Articles About Pet Trusts
Pet Trusts - By Mary Randolph, J.D. - With a pet trust, you can leave money to be used for the care of your dog or other animal. You put someone in charge of managing and spending it, following a written set of instructions that you provide. Until relatively recently, most states didn't allow trusts for animals. Now, every state allows pet trusts, with no human beneficiary. How a Pet Trust Works Most trusts for pets are written so that they take effect when the owner dies. In the document that creates the trust, there are several issues to address. Which animals are covered. In most states, you can create a trust to provide for the care of one or more animals that are alive during your lifetime. The trust ends when the last surviving animal dies. You can't set up a pet trust to continue indefinitely—for example, for offspring of your current pet or others that the caretaker might acquire. Someone to take care of the animal. Whether or not you use a trust, choosing a caretaker is always the most important decision you have to make. This is the person who will have custody of your pet and will responsible for day-to-day care. Don't assume the person you want to name—even if it's your spouse or best friend—is willing to take on this responsibility. Always ask. Name an alternate as well, in case your first choice can't take the pet when the time comes. An amount of money to be used for the animal's care. Do the best you can to estimate how much the caretaker will need to take care of your dog. The appropriate amount varies widely depending on the pet's age and condition. Be aware that if you set aside an amount that's unreasonably high, family members could challenge it in court, and a judge will likely reduce it. For example, a Pennsylvania woman set up a trust that in 1974 made $40,000 to $50,000 a year available for the care of four horses and six dogs. The court ruled that as long as the animals were well taken care of, the trustee was free to give the surplus money to the alternate beneficiaries named in the will. (Lyon Estate, 67 Pa. D. & C.2d 474 (1974).) And we all heard about Leona Helmsley's dog Trouble, who had a $12 million trust fund. In 2008, a judge reduced it to $2 million and ruled that the rest should go to Helmsley's charitable foundation. Caretaking instructions. Pet trusts tend to be very detailed when it comes to instructions for the caregiver. It makes sense, given that animals can't tell the caregiver what they need or like. Owners often specify everything from favorite food and toys to sleeping arrangements. Someone to go to court and enforce the terms of the trust if necessary. This is the person who makes sure the trust money is being spent appropriately on the animal, and not for any other reason. What should be done with any money that's left over when the animal dies. If you leave more money than is necessary, where do you want the rest to go? It could go to family, a charity—it's your choice. What happens if you can't take care of your pet before your death. One feature of a pet trust is that it can take effect before your death, if you were to become incapacitated and unable to care for your dog. The caregiver you named could immediately take custody and control of your pets if necessary. The provisions in a will, by contrast, don't have any legal effect until your death. Legal Challenges to Pet Trusts It's very uncommon for a trust to be challenged in court. But as mentioned above, relatives who are angry at being disinherited sometimes do challenge the terms of a pet trust, especially if the amount left for the pets seems much more than will be neeed for the animals' care. There are other reasons for legal challenges as well. For example, the nephews of a New York woman challenged her trust, which left $100,000 for the care of her cat Kissie Meouw. They claimed that their aunt had been unduly influenced by her friend and caregiver, but the court ruled that all the evidence indicated that she had been "very intelligent, private and strong-willed" and was quite clear about how she wanted to leave her money. (Estate of Stafford, N.Y. Sup. Ct., App. Div., No. 516429, 2013.) For more about this issue, see Undue Influence in Estate Planning.
Protecting Fido After your Gone - In Indiana, like most states, animals are viewed as personal property. Ordinarily a person cannot leave assets to personal property after death. For instance, an endowment of $1,000.00 to ‘my favorite chair’ is not allowed, but Indiana has carved out an exception for animals. Enacted in 2005, Indiana’s pet trust statute, Indiana Code § 30-4-2-18, recognizes trusts created for the benefit of a pet. A trust can be created to provide care for a pet or pets that are alive during a settlor’s lifetime. The trust ends upon the death of the pet, or, if multiple pets are named, after the death of the last surviving pet. The settlor can name a caretaker, or the court may appoint one. Property of a trust may only be applied for the trust’s intended use, with the exception being if the court determines that the value of the trust property exceeds the amount required for the trust’s intended use. If the court determines that the value of the trust exceeds the amount needed to care for the pet, it can distribute the remainder to the settlor, if living, or the settlor’s beneficiaries or heirs. It is recommended that someone is appointed to enforce the trust, in case the caretaker does not comply with the trust provisions. It is also recommended that a secondary beneficiary be named to receive the remaining trust funds, if the pet dies before the trust funds are fully used. There are other alternatives to a pet trust. For example, Purdue University’s College of Veterinary Medicine offers the Peace of Mind Program, which finds homes and provides medical care for pets in exchange for a testamentary gift to the veterinary school. The program requires a minimum bequest of $25,000.00 per pet. Indiana recognizes that a trust may be created for the benefit of a pet to ensure the pet will continue to enjoy the quality of care provided during the settlor’s lifetime after the settlor passes. If you have questions about the Indiana pet trust statute, contact Cecelia Neihouser Harper at 765-637-9175. Disclaimer: The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation. AUTHOR -- Cecelia Neihouser Harper, Attorney