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.
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.
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.
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.
Too Much Legalese for Your Pets?
I had a long conversation Friday afternoon with Kathleen Pender.
Ms. Pender is a well written and well respected writer for the San Francisco Chronicle.
She regularly reports on local, national and international economic and business events.
Recent stories have covered the failure of IndyMac Bank, the influx on foreign money and investment inroads into the United States, the still declining housing market, how the downgrading of bond insurers has a direct effect on the sock market and the basics of heath savings plans.
Our conversation was a little less complicated, as we discussed the newly passed California Pet Trust Statute.
As we talked about pet ownership, estate planning and the role of the Trustee and the Caretakers, she posed an interesting question.
Why, she queried, should the courts take up valuable time dealing with pet trusts, statutes, Trustees, estate issues with probate, emotional distress trials for pet owners, custodial disputes and other pet issues.
Surely there were more important items for the judges and courts to entertain.
My only response was that the courts are currently reviewing more and more of these issues, whether we like this change or not.
More households have pets than have children.
If pet owners did not have the passion and concern for their pets, they would not seek help from the courts.
If these cases were not brought in to the legal arena, they would not have the same import and legislators would not feel the need to enact more laws as the behest of their voters.
The Courts interpret the laws.
Legislators write the laws.
Laws that they deem necessary; to please their constituents.
The voters.
The role of pets in our lives will only increase as time passes.
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.
Rhode Island Pet Trusts
Can you provide any additional information for Estate Planning for Pets in my state?
Peggy Scituate, Rhode Island
Peggy, Rhode Island has had a statutory Pet Trust since 2005.
Animallawinfo.com, provides a summary of the law:
"This law represents the state's pet trust law. The law 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 provided for the care of more than one animal alive during the settlor's lifetime upon the death of the last surviving animal. The statute lists a distribution schedule for any remaining trust property and also states that such trusts are to be liberally construed to carry out the transferor's intent."
The Rhode Island State statute reads in full as follows:
(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 provided for the care of more than one animal alive during the settlor's lifetime upon the death of the last surviving animal.
(b) Except as provided in this section, the provisions of the general laws which govern the creation and administration of express trusts applies to the trust for the care of an animal.
(c) 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 interest in the welfare of the animal may request the court to appoint a person to enforce the trust or to remove the appointed person. The appointed person shall have the rights of a trust beneficiary for the purpose of enforcing the trust, including receiving accountings, notices, and other information from the trustee and providing consents.
(d) Property of a trust appointed by this person 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. Property not required for the intended use, including the trust property remaining upon its termination, shall be distributed in the following order of priority:
1) As directed by the terms of the trust;
(2) To the settlor, if then living;
(3) Pursuant to the residuary clause of the settlor's will;
(4) To the settlor's heirs in accordance with the Rhode Island general laws on descent and distribution.
(e) A governing instrument shall be liberally construed in order to presume against the merely precatory or honorary nature of the disposition and to carry out the general intent of the transferor. Extrinsic evidence is admissible in determining the transferor's intent.
(f) If a trustee is not designated or designated trustee is not willing or able to serve, the probate court shall name a trustee; a court may order the transfer of the property to another trustee, if the court makes a factual finding that it is necessary to assure the intended use is carried out and if a successor trustee is not designated in the trust instrument or if a designated trustee does not agree to serve or is unable to serve.
The Rhode Island format follows the majority of States with pet trusts.
Discuss this with your team of professional advisors, take advantage of this statute and prepare to plan for you and your pets.
Pet Trusts Are Available In Iowa
We recently received a phone message from an unidentified caller that asked about the availability of a Pet Trust for the state of Iowa.
Since 2000, Iowa has had a Statutory Trust available for use by pet owners.
The Iowa Code provides as follows:
633A.2105 Honorary trusts — trusts for pets.
1. A trust for a lawful noncharitable purpose for which there is no definite or definitely ascertainable beneficiary is valid but may be performed by the trustee for only twenty–one years, whether or not the terms of the trust contemplate a longer duration.
2. A trust for the care of an animal living at the settlor’s death is valid. The trust terminates when no living animal is covered by its terms.
3. A portion of the property of a trust authorized by this section shall not be converted to any use other than its intended use unless the terms of the trust so provide or the court determines that the value of the trust property substantially exceeds the amount required.
4. The intended use of a trust authorized by this section may be enforced by a person designated for that purpose in the terms of the trust or, if none, by a person appointed by the court.
The law is fairly simple and straight forward.
Contact you professional team for more assistance.
Hawkeyes have tools at their disposal for estate planning for their pets.
Put them to use…
How Much Is Too Much For Your Pet?
We have written extensively about the role of the Trustee and the Caretaker in your pet’s estate planning process, here here here and here.
The more written information and clarification that you can provide for them will only assist the process of caring for your pet after you have gone.
We have also discussed Leona Helmsley’s will and the millions of dollars that she left to her dog, Trouble.
A recent article in the New York Times now reports that the “mission statement” of Ms. Helmsley specifically states that her entire estate, of some $8 billion, is to be used for the care and welfare of animals.
With this much money at stake, we can be assured that the litigation in this probate process is set to continue for years, If not decades, to come.
You can read the entire article, here .
We fully encourage estate and emergency planning for owners of pets and companion animals.
But, we also urge you to use good sense in your planning.
Perhaps, just perhaps, that $8 billion, or a part of it, could be used for a different need or cause.
Just a thought.
Plan well for your pets and plan now.
Trust Protector-A Good or A Bad Thing?
Denise of Merlin, Oregon, had posed a question regarding the definition of a Trust Protector. We turned to Senior Counsel Sharon C. Nelson of Foley & Lardner, LLP, here and here to help us with these issues.
...In the right circumstances, the use of a trust protector can be invaluable in giving the grantor the peace of mind that his intent will be carried out even if the laws or circumstances of named beneficiaries change. On the other hand, granting broad powers to a trust protector can cause unintended results and change beneficial interests that the grantor never intended. Before including a trust protector in any trust document, the grantor should have the opportunity to carefully consider the possible consequences of giving someone the powers he or she is contemplating. Most importantly, if a grantor does decide to add a trust protector to a trust document, the drafting attorney should carefully define and specify the powers of the trust protector, the limitations placed on the trust protector and the intent of the grantor in naming the protector.
When you meet with your attorney and other consultants to discuss your estate planning for your pet, do not forget to talk about a Trust Protector.
Who Should Serve as A Trust Protector?
Denise of Merlin, Oregon, had posed a question regarding the definition of Trust Protector. We turned to Senior Counsel Sharon C. Nelson of Foley & Lardner, LLP, to help us with these issues.
...Technically, anyone can serve as a trust protector. However, in order to avoid adverse tax consequences (for both the grantor and the trust protector), it is generally advisable to name an independent third party as the trust protector. Trustees, beneficiaries or members of the donor’s immediate family are not independent parties and thus, should generally not be named as trust
protectors. Lawyers, accountants, unrelated business-minded friends, brothers, sisters, aunts and uncles of the grantor are often a good choice for the trust protector role. Corporate fiduciaries are not necessarily the best choice due to the conservative view of many corporate fiduciaries which may make it difficult for them to exercise the authority they are granted...
....While there is no set list of powers that should be granted to a trust protector, there are some powers that would be helpful in most situations that the grantor should consider. For example, the trust protector could be given the power to amend the trust to comply with new tax laws or to address any changes in the law or circumstances of a trust or its beneficiaries that would significantly change the tax treatment of the trust or its beneficiaries. In addition, the trust protector could be given the power to terminate the trust or to remove, add or replace the trustee. Other powers could include the ability to change the governing law or to expand or limit the powers of the Trustee. Some powers, however, such as the power to grant, expand, reduce or eliminate a power of appointment, the power to change, eliminate or add provisions regarding the disposition of income and principal or the power to change beneficiaries should be looked at more closely before including them because beneficial interests could be completely altered. Care should be taken to clearly define the purposes of the trust and to give the trust protector ample guidance as to what is expected and allowed and what is not...
We will conclude this review tomorrow.
What is A Trust Protector?
I mentioned the possible use of a pet trust to my insurance broker and she asked if I had considered a Trust Protector. What is this and what does it do?
Denise Merlin, Oregon
Senior Counsel Sharon C. Nelson of Foley & Lardner, LLP, wrote a very clear understanding of this issue
"The use of trust protectors in trust documents is becoming more and more popular in today’s estate planning environment. The purpose of a trust protector is to provide flexibility to an irrevocable trust. However, before adding a trust protector to any documents, the grantor should carefully weigh the advantages and disadvantages inherent in the role of trust protector...
The trust protector holds a power to direct the trustee in matters relating to the trust. The role of the trust protector and the ability of the trust protector to direct the trustee will vary from trust to trust depending on specific drafting. The greatest advantage of having a trust protector named in a trust document is that it adds flexibility to the trust and allows the grantor to delegate someone to deal with almost every conceivable future circumstance. This is very attractive in today’s changing estate planning environment where the tax law is in flux. Use of a trust protector can allow amendment of the trust document to achieve positive tax results and allow administration consistent with the grantor’s intent when circumstances change...
The greatest disadvantage to the use of the trust protector is that the grantor is vesting significant power in one person. In addition, because the trust protector is often given the power to amend the trust to take into account the changes in the tax laws, beneficial interests may be altered. Finally, a common complaint of naming a trust protector is that it adds another level of administration and administration expenses..."
Next we will look at her discussion of who should serve as a Trust protector.
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.
Changes Coming to California Pet Trust?
Although California has recognized some form of a Pet Trust since 1991, the enforceability has been minimal and it has been an “honorary trust.”
That may soon change.
A recently proposed amendment is moving forward in the California legislature to amend Section 15212 of the Probate Code
The Legislative Counsel’s Digest 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…"
In addition, the bill would provide a process for an accounting of the trust, to be waived if the value of the trust assets do not exceed $40,000.00.
These are major changes in a state with a huge population and clearly show the continuing trend in recognizing the wants and needs of pet owners.
We will keep you advised as these matters move forward through the grinding legal process.
Share Your Tomb with Your Pet?
We write on numerous occasions about Statutory Pet Trusts, Powers of Attorney for your pet, Will Clauses to provide for your pet and the selection of an appropriate trustee and a caretaker.
We have even reviewed your ability to clone your pet.
There is also an additional option, at least in the State of Florida.
A change in the Florida Statutes, now allows for an additional authorized function for cemeteries.
Under Statute 497.273, the following power is provided.
"4) This chapter does not prohibit the interment or entombment of the inurned cremated animal remains of the decedent's pet or pets with the decedent's human remains or cremated human remains if:
(a) The human remains or cremated human remains are not commingled with the inurned cremated animal remains; and
(b) The interment or entombment with the inurned cremated animal remains is with the authorization of the decedent or other legally authorized person."
So, if you keep the remains of you and your pet separate and agree to the inurnment, in Florida at least, you can take your pet with you.
Estate planning for you and your pet?
Maybe, maybe not.
This is a little too much planning for me.
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.
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.
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.
Responsibilities of a Pet Trustee
The Uniform Trust Code, adopted by a majority of the states since its initial draft inception in 2000, has been the underlying strength of the new growth phase of Pet Trusts.
We have previously minimally defined the role of the Trustee.
Generally speaking, the duties and responsibilities of a Trustee for a Pet Trust are no more or less than any other Trustee.
The Trust Agreement itself will set out the specific role of the Trustee and set the parameters of the powers of the Trustee.
The Uniform Trust Code also defines in detail, the duties and powers of the Trustee that have been accumulated as established by the courts and the legislatures throughout the years.
Beginning with Section 801, DUTY TO ADMINISTER TRUST, which states…
Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with this [Code].
The Code sets out in great detail the expectations of the Trustee, including definitions and explanations of the needed loyalty and impartiality of the Trustee as well as the accumulation, control and accounting of the Trust property.
Your choice of a Trustee for your Pet Trust, whether an organization or an individual should not be taken lightly. Although their responsibilities are set high and can be closely monitored by your Pet Caretaker, you will be out of the picture and the decisions will be made by someone else
You will no longer have control of the property that you have set aside for the care and protection of your pet.
Chose your Pet Trustee wisely.
What is A Trustee
A Trustee is a person or an organization (i.e. a bank) that holds or manages and invests assets (property or money) that are owned by a Trust Agreement for the benefit of another. The Trustee is legally obliged to protect the assets and distribute them according to the terms of the Trust. The duties and responsibilities of the Trustee are set out in the Trust Agreement and many states have statutes that also govern the activities of the Trustee. The Trustee may or may not be entitled to a payment for their services, depending upon the Trust language.
The choice of a pet caretaker is an important decision
One of the key decisions that you need to make when you set up a trust for your pet is who should serve as the caretaker and the alternate caretaker, if your original choice is unable, for whatever reason, to perform their duties.
The most obvious choices for a caretaker are a friend that is familiar with your pet or another family member. Secondary options may include a local breeder, an animal sanctuary , a pet retirement center or even your pet’s veterinarian. You should be aware that many animal sanctuaries or retirement centers may be cost prohibitive or require a specific donation amount before they will accept your pet.
Your pet trust will direct the Trustee to distribute monies to the caretaker on a regularly scheduled basis to provide for the payment of all of the necessary expenses for your pet. Most pet trusts also provide for a payment to the caretaker for their time and services. You can specify the normal costs required to maintain the standard of living for your pet that include housing, food, veterinary and grooming bills, insurance and cremation or burial expenses.
One of the duties of the Trustee should be the power to demand a regular inspection of your pets to ensure that they are being properly maintained by the caretaker. The Trustee should be allowed to visit the animals in their home environment with the caretaker. The inspections should also be permitted to be made randomly and without prior notice to the caretaker.
Whoever is your choice as the caretaker, it is extremely important that you discuss your expectations of their duties and functions, to ensure that that they are willing to accept this responsibility. You need to be clearly comfortable with your choice, as it may determine the future well being of your family pet.
What is a Trust
Welcome to the Blog!
Thank you for stopping by and taking the time to look around. This blog is all about people and their pets. You and your pets.
It is estimated that in the United States alone, over 65% of all homes have pets. Some 90 million cats and 75 million dogs are considered family members.
They live, play and even sleep along side of their owners. Pet lovers stay home from work when their pets are sick, they spend money without hesitation on toys and food and pay huge vet bills.
We spend time and money to plan for our business and personal estates and for more and more of us, the issues of estate planning for pets is considered a vital part of that plan.
In this blog, we will explore and discuss the various options used by individuals and families to plan ahead to make sure that their pets are not deserted or mistreated. More specifically, we will look at the how, why and when to plan for the well being of pets after the death of the owner.
We will review the possible uses of pet trusts and how they are funded; explain power of attorney for pets; discuss clauses that owners may place in their wills to provide for their pets; outline some guidelines for the selection of your pet’s caretaker and trustee and review options for the inevitable death of your pet that will occur.
To help along the way, we will review some of the basic terms used in estate planning and probate to take the mystery out of the legal process and make you more comfortable with your decisions.
My interest in this?
Besides, providing you information and assistance for this additional family member? A two year old Cavalier King Charles Cocker Spaniel named Anna, who runs our house.
What is a pet trust?
I was at a dog park the other day with my Golden Retriever, Mulligan, who was enjoying his romp in the daily rain. I overheard two ladies talking about something called a pet trust. I have heard of this from other pet owners, but do not know what this is? Can you explain the idea of a pet trust?
Dono, Seattle, WA
Dono, sure… a pet trust is a legally binding document that you can create that sets aside specific funds to take care of your pet. It can be set up to take effect immediately or automatically upon your death. The trust would specify a caretaker to physically provide for your pet and a trustee to monitor and control the funds. Under the common law such trusts were unenforceable by the courts in your state. However, the State of Washington has a statutory pet trust that has been approved by your legislature. The purpose of this law is to recognize and validate certain trusts that are established for the benefit of animals. These trusts will be recognized as valid and fully enforceable in Washington.
Contact us for more information or questions on a Washington statutory pet trust.
