Brown & Associates - Attorneys & Counselors at Law, P.L.L.C.

MORE ESTATE PLANNING FOR PETS
(9/1/02)

Last week, I addressed some of the issues involving in planning for the care of your pets after you are gone. I suggested you consider using a trust for the benefit of your pet, name a pet custodian to provide the caregiving, and designate someone else as Trustee with guidance on how and when the trust funds should be delivered to the pet custodian.

When you draft your estate planning document, be as precise as possible. Singer Dusty Springfield's Will provided specific instructions on the care of her cat, Nicholas. Her will said Nicholas' bed was to be lined with Dusty's nightgown, her records were to be played each night at his bedtime, and he was to be fed imported baby food. Oprah Winfry's Will says her dog is to live out his life in the lap of luxury. These celebrities and others have provided detailed instructions so their money is used for the care of their pets and not misused by their pets' caregivers.

Other Estate Planning Documents

An often over looked document is the Durable Power of Attorney. What happens to your pet if you are disabled? Your Will isn't effective yet, so none of its provisions are enforceable. Your revocable living trust may or may not address this situation. With a Durable Power of Attorney, you can make any special arrangements you feel are necessary for the care of your animal. You can authorize your attorney-in-fact ("agent") to hire a specific care provider, withdraw funds for veterinary care and other medical expenses, pay for transportation to different locations, contract for lodging, purchase specific items, and so on. One power of attorney even told the agent how many and what brand of catnip mice the agent should purchase for the client's cat. Without a power of attorney, those who want to care for your pet may be stymied because they don't have any authority to do so.

Testamentary or Inter Vivos Trust

You need to decide whether you want a testamentary or an inter vivos trust. An inter vivos trust is effective immediately and continues after your death. It avoids delay in implementing your instructions. A testamentary trust is created by your Will and may require probate. During this administration period, your pet's status is in limbo until the court rules on the enforceability of your Will. Your personal representative or trustee may not be able to access the funds he needs to care for your animal.

Another advantage of the inter vivos trust is that it is easily modified. It's a simple matter to amend or restate a trust. You can also make a Codicil to a will, but additional formalities are required and multiple codicils may create problems during probate.

A disadvantage of inter vivos trusts is the additional time, complexity, and expense involved in setting them up. The trust must be created and funded with sufficient property to carry out your purposes. This step isn't necessary with a testamentary trust. There are, however, ways around this problem, such as funding the trust with a nominal amount like $500 and naming it the beneficiary of your life insurance policy or pay on death ("POD") accounts. You could also provide in your Will for additional assets to be paid over to the trust after your death so your trust has adequate funding to care for your pet.

How Much Do I Need?

One of the hardest questions to answer is how much to put into your pet's trust. First, what standard of living do you intend to provide? Do you anticipate any expensive medical care? Will your pet be living with someone or in a kennel or care facility? If your caregiver needs time off for business, vacation or just to get a way, what alternative arrangements are needed? How large is your estate? Do you have $5 million to care for your pet or are your means more modest? In other words, don't ask for more care than you can afford.

An important factor is your pet's life expectancy. Is your cat elderly and only in need of care for a short time? Or do you have a young horse who will be around for 30-35 years?

Not everyone will be happy with your decision to provide for your pet. If you transfer too much to your pet's trust, your heirs may challenge your decision and claim you weren't of sound mind. If you have a large estate, you can transfer a fairly large amount of money to the trust. If, on the other hand, your means are limited, you may add fuel to the fire if you leave too large a legacy to your pet, no matter how well loved. And if the amount in trust is far more than your pet will need during its lifetime, your heirs might convince a court to overturn the Trust. In one case, the court reduced the amount in a pet's trust to what it deemed sufficient to accomplish the owner's purposes. The rest was paid over to the contesting heirs.

Who do you trust?

Be sure to name someone you trust as caregiver for your pet and as trustee of your pet's Trust. Beyond your trust and confidence in them, will they be around for the duration of the trust?

One client's pet, Annie, is an orangutang. She is about five feet tall, weighs some 100 pounds, has muscles of steel, is twenty years old, and will probably live another forty or fifty years. If something happens to my client, he wants someone to be around to care for her. He has designated three caregivers and three trustees, each of whom is progressively younger than the one before. His initial caregiver and trustee are in their mid-fifties. The first successors are in their mid-forties, and the final successors are in their late-twenties. By bracketing his target, someone should always be available to care for his beloved petchild (his word, not mine).

Provide Clear Instructions

You know what life you want for your pet after you're gone, but you cannot expect your care giver or trustee to read your mind. Specify the standard of living to be provided. Will your brother take your cat to his farm and let it run loose or do you want it placed in a pet boarding house where it will be pampered and its every need met? Will the caregiver be paid a monthly fee so long as he cares for your pet or will the trustee only reimburse costs for food, shelter, grooming, medical care, and burial expenses.

Try to avoid disputes between your caregiver and trustee. Give the caregiver clear guidance so he and your trustee don't disagree about what to do or how much to spend. The caregiver needs enough money to fulfill your instructions, but not so much he can go overboard. One dispute was over a washing machine. The caregiver said he needed the washer for the dog's bedding while the trustee said the caregiver just wanted it for himself. Do you want a judge trying to read your mind? Be very specific and avoid as many disagreements as possible.

Next week I'll conclude this series with some additional thoughts on providing for the needs of your pet after you're gone.

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