Pet Trusts and Estate Planning for Pets!

        Don’t forget about your furry friend! Pets are part of the family for many people, including the author of this article. To make sure that your pets have the financial support and care they properly deserve in the event something happens to you, your estate plan (i.e. your will or trust) should include provisions that provide for their care and support. In this article, I will discuss pet trusts, alternatives to pet trusts, and the advantages of using a trust for your pet over other estate planning devices. In addition, I will include sample language that you can include in your estate plan to make sure your pets are taken care of through your Will or Trust.

PET TRUSTS

Creating a pet trust. Although you can’t make outright gifts to your pet (your dog cannot receive a lump sum of money), you can create a trust for the care of your pet. Good news for people living in California is that there is specific California law (Probate Code § 15212) that protects trusts established to benefit a domestic or pet animal. However, if you decide to move away from California, check with local law to see what kinds of protections are offered for pet trusts and if your estate plan needs to be modified.

Choosing a responsible caretaker. Choose someone trustworthy and responsible to be the caretaker. A caretaker is a person designated in the trust with whom the pet will live. If the trust is funded with a minimal amount, the trustee may be the best caretaker. However, having the trustee serve as caretaker removes any check on the caretaker’s performance.

Choosing a responsible trustee. The Trustee has the dual role of making sure the caretaker is properly taking care of the pet and managing the financial assets held in trust for the pet. The trustee of your living trust can also serve as trustee of your pet trust. Having the same person serve as caretaker and trustee can save costs and provide for easier administration.

Reviewing any Breeder/Rescue Agreements. Many breeders, and rescue organizations have you sign agreements restricting your ability to transfer your pet to someone else upon your death or incapacity. For example, a rescue organization may have you sign an agreement that requires you to surrender your pet to the rescue in the event you can no longer personally care for your pet. Review any agreements you have signed to make sure you have the ability to create a pet trust, and/or to see what your options are as far as transferring your pet over to another person or organization in the event you can longer care for your pet.

Providing sufficient funds for a pet trust. If you do decide to create a pet trust, make sure you set aside sufficient assets to fund a pet trust. In deciding how much funds to set aside consider the following: a) the kind of animal; b) the animal’s life expectancy; c) the specific needs of a particular animal; d) the standard of living you wish to provide; and e) the size of your estate. Horses, for example, may average a 20 to 30-year life span, are very expensive to provide for, and setting aside $250,000 or more for their care is common.

Providing Reasonable Compensation. Whether you are the trustee or caregiver, it takes time and skill to manage the assets of a pet trust and make sure the animal is being taken care of. Provide reasonable compensation to the people you designate to make sure they are rewarded for their services and not burdened financially with the care and management of your pet. They can always waive compensation if they feel it is unnecessary.

ALTERNATIVES TO PET TRUSTS

Outright Gift to Individual. You can make an outright gift of your pet and funds for the care of the pet to an individual that you trust. With an outright gift to a trustworthy individual, there is no need for a pet trust. You can make the gift either in a Will or a revocable trust. The main drawback with this approach is that there is no guarantee that the person receiving the pet and money bequest will take care of your pet. For example, the individual may decide to take the money, and give up the pet to a shelter instead of taking care of it. Thus, it is important to have a trustworthy individual in mind before making such a gift.

Outright Gift to Animal Protection Organization. There is also the option of making a gift to a rescue or animal protection organization. There are numerous organizations in California that will take care of a pet when the pet owner dies or becomes disabled. If your pet is a purebred or close to it, contact a rescue group specializing in that breed to see if they can offer support or rescue. The following is a list of animal protection organizations that will help re-home and/or provide permanent care for your pet if you die or become disabled:

a.) Animal Rescue Foundation (ARF)—Guardian Program (Walnut Creek) (http://www.arf.net)

b.) Friends of Cats, Inc.—Lifetime Care (El Cajon) (http://www.friendsofcats.org)

c.) San Diego Humane Society—Pet Legacy Program (http://www.sdhumane.org)

d.) Greater California German Shepherd Rescue (http://www.gcgsr.org)

e.) Shepherds Without Borders Rescue (https://www.shepherdswithoutborders.org/)

ADVANTAGES OF PET TRUSTS

         For the following reasons, pet trusts are the best way to take care of your pets in the event something happens to you.

Management of Assets. Trusts offer flexibility with regards to the management of assets that you set aside for the care of your pet. You can gift money into a trust for the benefit of the pet, which can be used while the pet is alive, with the remainder of the money going to a designated beneficiary.

Specific Instructions. With a trust, you can include very specific instructions on the care of your pet. For example, providing specific instructions on the diet, exercise, and veterinary care of your pet.

Selection of Caretaker. With a trust, you can designate a caretaker to take care of your pet, as well as a succession plan of alternate caretakers in the event your first choice is unable to take care of your pet. You can also provide specific instructions regarding compensation for your caretaker.

Distributions. Through a trust, you can authorize a trustee to make payments for any and all expenses related to the care of your pet. You can also instruct the Trustee to visit your pet and make sure the caretaker is properly doing their job.

Payment of Final Expenses. With a trust, you can provide specific instructions on all final illness expenses related to the care of your pet, and can instruct the trustee on the disposition of your pet’s remains.

Care during Incapacity.  A living trust can provide for the care of your pet when you are incapacitated. You can provide incapacity provisions for the care and protection of your pet through the designation of responsible trustees and caretakers.

SAMPLE ESTATE PLANNING LANGUAGE

  1. Outright gift to individual: “The Trustee shall distribute the Trustor’s pets, namely _______ [description of pets] and money in the amount of ___________ ($___) to _________ [name of individual], if _________ [name of individual] agrees to take custody and ownership of Trustor’s pets and provide for their well-being. If _____ [name of individual] is unable to take custody and ownership of Trustor’s pets for whatever reason, the Trustee shall make this bequest to _________ [name of alternate individual], if [name of alternate individual] agrees to take custody and ownership of Trustor’s pets and provide for their well-being. If both ____[name of individual] and _______[name of alternate individual] are unable to take custody and ownership of Trustor’s pets for whatever reason, the Trustee shall use his or her discretion and distribute Trustor’s pets and money in the amount of  ___________($___) to an organization or individual of his or her choosing, provided that such organization or individual agrees to take custody and ownership of Trustor’s pets and provide for their well-being. If Trustor has no living pets at the time of his or her death, then this bequest shall lapse.”
  2. Outright gift to animal protection organization: “The Trustee shall distribute the Trustor’s pets, namely _______ [description of pets] and money in the amount of ___________($___) to _________ [name of animal protection organization] located at ________ [address]. It is the Trustor’s desire that Trustor’s pets be placed with loving families that will properly care for Trustor’s pets. If Trustor has no living pets at the time of his or her death, then this bequest shall lapse”
  3. Pet Trust Distribution Provision: “The Trustee shall distribute for the benefit of ____ [name of Pet] as much of the income and principal of the trust as the Trustee deems necessary or advisable for the care of _____ [name of Pet]. The Trustee may distribute all or any portion of the income and principal of the trust to the Caretaker, or directly apply such trust property, for the care of ______ [name of Pet], in such amounts and at such times as the Trustee determines is necessary.  Such care shall take into account ____ [name of Pet] living standard at the time of my death, and includes but is not limited to costs for food, veterinary care, medication, grooming, routine expenses, pet sitting, and the disposition of____ [name of Pet] remains.”
  4. Distribution during Incapacity: “During such period of time that the Trustor is incapacitated, the Trustee shall distribute for the benefit of ____ [name of animal] as much of the income and principal of the trust as the Trustee deems necessary and advisable for ____ [name of animal]’s care in accordance with the provisions set out in the Pet Trust for ____ [name of animal].”

HELP WITH PET TRUSTS

If you have any questions or comments regarding this article, or would like help with estate planning for your pet or yourself please contact the author, Jack Klosek, via email at jk@kloseklawoffices.com or by phone at (916) 836-5193. For more information about the author please visit www.kloseklawoffices.com.

 

 

 

 

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