Does Your Pet Need A Trust?
By Laura J. Martin, Esq.
A “Pet Trust” is a statutorily enforceable trust relationship for the care of one or more animals. If you die or become permanently unable to care for your animals, a Pet Trust can be used to provide for and protect your animals throughout their remaining lifetimes. A Pet Trust is the most protective estate planning option available for pets. However, Pet Trust planning is more complex and more expensive than using a simple will or traditional estate planning trust to transfer your pets and money for their care. This month, we will help you determine when the extra effort and expense involved is needed to ensure your pet’s future wellbeing.
Pet Trust Advantages:
Pet Trust planning has numerous benefits when compared to a will or traditional estate planning trust. Some of the most important advantages include:
A Pet Trust is immediately effective when needed, without probate or a post-death gap in pet care
Money and other property reserved for pet care is protected from misuse and creditors
You can select “pet friendly” trustees, pet caregivers, and enforcers and these people will have a legal duty to care for your animals
You can designate successor pet caregivers and trustees to ensure continuity of animal care
You may leave binding instructions, and high standards of pet lifestyle and care are more likely to be honored and enforced
A pet may be removed and rehomed with another caregiver for abuse, neglect, or inadequate care
A Pet Trust will be interpreted and enforced for the benefit of a pet rather than for the benefit of a person
There are fewer options and opportunities for disgruntled family members or heirs to interfere with or challenge the trust
Pet Trust Disadvantages:
There are also a few significant downsides that must be considered to determine whether a Pet Trust is the right planning tool for you and your pet:
A Pet Trust may be more expensive to create and maintain than a will or traditional estate planning trust (depending on the structure and terms of the trust, sometimes a lot more expensive)
Creating a Pet Trust adds more complexity to your estate plan
A Pet Trust must be properly funded with both pets and money, and the value of a Pet Trust may be subject to court-ordered reduction (good planning can help prevent this)
Pet Trust income is taxed at compressed and higher tax rates and any remainder gifts to animal charities are not tax-deductible (though most Pet Trusts pay little or no income tax)
A Pet Trust is only as protective as the people involved in the administration and enforcement of the trust (it isn’t magical – good people are still needed)
When Is a Pet Trust Most Appropriate?
While a Pet Trust is always the most protective planning option for pets, the extra layers of protection aren’t always necessary. Here is a list of the most common circumstances where Pet Trust planning may be needed to ensure the future wellbeing of your furry and feathered (or scaled) family members:
You do not have or need a traditional estate planning trust but want some of the benefits of trust planning for your pets, including:
a. No post-death delay or gap in pet placement or care
b. Continuity of care through the designation of successor pet caregivers and trustees
c. Fiduciary financial management to ensure money and other property remains available for future pet care
d. Protection from a spendthrift pet caregiver or the caregiver’s personal creditors
e. Fiduciary oversight and monitoring of pets and the care received
The value of the money and property you intend to set aside for future animal care is substantial or is a significant percentage of your total net worth
You are planning for an animal with a longer life expectancy
You want to ensure your high standards of pet care or instructions will be followed (post-death control)
Your pet’s caregiver will be subject to significant oversight and monitoring to ensure your pet’s welfare
Family members are likely to disagree with, dishonor, or challenge your plans for pets
The executor of your will or trustee of your traditional estate planning trust is not “pet friendly”
Money and property for pet care needs protection from potential creditors or Medicaid spend down
You want “the very best” or the most protective option available for your pet!
In the next OAA Animal Insider newsletter article, we will examine one of the most challenging aspects of Pet Trust planning – funding the trust with money and other property needed for animal care. How much is enough? How much is too much? And how to find the right balance.
This is the tenth article in the OAA Animal Insider newsletter continuing series about Pet Planning. Additional information about Pet Planning and the planning options available to you is included in the Introduction to “Pet Planning” for Animal Owners guide.
Disclaimer: This information is provided for educational purposes only and is not legal advice. For Pet Planning assistance, please consult with an experienced estate planning attorney.
