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Pet Estate Planning

When my dear friend Jennie told me she was working on a Pet Estate Planning Questionnaire, I asked her right away to share it with me so I could better provide for my own canine kids. I am very grateful that she also was willing to write a guest-blog for all of us on such an important subject.

guest blogger: Jennie Schenck

In modern times, a high percentage of Americans regard their pets as family members.  Approximately 45% of dog owners report that they take their dogs on vacation with them. More than half of pet owners would prefer the company of their pet to that of a human if stranded on a desert island. Half of all pet owners would be very likely to risk their lives to save their pet’s life.

These views are become increasingly apparent in the estate planning context. The most recent famous cases have involved hotel heiress Leona Helmsley leaving $12 million (later reduced to $2 million) to her maltese, Trouble, and a rumored million-dollar estate plan for talk show host Oprah Winfrey’s cocker spaniels. However, people other than the rich and famous are utilizing pet estate plans as well. Currently, approximately 20% of Americans provide for their furry and feathered friends in their estate plans.

Pet Estate Planning Questionnaire
Perhaps the simplest way of making sure your pets are cared for upon your death or incapacity is to write a letter or fill out a questionnaire for the person in charge of administering your estate plan.  This document should go into the fine details of your pet’s personality: what kind of food does he like? Where are his favorite hiding places? What kind of play does he enjoy? The letter/questionnaire should detail every little thing that you think would be helpful for a caretaker to know about your pet. This document can then be kept in a safe place with the rest of your estate planning documents. To download a (free) copy of the pet questionnaire, click here.

If you plan accordingly, you can have the letter/questionnaire incorporated into your trust or will by reference, making it legally enforceable and allowing you to change it without having to amend the actual estate planning documents.  However, the letter/questionnaire is not legally enforceable in and of itself. For this reason, a lot of pet owners choose to account for their pets directly in their estate planning documents.

Will or Trust?
The will is the first estate planning document that comes to mind for most people.  Simply put, the will directs where probate property (the majority of most people’s property) should be transferred upon your death.  Unfortunately, wills may not be terribly helpful for the pet owner who wants to set forth a detailed pet care plan after his death – wills cannot legally enforce instructions regarding pet care.  Additionally, wills transfer property in a lump sum.  A caretaker who receives one large lump sum money and realizes there is no legally enforceable way to make him care for the pet will be very tempted to spend the money on a shiny new house or car for himself, not on the pet.  As such, unless the caretaker has a personal attachment to the pet and is very trustworthy, pet owners should avoid wills for pet estate planning purposes.

A more appropriate estate planning tool for pet owners is the trust.  A trust has a grantor, or creator, who funds the trust; a trustee who holds legal title to the property and is a fiduciary, thus making him legally liable for any notable deviations from the grantor’s trust plan; and a beneficiary, who holds beneficial title to the property and is ultimately allowed to enjoy its benefits. Due to the recent surge of people who want to create pet estate plans, both the Uniform Probate Code and the Uniform Trust Code have created statutory rules that allow courts to find pet trusts valid. Thanks to these rules, all a grantor has to do is, for example, say, “I designate $5,000 for the care of my cat, Fluffy,” in the trust document itself. A court will then fill in the blanks according to the grantor’s presumed intent (though it is best if the grantor states his intent as clearly as possible, of course). The grantor can also designate alternative caretakers and direct where the property should go after the pet’s death.

The greatest advantage of the trust is that the trustee will be liable if he does not care for the pet according to the grantor’s wishes. Pet owners with trusts can be confident that their pets will continue to lead happy, healthy lives after the pet owner is gone. While pet trusts are a great way for any pet owner to create a pet estate plan, they are especially useful for people who are older, who live alone, whose spouse or children does not want to care for the pet after the grantor dies (under laws of intestacy, pets, as property, are automatically passed to the decedent’s spouse – or, if there is no spouse, to his children), or whose pets have a long life expectancy.

Courts
Because statutory pet trusts are fairly new, there are still a few kinks that need to be worked out.  For example, if a court finds that a pet owner has left too much property to the pet, they can substitute their judgment for that of the grantor in deciding how much property should go to the pet.  In the case of hotel heiress Leona Helmsley, the court eventually slashed the $12 million she left to her beloved dog Trouble to $2 million. While this may still seem like an astronomical amount for a pet, some worried that the money would run out before Trouble’s death due to the expensive gourmet dog food that Helmsley directed that Trouble should eat and the huge cost of guarding the dog from dog-napping. There is a current movement to eliminate the court’s ability to lower the amount of property designated for the pet – after all, the entire purpose of a trust is to honor the grantor’s intent.

Taxes
Additionally, the tax ramifications of pet trusts are currently not favorable. For example, these types of trusts are taxed at the trust’s high income tax rates, and charitable deductions are not allowed, even if a charity is designated as the remainder beneficiary. A bill regarding more favorable income, gift, and estate tax treatment of pet trusts has been introduced in the past, but it has not gone anywhere.

Comet & Jupiter

In conclusion, pet owners/guardians have many options for making sure that their animal friends will be treated well after the pet guardian is gone. From a simple letter to an elaborate trust agreement, a person can make sure his companion animal enjoys the same standard of living (s)he enjoyed during the person’s life. Hopefully, as people begin to utilize pet estate planning more and more, the trust rules will become more refined and user friendly. Until then, a little strategy can go a long way in creating an effective pet estate plan.

Jennie Schenck is a third-year law student at the University of Arizona James E. Rogers College of Law. She is a board member for the Student Animal Legal Defense Fund at the U of A. Her legal experience includes family law, personal injury, estate planning, and federal contracts. She created the pet estate planning questionnaire as a 2011 summer law clerk at Beth Allen Law, P.C., in Portland, Oregon. She lives with her two crazy cats, Comet and Jupiter.

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Author: Sharon Discorfano

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1 Comment

  1. Blog articles of this type underscore the need for planning in advance regarding one’s estate, they also serve a useful purpose to highlight for the general public the need and importance of including ones pets in their estate planning. To provide excessive funds for the care of one’s pet very often ends up with a lawsuit and eventual court decision reducing the bequest or trust amount. Whether one agrees or disagrees with this type of court intervention, it is an aspect that must be considered when planning. There are many questions raised when planning for companion animals that bear discussion and sometimes there are no easy answers.

    Our intention when we created our book, ‘Fat Cats & Lucky Dogs’, was that it would be an easy to understand and complete resource of information and ideas that the general public could immediately use; for providing guidance to those who would like to explore planning possibilities for their families and pets; and for stimulating people to take action before they are in a position where they can’t.

    We hope as many people as possible will be encouraged to deal with this type of planning rather than leave it to others and the courts when they no longer can.
    We believe our book is of great value to everyone who loves their companion animals.
    Sincerely,
    Barry Seltzer, Lawyer & Professor Gerry W. Beyer, Governor Preston E. Smith Regents Professor of Law, Texas Tech University School of Law

    A few observations about ‘Fat Cats & Lucky Dogs’

    I have received … a copy of your book, Fat Cats & Lucky Dogs. I look forward to reading it.

    Very truly yours, JUSTICE SONIA SOTOMAYOR,
    Supreme Court of the United States

    The book if full of wonderful anecdotes and sound advice. I know I will enjoy reading it.

    Sincerely yours,
    JUSTICE SAMUEL A. ALITO JR.,
    Supreme Court of the United States

    Thank you for…your book…I look forward to reading it. It is so nice to see other animal lovers taking time to instruct people on how to care for their pet’s well being.

    Martha Stewart

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