The law has taken steps to protect pets and consider their well-being. California, for example, enacted AB 2274 which differentiates pets from other marital assets and allows a judge to award ownership based on factors like who feeds the pet and who provides the safest environment for the pet. Despite these steps the law still classifies pets as personal property just like cars, furniture, and electronic devices. So unless you take the proper steps to include your pet in your estate plan, your beloved companion could end up in a shelter or worse following your death or incapacity.
In light of this cold reality, we will educate you on how proper estate planning can help your pets receive the best possible care when you are no longer able to care for them yourself.
WHO SHOULD ENGAGE IN ESTATE PLANNING FOR PETS?
Every pet owner should engage in pet planning. The Humane Society of the United States estimates around 500,000 loved pets are euthanized each year because their pet parent didn’t have an estate plan that protected the pet when they could no longer provide care. The sad reality is that none of these pets needed to die – they just needed their owners to create an estate plan that provided them with a lifetime of love and care.
HOW ESTATE PLANS PROTECT PETS.
There are four main ways estate plans can address the future care of your fur baby, some of which come with greater risk than others.
OUTRIGHT DISTRIBUTION TO A PET CAREGIVER.
An outright distribution of a pet occurs when your Living Trust or Last Will has a small paragraph saying something to the effect, “After my death, my dog Fluffy should be given to my sister, Amanda (pet caregiver), outright.” Sometimes the pet parent will also leave a specific amount of money, “After my death, my dog Fluffy and the sum of $10,000 should be given to my sister, Amanda.” Leaving a sum of money is not required. While outright distributions can be an inexpensive solution for some pet parents it is not an ideal, because this option offers no protection for the pet. Once the pet caregiver receives the pet and money there is no oversight so nothing prevents the pet caregiver from keeping the money and leaving the pet at the nearest shelter.
PET TRUST CREATED IN A LAST WILL
A pet trust can be created as a testamentary trust in a Last Will. This means the trust is not effective until after the pet parent dies, the Last Will has been through probate where all of the creditors have been paid, and the distribution to the pet trust has been received by the pet trust trustee. Probate is a court administered process for proving the terms of a Last Will. It can take time, has expenses associated with it and can create delays in getting assets into the pet trust for the benefit of a loved pet. The pets are at the mercy of the court. Friends and family may have to personally pay for the expenses of caring for the pets. Assets in the probate estate may not be sufficient to provide for the lifetime care of the pet. As a result of these possible devastating outcomes that can put a pet at risk, it is not the best option.
PET TRUST CREATED IN A REVOCABLE LIVING TRUST
A pet trust created in a Revocable Living Trust (a standby trust) allows the trust maker to create instructions and a pet trust to provide for the care of loved pets in the event of a mental disability and at the time of death. The pet trust details who takes care of your pets, and specific instructions regarding daily, chronic and emergency care. The pet trust can appoint both short and long term pet caregivers. The pet trust should also say where and how you want your pets to live, whether you want your animals to stay together, and your wishes regarding final disposition upon their passing. A Revocable Trust is valid when created and can provide significantly greater protections for your pet. Your pet trust will appoint pet caregivers, pet trustees, and will allocate some or all of your estate to provide for the care of your pets. When the pet trust terminates, after all pets have been cared for, any remaining pet trust assets can be distributed to your favorite animal charity. Also, since a Revocable Living Trust is not subject to court administration, your pets don’t have to wait on the mercy of the court before receiving care.
STAND ALONE PET TRUST
A stand alone pet trust takes the terms and conditions of a standby pet trust created in your Revocable Living Trust and turns it into a whole separate trust. Some pet parents prefer a standalone pet trust because it is designed for a specific purpose – the lifetime love and care of your pets and may have different terms than your personal Revocable Living Trust. A standalone pet trust also allows multiple people (spouses or co-owners of pets) to contribute to a single trust for the benefit of their pets. It is one more piece in a comprehensive estate plan. Other important elements to your plan would be your personal Last Will, Revocable Living Trust, Financial Durable Power of Attorney, Healthcare Power of Attorney (Health Care Directive) and a Living Will.
The standalone pet trust is just a separate document rather than being a part of your Last Will or Revocable Trust. Standalone pet trusts are typically ideal for those who own several animals, own animals who have a long life span like turtles, expensive animals like horses, or have incredibly detailed instructions regarding how they want their animals taken care of. Stand alone pet trusts offer greater protection for the animals because of its singular focus that allows you to appoint those people you trust to provide care for your pets. Examples of standalone pet trusts are the ACT4Pets Community Pet Trust™, the Forever Loved Pet Trust™, You can find more information at https://animalcaretrustusa.org/can-you-trust-your-pet/. You might also create a custom pet trust with the assistance of your estate planning attorney.
ROLES INVOLVED IN PET TRUST
CREATOR OF THE TRUST
This is the person creating and funding the trust. Could also be referred to as the Settlor, Trustor, Grantor or Trustmaker.
TRUSTEE
The trustee is the person charged with the responsibility of overseeing the management, investment, and distribution of the assets in the trust. While you are alive and healthy you are the trustee of your trust; meaning you are in charge of all aspects of the trust, including the money. It also means you can change or revoke the trust any time you want. Once you become sick or pass away someone you named (a successor trustee) will step in and will manage your estate in accord with the law and what the trust says. The trustee can be a person, a professional, or an entity like Animal Care Trust USA, Inc. When it comes to pet trusts the trustee is responsible for managing the money allocated to the pet trust and making sure the pet caregiver is actually using the money to take care of the pet. This role is why a pet trust is a better option than making an outright gift of your pet and money. With a trust you have a trustee who is responsible for making sure the pet is actually being taken care of and that all terms of the trust are being met. The trustee will be able to check on your pets and confirm they are happy and healthy. If your pet caregiver isn’t doing a good job or can no longer care for your pet, the trustee may be granted the power to choose an alternate pet caregiver.
TRUST PROTECTOR
The trust protector is a standby role that can provide additional trust oversight. The trust protector can be delegated responsibilities for removing and replacing trustees, amending the trust if there is a change in the law, fixing any errors in the trust, or resolving trust disputes without having to go to court. This role is another reason why a pet trust is a better option than an outright gift of your pet and money. The trust protector can make sure the trustee and caregiver are doing their jobs or appoint someone else if they are not.
PET CAREGIVER
The pet caregiver is the person responsible for the day to day care of your pet. This can be the same person acting as trustee, though it is preferable they are different people so they can serve as a check and balance for each other. It is suggested to select at least three pet caregivers – both short term and long term. You’ll want to have plenty of options if your first choice is not available. It is advisable to choose both short and long term pet caregivers, especially in instances where the long term pet caregivers live a distance away from the pets. You’ll want someone close by that can come and temporarily watch over the pet while the long term caregiver is on their way. Choose a pet caregiver you know you can trust. Don’t assume that your spouse, your kids, relatives, or friends will step in and care for your pets should something happen to you. Every pet parent knows that providing proper care for pets is a major commitment of time, energy, finances and love. Don’t rely on a promise to ensure your pet’s future is secure. As a result, it is vital to come up with a list of potential candidates, and then have a frank talk with each of them, discussing the extent of care your animals require and whether they can take on the role as pet caregiver.
PET OR ANIMAL CARE PANEL
The animal care panel is a group of people you know and trust who may not provide daily care for your pets but would still have an interest in knowing they are being cared for. This panel can provide a great support system for your pet caregiver by helping them make difficult decisions regarding your pets’ health, especially in the event of chronic or emergency health issues. The animal care panel can also provide additional oversight to ensure your trustee and pet caregiver are carrying out your instructions for the care and support of your fur baby.
CURRENT BENEFICIARIES
The current beneficiaries are those who benefit from your pet trust. During the lifetime of your pets, your pets will be the primary beneficiaries or your pet trust. Your pet caregiver may also be a beneficiary because they will certainly benefit from the assets of the trust. When the pet trust ends, you will have remainder or final beneficiaries.
REMAINDER BENEFICIARIES
A remainder or final beneficiary is one or more persons or organizations that will receive the pet trust assets remaining after all of the pet trust beneficiaries have been provided for. Typically, a pet trust may last for the lifetime of the pets and thereafter be terminated. Charities are ideal remainder beneficiaries so your family or friends are not motivated to force an early termination of the trust.
HOW MUCH MONEY SHOULD BE ALLOCATED TO THE PET TRUST
Once your pet trust is signed and fully effective, the next step is to transfer assets to your trust, or name the pet trust as beneficiary to prevent the assets from going through probate. During this process you’ll want to make sure there is enough money in the trust to take care of your pets. The process of transferring assets and designating beneficiaries is commonly called funding or asset integration. Your pet trust can be funded with a variety of assets including checking and savings accounts, certificate of deposit, money market, mutual funds and investment accounts, stock and bonds, real property, personal property, life insurance and annuities, and retirement plans.
How much money should be allocated to your pet trust is flexible and depends on the cost of care for your animals. Factors that go into determining the cost of care include: the number of pets you have, the type of pets you have, the age of your pets, the food and medication your pet requires, the cost of toys and treats your pets love, special care needs, veterinary care, boarding and grooming, end of life care so euthanisia, cremation/burial, final disposition, caregiver compensation, trustees fees, and the cost of maintaining the home if applicable. Remember, you are covering the cost of caring for the animal for the rest of its life, and even basic expenses can add up over time.
Because this is a personal and fact specific decision, Animal Care Trust USA has a calculator that can be downloaded to help you get an idea of how much money should be directed to your pet trust. Some pet parents will leave only a minimal amount, others will want to leave significant assets, including all of their estate to ensure their pets don’t run out of assets. Animal Care Trust USA has established certain minimums for funding their ACT4Pets Community Pet Trust™ and Forever Loved Pet Trust™ .
DO RIGHT BY YOUR FURRY FAMILY
It is vital for every pet parent to take the time to create an estate plan that will provide for their pets in the event of their death or incapacity. Animal Care Trust USA provides affordable options to help pet parents accomplish this important goal. You can also reach out to your estate planning attorney for assistance in creating a plan to provide for your pets.
This article is by Peggy Hoyt and Amanda Vavak. Feel free to contact Peggy Hoyt at (407) 977-1300 , Peggy@HoytBryancom or Amanda Vavak at (916) 801-8995, amandv@yourpropertylawfirm.com with any questions.
