Estate Planning Issues Involving Pets
Estate Planning Issues Involving Pets
Legally, pets are classified as property. But to their owners they often mean more than the couch or the desk—they are best friends, companions, and family (sometimes the owners’ only friends, companions, or family). When a person begins the estate planning process and classifies property and beneficiaries, the pets must be addressed as well.
If your clients own pets—and odds are they do—you are almost certainly going to address this situation eventually. Americans are very concerned about providing continuing care for their dearly loved pets. Sadly, a considerable number of domestic pets are unwittingly condemned to imprisonment and a life without love because their owners did not know—and were not well advised—to make arrangements for them.
Only legally enforceable documents can guarantee a pet’s secure future. Because of reasons as diverse as allergies, conflict with other pets, and exclusion of pets from rental apartments, the informal vows and promises made by friends and family to care for your clients’ pets often fail.
The idea of legally enforceable documents that ensure companion animals’ continuing care is relatively new. The mainstream press often makes a mockery of transitioning pets from owners to pet guardians; they focus only on the large funds left for the pets’ care and ignore the fact that the remainder beneficiaries are often animal charities. Leona Helmsley, a “notorious” celebrity who left millions of dollars for the care of her dog, Trouble, raised the world’s awareness to the possibility of estate planning for pets. Sadly, she was ill-advised, and none of the instructions she left in her will were followed.
This article is a guide to the basic elements of, and what you should include in, estate planning documents to ensure that your clients’ wishes regarding their pets are actually carried out.
Three Legal Documents for Pet Protection
There are three documents to consider when planning the estates of pet owners. The will is valid after death, and its purpose is to distribute property. The free-standing, traditional pet trust enlists a trustee who distributes funds and ensures that the person caring for a pet follows the owner’s instructions. The pet protection agreement is the layperson’s pet trust—an affordable, fill-in-the-blank, legally enforceable document.
Wills. The belief that pets can be adequately protected if they are mentioned in a will is a myth. Consider the following pitfalls of a will:
- Instructions in a will are written in invisible ink; that is, instructions in a will are not enforceable. Wills disburse property: Jane gets the house and cat. Wills cannot enforce demands that every year Jane paint the house she now owns. Nor must Jane care for the cat.
- Wills are not enacted immediately. There will be a waiting period before the will is read and the property changes hands. Ask yourself who owns and cares for the pet before the will is probated? Where will the pet be held during this waiting period? And if legal disputes arise, the final settlement of property can be prolonged even further.
- Wills do not allow disbursement over a pet’s lifetime. In a will, the owner cannot distribute funds over time, which can be achieved with a free-standing traditional pet trust or pet protection agreement.
- Changes to the will are in the court’s discretion. Who do you want deciding the fate of your clients’ pets: your client or a judge?
- Wills make no provisions for incapacity. A will cannot address the possibility that the pet may need to be cared for during the owner’s lifetime.
- Pet provisions in a will may be “honorary.” Forty states and the District of Columbia recognize statutory pet trusts; in these jurisdictions, pet owners who include a simple directive in their will (e.g., “I leave my dog Soupbone and $5,000 for his care to my friend Jane”) can be assured that the funds and pet will remain together. In the ten states without statutory pet trusts, however, these provisions are “honorary.” The person who receives the funds decides whether or not to use them for the pet’s care. There is nothing to prohibit the “trustee” from dumping the pet at the pound and using the money to go to Paris.
The presence of these pitfalls does not mean that wills should never include a provision for pets. Rather, it means that such a provision should be supplemented by a pet trust and/or pet protection agreement.
Pet trusts. Unlike a simple directive in a will, a pet trust provides a host of additional protections and advantages:
- Pet trusts are valid during the pet owner’s life and after his death.
- Pet trusts can help preempt problems with substantial and involved estates. Pet trusts are particularly useful if the client expects a contest to the estate—for example, if the amount left for the pet’s care is enough that someone will contest the client’s capacity, or if there is a litigious family member whom the pet owner believes may dispute the final documents.
- Pet trusts and pet protection agreements control the disbursement of funds.
- Pet trusts allow for an investment trustee. A trust protector (separate from the pet guardian or trustee) can be appointed to invest funds with a view toward growth of the principal and future use on behalf of the pet, heirs, and charitable recipients.
- Pet trusts and pet protection agreements allow provisions for incapacity. Pet trusts and pet protection agreements can ensure that the owner and pets will remain together in the event that your client moves to a nursing home or other long-term care facility. Studies have shown that seniors and those with health issues receive increasing benefits from their pets—lower blood pressure, increased exercise and circulation, reduced anxiety and stress, boosted mental acuity, enhanced opportunities for social interaction, and decreased loneliness. The New York Times has reported that nursing home residents live longer when a pet is present. With a pet trust or pet protection agreement, owners may even leave a portion of the funds remaining after the pet’s death to the facilities that kept the owner and pet together.
Pet protection agreements. The pet protection agreement is a laypersons’ document that I created to establish continuing care for companion animals when owners are unable to care for them. It is a unique product that affords pet owners the opportunity to easily dictate care for all their pets—without the need for large legal bills.
Although most pet owners want to make arrangements for their pets’ care, too many people do not want to go to a lawyer’s office, nor do they have the time or the funds to do so. Sitting with a lawyer and discussing that the pet loves the beach (but doesn’t like Uncle Joe) is important but very time-consuming, and therefore potentially expensive.
As a result of these financial concerns among pet owners, I ended up doing a lot of pro bonowork to ensure that pets’ needs for continuing care did not go unmet. This experience led me to create a unique document that incorporated the best qualities of a will, a pet trust, and a contract. The pet protection agreement—a quick, effective, and affordable way for the layperson to guarantee the well-being of all pets for the rest of the pets’ lives—was born.
The pet protection agreement can be completed with or without a lawyer’s help. Any trusted advisor (such as an accountant, trustee, insurance representative, investment advisor, lawyer, or paralegal) can help a client complete this document. Like the pet trust, the pet protection agreement is valid during the owner’s lifetime as well as after the pet owner’s death. Unlike a pet trust, however, a pet protection agreement cannot ensure that owner and pets will remain together in a long-term care facility.
Elements of Estate Planning Documents for People with Pets
Regardless of which estate planning document you choose, you must address the following issues when considering how to provide for your clients’ pets.
Pet owner. I look forward to the day when all advisors will ask clients, “Do you have any pets?” It is important to establish who the owner is, especially because pets are legally classified as property. As a matter of law, the courts protect children in divorce or separation; because animals do not have that same protection, we frequently see partners in domestic violence and divorce cases using the pet to cause the other partner pain.
The experience of victims of Hurricane Katrina provides yet another example of the need to pre-determine ownership. Displaced owners often unwillingly left pets behind; when they returned to retrieve them, they found that the pets had been adopted out in the absence of ownership and emergency contact information. For this reason, copies of all pet trusts and pet protection agreements should be distributed to everyone who signed them, as well as those who are only mentioned in them (such as groomers, veterinarians, and walkers).
Pet guardian. The pet guardian can be a person or an organization. The pet guardian will keep the pets, generally in the guardian’s home, and must carry out the pet owner’s instructions. If a pet organization assumes this role, the document should include directions about adoption.
Ideally, there should always be a successor pet guardian selected to ensure care if the pet guardian is unwilling or unable to assume care for the surviving pet. Ultimately, the concern is that the pet will always be cared for. In case the pet outlives or otherwise does not have a pet guardian, a shelter, sanctuary, or breed rescue of “last resort” should be named. Usually, shelters and sanctuaries require a fee, and this must be factored into the consideration of how much money to leave.
Funding. If you were leaving your children to a family member, would you expect Uncle Joe to say that he would not take your child unless you left him the farm? Well, look at estate planning for pets the same way. Funding is optional in both pet trusts and pet protection agreements.
Although funding is optional, it is recommended. Funds can be a fixed amount or a percentage of an insurance policy, bank account, 401(k), or even a portion of the sale of a home.
Many factors should be considered when deciding how much to leave for a pet’s care, not the least of which is the fact that pets are more expensive as they age. Some things to consider are: How many pets are included? What type of pets are they? How long are they expected to live? Does the pet guardian need funds to keep the pets in the manner to which they are accustomed? Is the pet guardian going to be compensated from the remaining funds after the pets pass, or should the pet guardian receive monthly or yearly compensation?
Another consideration is emergency funds. I had a client who left her pets to her sister in North Carolina. Trouble was, the client lived in Connecticut, and when the client passed away the sister did not have the funds to fly up and retrieve the pets. I had to lend her the money until we could access the bank account. That’s when I learned that it’s a good idea to consider leaving a small bank account in the joint names of the pet owner and pet guardian. It also tests the pet guardian’s trustworthiness while it’s still possible to change the document.
The same person or organization named as the pet guardian can also be in charge of the funds, but appointing a different person or organization to each role creates a system of checks and balances and further protects the pets. In a pet trust, the person who manages the funds is called the trustee; in a pet protection agreement, that person is the distributive representative. Always consider alternatives in case the first choice is unavailable. In the pet trust, it is the trustee who passes the pet to the pet guardian, who then acts as the new owner.
Remainder beneficiaries. Most people incorrectly believe that all of the funds must be spent on the pet. This is not true. As a matter of fact, it is vitally important to direct the distribution of all funds remaining in the documents so that the court doesn’t get involved in doing this. The majority of pet owners leave the remaining funds after the pets’ death to animal charities and family. It is important that the remainder is left in percentages as opposed to whole numbers; you never know what the final number may be.
Pet’s detailed description. Identifying the pet in detail is critically important to prevent a pet guardian from replacing the original pet in order to illegally extend trust distributions or benefits.
Instructions for care. Instructions regarding the pet’s care should be as detailed as instructions that a parent might provide when leaving a baby in a sitter’s care for an extended period. Detailed instructions help ease the transition between pet owner and pet guardian. However, the instructions should allow the pet guardian to exercise some discretion when facing new circumstances.
Keeping pets together. If the pet owner wants to keep together certain pets because they were raised together or have otherwise bonded, make sure to include this instruction in the document; it will not happen automatically. The ability to keep pets together can have a significant impact on the choice of pet guardians .
Including all present and future pets. All pets owned by the pet owner, including those the pet owner does not yet have at the time the documents are written, should be included. It saves the effort of having to formally amend or create a new document every time a pet dies or a new one comes into the family. Including the term “all my pets” accomplishes this.
No one likes to see a pet consigned to a place not of the owner’s choice, and no one wants the court to decide a pet’s fate when its owner is no longer able to care for it. As painful as it is to think of leaving beloved pets behind, there is no greater sense of security for pet owners than knowing that all their companion animals are provided for. You will be doing your clients a great service when you help them secure their pets’ futures.