Life Insurance Can Fund Your Pet Trust
There is no “one best” way to fund a pet trust.
You may specify a bank account, a 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.
Generally, the trustee is named as the beneficiary of the life insurance proceeds to be placed into the pet trust
However, 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 your pets.
Three Million Dollars Left To Fund a Pet Trust-Mansion to Caregiver
Victor Posner was an American businessperson, millionaire and philanthropist who was an original pioneer of the leveraged buyout.
Upon his death, he left a wife and son to survive him.
That wife Gail, has now passed away and left $3 million in a trust to her pet Chihuahua, Conchita and two other dogs.
Her housekeeper will be able to live, rent free, in an $8.3 Million Miami Beach mansion, as long a sheremains the caregiver of the dogs.
She also left some $26 million to house staff and bodyguards.
By the way, she left her son Carl----One million dollars.
How Much is Too Much Money For Your Pet Trust?
The question of how much money should be placed into the pet trust is a constant issue.
Unfortunately, there have been very few court decisions to give us the appropriate guidelines for this matter.
One older case, dating to 1974 entitled, In re Lyon Estate, 67 Pa. D. 7 C.2d 474 (1974), does provide some insight, as reported by Suzette Daniels of Michigan State University-Detroit College of Law here.
"Oftentimes, courts have the power to reduce the gift if it is deemed to be an unreasonable amount. Such was the case of the will written by Florence Lyon. Her will directed that the principal or income of her estate was to be used for the care of her six dogs and four horses, and the residuary was to go to Princeton University. At the time of her death, the income was deemed to be approximately $40,000 to $50,000 a year. Clearly this is an excessive amount of money to care for these animals, but there was language to suggest that Ms. Lyon might not have had any idea how large her estate was or how much it would cost to care for these animals The court determined that the life expectancy for them was anywhere from one to twenty years. It further ascertained that, “It will take five acres of land, a $22,000 shelter and $5,000 a year to care for the presently living animals.” With this information in mind, the court held that the amount indicated by the testator was excessive. It modified the provision by directing the executors to either reserve $150,000 to be held for the care of these animals or give the entire residuary to Princeton University immediately but with an agreement that Princeton provide the care for these animals.
While an excessive amount of money could lead to court interference, an amount too small to properly care for the animal could lead to financial hardship on the part of the caretaker.
Testators should not only determine an amount of money that is reasonable to cover day to day maintenance but also factor in expenses for emergency medical care and hospitalization".
Use An Insurance Policy to Fund Your Pet Trust
Can I use an insurance policy to fund the trust for my cat, Candy?
Donna Cleveland, Ohio
Donna, insurance policy proceeds are one of the most common, popular and acceptable methods to fund a trust for Candy.
An insurance policy on your life can be issued and the proceeds will generally be paid to “_________________” as the Trustee of the Candy Cat Trust.
Candy should obviously not be the beneficiary of the insurance policy.
In most states, pets are still considered to be personal property and a piece of personal property certainly cannot be a beneficiary under an insurance policy.
If it is properly established, there should be no tax consequence as a result of the policy being paid to the Trust.
Good for you, for planning for the future of both you and Candy.
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.
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.
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.
