In December 2007, the Editors of Fortune Magazine ranked Leona Helmsley’s decision to leave her Maltese, Trouble, a $12 million trust fund, the 3rd dumbest moment in business. Although not all of us can afford to keep our pooch in such luxury, many of us would like to see our pets well cared for after our deaths.
The law provides several mechanisms of increasing complexity for maintenance of pets after their owners die.
The simplest method is to make an outright gift of the animal along with a sum of money directly to the caretaker conditioned on the premise that the money will be used for the animal’s care. This is an effective procedure if you are confident that the caretaker will honor your wishes concerning the animal’s care. The downside to this method is that there is no person directly charged with ascertaining whether the animal is receiving proper care.
Moving up slightly in complexity, an Honorary Pet Trust allows a pet owner to leave funds in trust to be used for the animal's care. This type of trust allows a pet owner to leave funds to a designated person who is charged with administering the pet’s care without court oversight.
A court may however reduce the amount of property transferred into the trust if it determines that the amount substantially exceeds the amount required for the intended use. The trust cannot be used to care for an animal’s offspring and by law must terminate when the animal dies or 21 years after its creation. Any unexpended property remaining in the trust when it terminates will either pass to named beneficiaries or the heirs of decedent.
Finally, if a pet owner has very specific intentions for the animal(s) and desires enforceable court oversight, the owner can create a trust in favor of a human beneficiary (the pet’s caretaker) and name a separate trustee who is required to make distributions to the beneficiary to pay for the pet’s expenses. The trust should, at a minimum, provide general guidelines specifying the type of care the beneficiary is to give the animal, for example, food, medical care, grooming and housing. The trust can also designate special requests for burial, cremation, etc. The advantages to creating this type of trust with a human beneficiary is that it can remain in existence for a longer period of time, any amount of property can be transferred into the trust, it can provide for care of offspring, and it is subject to strict court oversight and enforcement.
The hardest part of this process for many pet owners is selecting a caregiver. It is of utmost importance for the pet owner to identify a caregiver who is willing and able to care for the animal in a manner the pet owner finds acceptable. Likewise, if the pet owner wants to create a trust, the trustee should be similarly vetted.
The primary goal of an estate planning attorney is to effectuate the wishes of their clients to the fullest extent allowed under applicable law. If you are concerned about your pet’s care make sure you mention this to your estate planer because with your passing your pet will have lost its most eloquent spokesman.
Written by Valerie Thresher.