be challenged. The larger the amount left for your pet, the higher the percentage of a challenge. Especially, by a disgruntled relative.
Many of you will recall that hotel heiress, Leona Helmsley, who died last year, left a $12 million Trust to her 9 year old Maltese, Trouble.
Well, Trouble, who now lives in Florida, has trouble now!
A New York Judge and the State Attorney General have signed off an agreement that reduces Trouble’s share to $2 million.
Not all of the facts have been revealed as to agreement of the parties or their reasoning, but certainly some of the heirs that were omitted from Helmsley’s will stand to see a substantial increase in their fortunes.
It appears as though the Trustee of Trouble was not opposed to the reduction of the amount.
You can see the update on the story here.
Remember these common issues when establishing you Pet Trust:
The appointment of the trustee and successor;
The appointment of the caretaker and successor;
The need to adequately identify your pets in order to prevent fraud;
A description of your pet’s standard of living and care in detail;
A requirement that the trustee ensures the caregiver is providing the pet with regular, thorough veterinary check-ups;
The need to determine the amount of cash or assets needed to adequately cover the expenses for your pet’s care;
The need to determine the amount of cash or assets needed to adequately cover the expenses of administering the pet trust;
Choosing a beneficiary who will receive any remaining funds that were not used by the pet trust; and
Providing directions for your pet’s burial or cremation.
But, do not forget to…establish your Pet Trust.
Can A Pet Trustee Receive Payment?
I saw your recent explanation of the duties of a Trustee for a Pet Trust. I have been asked by my brother Rex to serve as the trustee for his three dogs, Bingo, Bango and Bongo (very cute eh!) If I agree to do this, can I get paid for my time?
Zachary Palm Island, Florida
Zachary, unless the Trust Instrument has some type of specific prohibition, you are entitled to "reasonable compensation" for your services as a Trustee.
What is reasonable compensation?
That is a good question and is usually based upon an hourly rate or a percentage fee of the total amount of the Trust.
Bank trust departments will customarily charge an annual fee equal to approximately one percent (1%) of the current value of the trust's assets. They may charge a lower fee, but then add on transaction charges for every action.
If the Trust Instrument provides for specific compensation, you should follow the dictates of that document. If you feel that the compensation provided for in the trust is unreasonable or unduly burdensome, you can either resign as the Trustee or petition the court for additional compensation.
The trustee’s fee is normally paid on a quarterly basis. Remember, compensation (but not expense reimbursements) that you receive as a Trustee, is taxable to you, usually as self employment income.
Some Trustees want to waive the compensation because of their love for the family or animals involved. If you want to do this, make sure that you consult with your accountant about how to document this compensation in the correct manner. Otherwise you may have taxable income imputed to you even though you do not actually receive it.
The duties and responsibilities of a Pet Trustee are serious and legally binding. Receiving reasonable compensation for the performance of this role is fair and anticipated.
What Are the Duties of a Pet Trustee?
I want to appoint my cousin Sully as the Trustee for my Pet Trust. He said that he would consider doing it, but wanted to know exactly what that means. How do I explain this to him?
Bianca Pawley’s Island , South Carolina
Bianca, generally the Trustee is considered to have four major areas of duties or responsibilities.
He or she must collect all of the assets that belong to the trust, manage and invest the trust assets, pay all of the applicable debts and taxes as required in the trust document and then distribute the remaining trust assets to the designated beneficiaries as set out in the Trust.
The collection of the assets should be a fairly simple task in that most Pet Trusts have specific source of easily identifiable funds to be placed into the Trust.
The investments must be in a prudent and reasonable manner, with no self-dealings or commingling (mixing) of personal and trust funds.
Accurate records of all income and expense of the Trust funds must be kept by the Trustee.
The Trustee is usually empowered to hire legal counsel or accounting help to assist in the legal and/or financial affairs of the Trust, to be sure that they are in full compliance with state and federal rules and regulations.
When the Trust ends, the remaining assets are turned over to the named beneficiary and the duties of the Trustee are ended.
Tell your cousin Sully, there is no reason for him not to help you and your pet with your estate planning.
Kentucky has Options for Statutory Pet Trust
I have a number of hunting dogs that provide both business and pleasure to me and my kids. They actually are a valuable asset of my business. Should I set up a Pet Trust for them?
Bo Paducah, Kentucky
Bo…Kentucky is in the minority of states in that there is no Statutory Pet Trust legislation that has been passed by your Commonwealth.
However, Kentucky was one of the early leaders in recognizing the desire of pet owners to prepare for the future of their pets.
In 1927, the case of Willett v. Willett, 247 S.W. 739 (Ky. Ct. App. 1923) was a landmark decision in that it was the first time an appellate court considered a will contest that arose as a result of a gift to an animal.
In Willett, the testatrix ( the one who wrote the will) devised her entire estate to her sister for life, then to her church with the exception of $1,000.00 which is to be used…
"for the support of our dog 'Dick,' if the interest is not sufficient for him to be kept in comfort, that is being well fed, have a bed in the house by a fire and treated well every day, that the principal be used to such a sum so it will last his lifetime. . . Dicky must have three meals daily..."
The trial court held the clause for Dicky's support to be invalid, because…
"(1) there is no trustee, and (2) a dog cannot take as a devisee under our law."
However, the Kentucky Supreme Court rejected these arguments, and stated that a trust should never fail for lack of a trustee. The court further reasoned that if no trustee was willing or able to serve, the court could appoint a trustee.
In addition, the Supreme Court interpreted the language of the will as creating a trust for the benefit of the dog, not as a gift directly to the dog.
The Kentucky court declared that a testamentary gift for the care of a specific animal is a humane purpose, and thus was valid under a state statute permitting testamentary gifts and trusts for charitable or humane purposes.
Finally the Court, set out its opinion on the difference between a charity and a humane purpose, stating that
"[c]harity extends to every one of a class, while . . . a humane purpose . . . moves a person to take care of or feed a single hungry person, bird or dog."
Thus, the Kentucky Supreme Court upheld the pet provisions in Willett because of an express statutory provision permitting trusts for humane purposes.
Even though you are in a state that has not authorized a specific Statutory Pet Trust, you can still plan to provide for the care of your pets with the preparation of the correct legal documents. There are alternate methods that will be accepted and approved by the courts.
We have discussed those options before.
Review them and discuss them with your family, attorney, financial adviser and accountant.
Then make a plan.
Funding Options for Your Pet Trust
The bigger issue is when we talk about the final funding of the Trust for the benefit of your pet.
There are number of ways that you can ultimately transfer assets into the Trust.
The most obvious way is simply to have a certain cash amount transferred to the Trust while you are alive. The Trust is funded and will grow with accumulated interest.
The down side is that the use of the money is gone from your individual control until your death (assuming that you do not revoke the Trust).
You may also add funds to the Trust with a “pour over provision” in your will and designate specific source of the funds.
Another alternative can be the use of a Payable on Death Account.
This account is in your name individually and also in the name of the Trustee. Upon your death, without any probate process, the money should transfer to the Trustee for the benefit of your Pet Trust.
You can also purchase a life insurance policy and name the Trustee as the beneficiary of the proceeds.
This beneficiary method can also be successfully used with other forms of personal property, Individual Retirement Accounts, annuities, 401 (k)’s, corporate stock (both private and public), limited liability memberships and bonds of all types. Even rarely, in some circumstance, real estate may be used.
Remember that most, if not all of these actions, involve some type of tax implication and you need to discuss this with your financial adviser and accountant before choosing the proper course of action.
Then, of course, you will need to follow up with your estate attorney or insurance and stock brokers to verify the correct language that will be needed to be used for all of these avenues to secure the results that you require.
You have a number of options to fund your Pet Trust… make sure that you have a Trust to fund.
Include your Veterinarian in your Estate Plans for Your Pet
Certainly, your own family members, the potential trustee and the potential caretakers of your pet must all be in accord with your plans and wishes.
Your estate attorney and financial planer also need to be involved to make sure that your documents conform to the legal and financial standards.
But, don’t forget to meet with your Veterinarian.
Very few individuals have the same insight about the health and well being of your animal as your pet’s own Vet.
A discussion with him or her during your estate planning process can assist greatly.
Medical records and the future potential needs of your pets can be outlined for the caretakers.
Special dietary schedules or exercise or medication routines can be easily established for future reference.
You and your Vet can discuss the potential time line for the duration of the life of your pet. This can provide some guidelines for the total costs that will be necessary for the care of your pet and the necessary funding of the Pet Trust.
Your Vet can also play an integral role in the transfer of physical custody of your pet to the caretaker on a temporary or permanent basis and is indispensable when the final arrangements must be made for inevitable death of your pet.
Talk to your Vet on behalf of your pet.
It is a necessary part of your overall estate plan..
Don't Forget to Fund Your Pet Trust
Nathan Gene Stone, Mississippi
Nathan, once you have set up your Pet Trust you need to at least fund it with a minimal amount of money.
For the Trust to take effect, some assets must be transferred into the Trust.
Not everyone understands that the grantor (you as the pet owner) must take some affirmative steps to transfer at least some assets and fund the Trust. Merely executing the Trust itself will not cause the Trust to become funded. You must actually transfer legal title to the Trust.
The transfer is from you as an individual to the Trustee, even if you are also the Trustee.
You need to be clear that any activity that you take is as, “Nathan Gene, Trustee of the Annika the Afghan Hound Trust,” or whatever is the correct designation.
These actions, whether money transfers or whatever needs to be completed on behalf of the Trust and should be by the Trustee and not you as an individual.
You need to discuss all aspects of correctly funding your Pet Trust with your legal counsel to ensure complete accuracy.
The first step is draw up the Trust...then you are on your way to protecting your pet's future.
Support Your Local No-Kill Animal Shelter
I had the pleasure this past week of meeting with Mr. Andy Reed, the Director of Development for The Humane Society of Naples.
Over a cup of coffee, we discussed the challenges of his organization and others like his, in a similar position, during these times of uncertainty and the apparently declining economic climate.
Andy pointed out that the vast majority of funds that come into the shelter are from private individuals and animal lovers in general.
“We are very pleased that The Humane Society of Naples is Collier County’s only physical no-kill animal shelter,” said Reed. “We do our best to work with owners and prospective adoptees to place the animals that we receive in a good and safe environment.”
Reed said that they have established a “Remaining Best Friends” Program at The Naples Humane Society.
Andy and this staff will work with families, their financial advisers and their estate planning attorneys to help guide and shape the future of their pets.
Reed suggest to all animal owners, that they follow at least three simple steps for their pet's future;
Set up a plan for an emergency caregiver for pets using the appropriate legal documentation and instructions for necessary care.
Use a will to properly provide for the long term care of pets after the owners are no longer around to do so.
Set up a Pet Trust that can be used for the pet if the owner becomes incapacitated or ill during their lifetime.
Northern Trust recently published a survey of wealthy families. In Wealth in America 2008, Findings from a Survey of Millionaire Households, they reported that charitable giving among families with $10,000,000.00 to invest decreased dramatically from 2005 to 2006.
Many individuals (42%), not surprisingly, reported in the survey that they supported causes in which they personally believed.
The survey also reported that 60% of those families would eventually give 10% or less of their estate assets to charities. One-half of that same group plans on no charitable bequests at all, from their estate assets.
Reed told me that approximately 30 to 40 % of the private support for his shelter comes as gifts from estates.
Your monetary support is invaluable to animal shelters.
Your monetary support is absolutely necessary to maintain animal shelters.
We often outline the vital components of estate planning for your pets, here and here.
You will need to choose a beneficiary who will receive any remaining funds that are not used by the Pet Trust.
If you designate an animal shelter as that alternate beneficiary, you can be sure that you provide the necessary care and protection for the well being of your pet and, just maybe, leave a legacy as well.
Burial, Cremation or Alkaline Hydrolysis for Your Pet?
We have discussed before, here, that one issue to consider as a key component of your Pet Trust drafting is the final disposition of your pet.
After you are long gone, eventually your pet will also die and someone or some entity will be responsible for following the final directives that you have set out in your Pet Trust or will.
We usually talk about two options after death; burial or cremation.
However, recently the web is a buzz about a new option…dissolving bodies in lye and flushing the brownish, syrupy residue down a drain.
BioSAFE Engineering LLC, located in the small town of Brownsburg, Indiana, is producing cylinders for a process called alkaline hydrolysis.
According to the BioSAFE website…
...Alkaline hydrolysis is a process of an elevated temperature and pressure to convert the proteins, nucleic acids, and lipids of all cells and tissues, as well as infectious microorganisms, to a sterile aqueous solution of small peptides, amino acids, sugars, soaps, and electrolytes. The alkali itself is consumed in the process by generating the salts of the hydrolysis products. The only byproducts of the process are the mineral constituents (ash) of the bones and teeth of vertebrates. These are soft enough after the organic matter has been degraded to be easily crushed (even by bare hands) and recovered as calcium phosphate powder (sterile bone meal).
The WR2 Tissue Digestor™ consists of an insulated stainless steel pressure vessel with a manually or hydraulically clamped lid. The unit is supplied with a basket to contain bone remnants. All wetted parts are 316-L stainless steel alloy, and all vessels are ASME pressure rated and certified. All electrical components are built according to NEMA standards. The system is fully automated; allowing unattended operation after the unit is loaded...
What does this mean?
The equipment that they manufacture provides the access for a process that converts animal, human, and microbial tissues into a sterile, neutral, aqueous solution suitable for disposal to a sanitary sewer.
Apparently the time and cost for this procedure depends on the size and weight of the human or animal being processed.
The Associated Press recently reported in a story by reporter Norma Love that
..."No funeral homes in the U.S. — or anywhere else in the world, as far as the equipment manufacturer knows — offer it. In fact, only two U.S. medical centers use it on human bodies, and only on cadavers donated for research.
But because of its environmental advantages, some in the funeral industry say it could someday rival burial and cremation.
"It's not often that a truly game-changing technology comes along in the funeral service," the newsletter Funeral Service Insider said in September. But "we might have gotten a hold of one."
Currently, only the states of Minnesota and New Hampshire have legalized this process for humans.
Apparently, some 40 to 50 facilities use the cylinders developed by BioSAFE on human medical waste, animal carcasses or both. The users include veterinary schools, universities, such as the University of Florida (for cadavers) pharmaceutical companies and even the U.S. government.
The liquid residue from human tissue and animal carcasses can simple be poured down the drain.
I am not, in any manner, advocating the use of the process.
The thought of pouring my pet down the drain is a little appalling.
However, many people retain the ashes from a cremation of both humans and pets and place them on the mantle or a shelf.
I am not sure how much different this would be…a little decorative bottle, rather than an urn.
I don’t know…
It is your choice.
I am just presenting another viable option for your consideration.
Estate planning for your pet. Think about it, discuss it, make some decisions and then act on your plan.
No Pet Trusts in Connecticut
I live in Barkhamsted, Connecticut and have a two year old Otterhound named Oscar. Can you tell me if my state recognizes pet trusts?
Kacey
Kacey, we went straight to the source on this one.
According to Sandra Norman-Eady, Chief Attorney, during the 2005 regular session of the Connecticut General Assembly, an Act Concerning the Creation of Trusts for the Care of Domestic Animals, was introduced to the legislature.
“The bill authorized trusts for the care of domestic animals that are alive when the person who created the trust dies. It allowed a natural person, corporation, limited liability company, trust, partnership, incorporated or unincorporated association, or any other legal entity to be selected as trustee.
Under the bill, the trust would have terminated on the earlier of the following occurrences: (1) when the animal died, or if the trust was created to provide for the care of more than one animal, when the last surviving animal died; or (2) 90 years after its creation.
A person appointed in the trust could enforce it. If no one was named, the bill allowed a court to appoint someone to enforce it. It allowed a person having an interest in the animal's welfare to ask the court to appoint a person to enforce the trust or to remove a person appointed.
The bill specified that trust property authorized to care for an animal could be applied only for its intended use, except to the extent the court determined that the trust's value exceeded the amount required for the intended use. Except as otherwise provided in the trust, property not required for the intended use had to be distributed to the settlor, if living. (A settlor is the person who creates a trust and transfers property to it. ) Otherwise, it had to be distributed to the settlor's successors in interest. The bill permitted a trustee to be designated as the person who received the trust assets when the animal the trust benefits died.
The bill was referred to and voted out of the Judiciary Committee. However, it ultimately died in the Judiciary Committee upon recommitment by the Senate.”
No additional legislation has been passed in this area.
Therefore, Connecticut remains in the minority as one of only eleven states that does not recognize a statutory pet trust.
We have written before however, here , that you can still provide for your pet's future with an inter vivos trust or with a will provision in your current estate plan.
Contact your legislators if your want Connecticut to join the main stream of thought in this area.
With or without a statutory pet trust, you can do estate planning for your pets.
It is the responsible thing to do.
No Pet Trust In Delaware?
Although pet lovers in Delaware have been trying for over five years, the legislature has consistently failed to pass a Statutory Pet Trust in that jurisdiction.
Nevertheless, pet owners in Delaware are not out of options in the event that they want to provide estate planning for their pets.
Professor Gerry W. Beyer is a faculty member of the Texas Tech University School of Law. Professor Beyer is an invaluable source and resource for all involved in the field of estate planning for animal owners. His website is full of updated information regarding this area.
A prolific author and public speaker, Dr. Beyer writes that the “traditional pet trust” is effective in all states, even those without the Statutory Pet Trust.
According to Professor Beyer,” Many pet owners will prefer the traditional pet trust because it provides the pet owner with the ability to have tremendous control over the pet’s care. For example, you may specify who manages the property (the trustee), the pet’s caregiver (the beneficiary), what type of expenses relating to the pet the trustee will pay, the type of care the animal will receive, what happens if the beneficiary can no longer care for the animal, and the disposition of the pet after the pet dies.”
If you live in a state that has not authorized a specific Statutory Pet Trust, you can still plan to provide for the care of your pets with the preparation of the correct legal documents. There are alternate methods that will be accepted and approved by the courts.
Yes Virginia, there is a state Pet Trust
Does Virginia have pet a trust law? I am concerned about my little dog, Alice, who is an Affenpinscher.
Maybelle, Manassas, Virginia
Yes, Virginia…sorry I could not resist…yes, Maybelle, Virginia does have a Pet Trust Statute. However, I have to admit that I knew that, but I had no idea what an Affenpinscher was until I looked it up.
The Animal Welfare League of Arlington Virginia reported that in 2006,
“Virginia proudly joined 37 other states with a pet trust statute. This means that Virginia is also a little late to the game, but at least now Virginians can rest assured that their furry friends will be taken care of in case something ever happens to the pet's guardian. Pet owners may now designate a caretaker for their pet(s) and a trustee who ensures that the money is spent on the pet. Previously, if a pet's guardian passed away and left money in their will to take care of the pet, anyone could contest the provision and the pet could find himself in the shelter -- no cash, no home, no guardian. This statute puts an end to this injustice."
In its 2005 Session, the Virginia General Assembly enacted Senate Bill 891, the Uniform Trust Code (“UTC”), with modifications.
It provides that a trust may be created to provide for the care of an animal alive during the settlor's lifetime. The trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime, upon the death of the last surviving animal.
The instrument creating the trust shall be liberally construed to bring the transfer within the scope of trusts governed by this section, to presume against the merely precatory or honorary nature of the disposition, and to carry out the general intent of the transferor.
A trust authorized by this section may be enforced by a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court.
Except as ordered by a court or required by the trust instrument, no filing, report, registration, periodic accounting, separate maintenance of funds, appointment, or surety bond shall be required by reason of the existence of the fiduciary relationship of the trustee.
Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use.
Except as otherwise provided in the terms of the trust, property not required for the intended use shall be distributed to the settlor, if then living. If the settlor is deceased, such property shall be distributed pursuant to the residuary clause of the settlor's will if the trust for the animal was created in a preresiduary clause in the will or pursuant to the residuary provisions of the inter vivos trust if the trust for the animal was created in a preresiduary clause in the trust instrument; otherwise, such property shall be distributed to the settlor's successors in interest.
Those of you that are regular readers of this Blog will certainly note that the Virginia Pet Statute outline is very similar if not identical to other state Pet Statutes.
Attorneys are Active Animal Advocates
What exactly is this critter called animal law?
Attorney Emily A. Gardner of Hawaii, in her website, states that she is an attorney devoted to animal law.
Ms. Gardner defines the field here,
“…Animal law has become a distinct legal discipline, with its own body of case law and a growing number of practitioners and academics. The practice of animal law deals primarily with resolving legal issues and situations in which the nature of animals–including their legal status, behavior or biology–is an important factor. Although animals themselves typically do not have standing (meaning the right to sue and be sued on their own behalf) people who care about animals, or who own them or have suffered harm by them often do. As a general rule, if a person or a group of people can show that they have a real and tangible stake in a legal claim involving animals, they can have their grievances heard in a court of law…”
Ms. Gardner proposed the current Hawaii Pet Trust legislation that was adopted by the state in 2005.
She was also invited to testify before the Hawaiian House Judiciary committee concerning her legislation.
She provided insightful reasoning for the passage of the bill when she testified before the Committee;
“…There are many good, caring, intelligent people in Hawaii who want to be able to provide for their pets through the creation of a trust. H.B. 1453 will give them, and their attorneys, the certainty of creation of an enforceable document -- it will do away with all the uncertainties surrounding pet trusts that currently exist.
At the same time, the legislation contains a provision which would allow a court to reduce a bequest deemed in excess of the reasonable needs of the pet-beneficiary, thereby providing a mechanism to prevent excesses which might bring the law into criticism. An attorney counseling their clients would surely inform them of this provision and advise them accordingly…”
She further testified that the bill also contained a provision exempting the trust from the common law against perpetuities, which would allow for the provision of care for long-lived pets such as birds and reptiles and that the legislation would have little administrative burden, as Court appointed enforcement of the trust would be available only by petition.
When asked who might possibly be opposed to the newly proposed legislation, she responded,
“I have wracked my brain for an answer. The only one I've come up with is "The nieces and nephews who didn't care enough to visit auntie, and who are passed over for a bequest in favor of Spot and Fido."
Shouldn't we permit people to care for those most dear to them in the event of their untimely demise, even if those are dogs, cats, or birds rather than people?”
There are many devoted animal owners and lovers throughout the United States.
Fortunately, there are also many attorneys who are included in this group and are willing to share their time, energy and efforts to further the various causes for you and your pets.
A Pet Trust can be Inter Vivos or Testamentary
A pet trust can be established thorough a testamentary trust or with an inter vivos trust.
An inter vivos trust is one that takes place immediately upon the completion and execution of the document. We generally think of this type of trust as a living trust and it is usually revocable by the trust grantor, creator or settlor (all of these terms are used interchangeably).
The living trust can be used to plan for unforeseen circumstances such as incapacity, disability and eventually the death of the grantor.
The grantor also usually serves as the original trustee or co-trustee. In the case where two or more co-trustees serve, the trust instrument can provide that either trustee may act alone on behalf of the trust or require both co-trustees to actor sign.
The trust may never actually be needed or used until the death of the grantor, but it is always available if necessary. It can be changed or altered or even revoked by the grantor at any time.
In a pet trust, this provides that there will be no lapse of care or treatment for your pet and no delay because of any probate process.
On the other hand, a testamentary trust is one that is created in a will.
Since a will is an ambulatory instrument, in that it never is effective until the testator (the one who writes the will) actually dies, this trust will not spring to use until the pet owner is no longer around.
Additionally, a will must go through the probate process, see here, and there may well be some time delays.
This delay may cause issues for the ability of your pet caretaker to secure the means and authority to take care of your pet.
One advantage of this type of trust is that is may be less expensive than the living trust. The trust clauses can be incorporated into the will of the pet owner and thus, become an integral part of the overall estate planning process.
Issues to Consider for Your Pet Trust Planning
The American Society for the Prevention of Cruelty to Animals ( ASPCA) is another invaluable site to reference estate planning needs for your pet.
Kim Bressant-Kibwe, Esq. the ASPCA Trusts & Estates Counsel offers assistance to attorneys, financial advisers and executors on all aspects of planning.
Ms. Bressant-Kibwe writes,
“…A pet trust is a legally sanctioned arrangement that provides for the care and maintenance of one or more pets in the event of their owner’s disability or death. The person who creates the trust is commonly referred to as the ‘settlor’. The person who is entrusted with the funds is called the ‘trustee’. A trust can take effect either during a person’s lifetime or after their death. Typically, a trustee will hold property (cash, for example) “in trust” for the settlor’s pet or pets. When the time comes, the trustee will make payments on a regular basis to a designated caregiver. In some states, the trust may continue for the rest of the animal’s life or for 21 years, whichever comes first. Other states allow a pet trust to continue for the rest of the animal’s life without regard to the 21-year limitation. This is especially advantageous when planning for companion animals such as horses and parrots, who have longer life expectancies than cats and dogs.”
She suggests that you contact your attorney to discuss the needs and future estate plans for your pets to establish a pet trust.
Additional areas of concern that she notes that you, your family and your attorney need to consider include;
The appointment of the trustee and successor;
The appointment of the caretaker and successor;
The need to adequately identify your pets in order to prevent fraud;
A description of your pet’s standard of living and care in detail;
A requirement that the trustee ensures the caregiver is providing the pet with regular, thorough veterinary check-ups;
The need to determine the amount of cash or assets needed to adequately cover the expenses for your pet’s care;
The need to determine the amount of cash or assets needed to adequately cover the expenses of administering the pet trust;
Choosing a beneficiary who will receive any remaining funds that were not used by the pet trust; and
Providing directions for your pet’s burial or cremation.
The ASPCA is on one of the many valuable sources of information available to the public regarding the estate planning process for your pets.
If your advisers need assistance or direction, you can help show them the way.
Be proactive in your life. Make your choices, plan and then proceed,
Alabama Code Protection for Pets Trusts
The Comment to the Code states that the purpose is to validate so called honorary trusts. Unlike honorary trusts created pursuant to the common law of trusts, which are arguably no more than powers of appointment, the trusts created by this and the next section are valid and enforceable.
Additionally, the Code provides that a trust for the care of an animal may last for the life of the animal. While the animal will ordinarily be alive on the date the trust is created, an animal may be added as a beneficiary after that date as long as the addition is made prior to the Settlor’s death. Animals in gestation but not yet born at the time of the trust’s creation may also be covered by its terms. A trust authorized by this section may be created to benefit one designated animal or several designated animals.
We have recently discussed, here and here, the close relationship in the ongoing ever changing legal theories for treatments of pets as mere chattel or more akin to a family member.
It is interesting to note that additional Comments to the Alabama Code state in part…
Non-charitable trusts ordinarily may be enforced by their beneficiaries. Charitable trusts may be enforced by the state’s attorney general or by a person deemed to have a special interest. But at common law, a trust for the care of an animal or a trust without an ascertainable beneficiary created for a non-charitable purpose was unenforceable because there was no person authorized to enforce the trustee’s obligations…The intended use of a trust authorized by either section may be enforced by a person designated in the terms of the trust or, if none, by a person appointed by the court. ..If the trust is created for the care of an animal, then a person with an interest in the welfare of the animal has standing to petition for an appointment. The person appointed by the court to enforce the trust should also be a person who has exhibited an interest in the animal’s welfare. The concept of granting standing to a person with a demonstrated interest in the animal’s welfare is derived from the Uniform Guardianship and Protective Proceedings Act, which allows a person interested in the welfare of a ward or protected person to file petitions on behalf of the ward or protected person. See, e.g., UNIFORM PROBATE CODE §§ 5-210(b), 5-414(a)… (our emphasis)
We generally think of humans as seeking protection under a Guardianship or Protective Order proceeding.
In the Code the protection afforded a ward or protected person is also granted to an animal!
(Alabama has been known as the “Yellowhammer State” since the Civil War. The yellowhammer nickname was applied to the Confederate soldiers from Alabama when a company of young cavalry soldiers from Huntsville, under the command of Rev. D.C. Kelly, arrived at Hopkinsville, KY, where Gen. Forrest's troops were stationed. The officers and men of the Huntsville Company wore fine, new uniforms, whereas the soldiers who had long been on the battlefields were dressed in faded, worn uniforms. On the sleeves, collars and coattails of the new cavalry troop were bits of brilliant yellow cloth. As the company rode past Company A, Will Arnett cried out in greeting "Yellowhammer, Yellowhammer, flicker, flicker!" The greeting brought a roar of laughter from the men and from that moment the Huntsville soldiers were spoken of as the "yellowhammer company." The term quickly spread throughout the Confederate Army and all Alabama troops were referred to unofficially as the "Yellowhammers.")
Holding the Pet Trustee Accountable
We recently, visited the responsibilities of the Pet Trustee, see here and determined that their duties mirror those of other Trustees.
In addition to the restrictions imposed in the Trust Agreement , we noted that the Uniform Trust Code also sets out specific expectations for the Trustee.
What happens if the Trustee fails to adhere to the restrictions and steps outside the parameters of the power structure?
If a Trustee is believed to have breached their duties under the Trust Agreement or threatens to do so, what ability does the Court have to control the actions of the Trustee?
Under the common law there were limited remedies available for a breach of duty action again the Trustee. Only the Beneficiary and any Co-Trustee could bring the action and it was a matter for the Court to review.
The legislatures have now provided in most states, that others may represent a Beneficiary if legal action against the Trustee becomes necessary.
In the case of a Pet Trust, the Pet Caretaker would be able to bring an action of the behalf of the Pet.
Generally the Court can order the Trustee to do any number of things, including ordering the Trustee to perform the Trustee’s duties as set out in the Trust or to stop the Trustee from committing a breach of that agreement; order the Trustee to repay money or restore property to the Trust and order the trustee to account for all assets.
In some circumstances the Court can suspend the activities of the Trustee or even remove them from their duties or deny them any compensation for their work.
Many states have also written specific remedies that are available if a Trustee is in violation of their duties. Usually, these remedies are contained within the State's Trust Code and are identical or closely similar to those of the Uniform Trust Code.
Alaska a leader in Pet Trusts
Dog sleds in Alaska…
The phrase conjures up vivid images for all of us. We think of strong, barrel-chested, huskies with thick fur, plowing through the heavy snow…straining at their harness to take their master and much needed supplies to the outpost of the wilderness, in exchange for the care and feeding of the musher.
For some of us…Sgt. Preston of the Yukon…On King On!
Maybe this unique mutually beneficial relationship is the reason that Alaska was one of the earliest proponents of Statutory Pet Trusts.
In 1996, the Alaskan legislature passed a bill that validated specific Trusts for designated domestic or pet animals.
The Trust may last for up to 21 years and terminates when a living animal is not covered by the Trust. The Pet Trust is to be liberally construed, to presume against any honorary nature and to carry out the general intent of the transferor.
The law specifically states that unless expressly provided otherwise in the Trust instrument, no portion of the principal or income may be converted to the use of the Trustee or to any use other than for the Trust's purposes or for the benefit of a covered animal.
The statue offers further protection. If an individual believes that the Trustee is not using the Trust funds in accordance with the stated purpose in the Trust instrument, then that individual may make an application with the Court for the proper enforcement of the Trust terms.
When the Trust ends, any remaining funds are distributed according to the terms of the Trust or pursuant to the other statutory requirements.
Today, an overwhelming majority of the states recognize the use of Statutory Pet Trusts for the future well being of your pet and your peace of mind.
Estate planning for your Pet...when to begin?
Pet trusts, which had their beginnings in the late 1980’s, have become widely accepted in recent years. Thirty-nine states and the District of Columbia have specific Pet Trust statutes on their books and there are other forms of documentation that can be prepared to provide for your pets in those states without Pet Statutes.
If you die without making advanced and sufficient plans for your pets, they will probably end up in a shelter and eventually euthanized.
According to the Human Society of the United States, HSUS, some 6 to 8 million cats and dogs will enter a shelter this year and nearly half of that number or 3 to 6 million will be euthanized.
As many as 25 percent of families with a pet have provided for their animals through wills or trusts, said Sara Amundson, executive director with the Humane Society Legislative Fund. "People really consider pets as members of their family," she said.
When should you begin your planning for your pet trust or the use of a will to determine your pet’s future care?
Owners should start thinking about establishing a trust "the minute" they acquire an animal, recommended Kim Bressant-Kibwe, trusts and estates counsel with American Society for the Prevention of Cruelty to Animals Bressant-Kibwe. ASPCA,
"Life isn't guaranteed to any one of us," she said. "People are particularly interested in pet trusts because they reach beyond the grave."
"Pick the right person and hope that when the time comes that they'll have enough integrity to follow your wishes," Bressant-Kibwe said. "Leaving a little money for them sweetens the deal."
Estate planning for your business, your family and your pets is essential because none of us knows what tomorrow may bring. We make plans to try to minimize the uncertainty, reduce the stress, eliminate the chaos and ease the fear of sudden life changing events.
Estate planning for your business, your family and your pets should begin today.
A Will...a way...to protect your Pets?
A will is a legal document that contains your instructions and wishes as to how to distribute your assets and property after your death. The person who writes a will is called a testator. The will can also appoint individual’s that can serve, if necessary, as a guardian for your minor children and nominate a personal representative to carry out the instructions of your will. Each state has minimal legal requirements that must be followed for a will to be valid and accepted by the courts. But generally, the will must be made by a competent adult, it must be in writing and signed by the testator and witnessed by a least two other individuals and a notary.
You can include a clause for your pets in your will with the appropriate language, but you need to be fully aware of the possible limitations and drawbacks. In some circumstances, the preparation of a pet trust is more appropriate in your estate planning for your pet. Today the majority of states accept and recognize some form of a pet trust.
