Estate Planning for Pets
Providing for Your Pet in Your Estate Plan
When hotel magnate Leona Helmsley passed away in 2007, she left a $12 million bequest to her Maltese, Trouble. Two of Helmsley’s grandchildren received nothing, while two others received $10 million each. While Trouble’s bequest generated tremendous media attention, it highlighted the importance of ensuring that your pets are properly provided for in your estate plan. Many people consider their pets to be members of their family, but few actually provide for the continued care of their pets in their estate plan.
Americans own an estimated 68 million dogs and 73 million cats, according to a 2000 estimate prepared by the American Pet Products Manufacturers Association. Thousands of pets end up unwanted in animal shelters because their owners died without making any provisions for their care. Many assumed that a family member would step in and care for the pet, but the animal ended up in the shelter. Planning ahead can prevent your pets from a similar fate.
Trusts for Pets
One increasingly popular vehicle for providing for your pet’s care is a trust for the benefit of your pet. A trust allows you to specify a sum of money to be used for your pet’s continued care and to name a trustee to carry out your wishes.
Until recently pet trusts in California were “honorary” and could not be legally enforced. Now in California, since January 1, 2009, the Probate Code section dealing with pet trusts, Section 15212, has been amended to govern trusts for the care of any animal, defined as “a domestic or pet animal for the benefit of which a trust has been established.”
The statute provides that a trust for the care of an animal is deemed to be a lawful noncharitable purpose. The trust is enforceable by a person designated in the trust or by a person appointed by the court, or by any person interested in the welfare of the animal or any nonprofit charity that is involved with animal welfare. The court reserves the power to designate a trustee if one is not designated or to designate a successor trustee, and to make any other orders necessary to carry out the intent of the settlor/pet owner.
The statute also provides that accountings must be given to the remainder beneficiaries (those who would take the remainder of the trust assets upon the death of the animal) or any nonprofit charitable animal welfare organization who makes a request. The trust terminates upon the death of the pet and the balance is distributed to the remainder beneficiaries.
A pet trust can be created as a “stand alone” trust or it can be part of a revocable or “living trust” that you create for the rest of your estate. It can provide an immediate plan for your pet if you become incapacitated as well as direct what happens to your pet upon your death.
Terms of the Trust
A traditional pet trust allows you to provide special instructions regarding the care of your pet. Some examples of commonly included instructions include:
1 Identification of the pet
2 Food and diet instructions
3 Grooming instructions
4 Veterinary care
5 Socialization of the pet
6 Compensation for the caregiver and trustee
7 Method the caregiver must use to document expenses
8 How the trustee is to monitor the caregiver’s services
9 Whether the trust will cover the cost of veterinary insurance, liability insurance in case the pet bites or injures someone, etc.
10 Final disposition of the pet (burial, cremation, etc.)
Other Factors to Consider
Who will serve as trustee of the trust? Most trusts will name a trustee to manage the money for the benefit of the pet and a caregiver to manage the care of the pet. While it is possible to name the same individual as both trustee and caregiver, some prefer to name different individuals since this will provide some oversight or “checks and balances” to ensure that the pet is being properly looked after. You will also want to name a back-up trustee and caregiver in case the individuals you named as first choice are unable to serve due to death, illness or incapacity. It is advisable to speak to the individuals you plan on designating as trustee and caregiver, to make certain they are agreeable to serving and that they understand the responsibilities involved.
What qualities should you consider in selecting a caregiver? Selecting a caregiver for your pet is analogous to selecting a guardian for children. The ideal candidate is someone who knows and loves your pet, who is able to provide a stable home, and is willing to assume the responsibilities of caring for your pet.
What qualities should you look for in a trustee? You will want to select someone that you trust implicitly and have complete confidence in. The trustee should be someone who is financially responsible and able to manage money. Most people opt to name the same person or persons they have named to be trustee of their living trust.
How much money should you set aside? This depends on the species, age and life expectancy or your pet, as well as the annual cost of care for your pet. You will also want to factor in possible emergencies that may arise, such as the cost of surgery or extended veterinary care in the event of a major illness. You will also want to consider any costs associated with the end of the pet’s life, such as cremation or burial arrangements.
How will you fund your trust? You can set aside a certain dollar amount or percentage or your estate to fund the trust, or you can purchase a life insurance policy and name the trust as the beneficiary.
What happens to the money after your pet dies? Some trusts direct that the unused funds will be given to the caregiver. While this is a nice way to reward the caregiver for their devotion to your pet, it may also create a conflict of interest for the caregiver, since any funds expended on your pet will ultimately reduce the amount left over in the trust. You may want to provide that the caregiver will be given some amount of direct compensation from the trust during the pet’s lifetime, and leave the remaining funds from the trust to a charity.
Review Your Plan Periodically
With any estate plan, you should review your documents periodically to ensure that they still reflect your wishes. When you review your documents, you’ll want to consider how your situation may have changed since the documents were executed. Have you adopted any new pets? How old are your pets now? Have your pet’s needs changed? Are you still comfortable with your choice of trustee and caregiver, or have circumstances changed?
Consult an Experienced Estate Planning Attorney
When planning your estate, don’t forget to plan for your pets. Talk to your estate planning attorney about the best way to provide for your pet. The attorneys at the San Francisco estate planning firm of Dean Jones LLP have extensive experience in estate planning and we understand your concern for your pet’s well-being. We welcome your inquiry and invite you to contact us by e-mail , or call us at (415) 352-1440 to schedule a free in-house consultation.