In the 1970 Disney Movie The Aristocats, Madame Adelaide Bonfamille wishes for her fortune to be left to her cats, which will retain it until their deaths, at which time the fortune is to pass to Edgar, her long-time, yet unscrupulous butler. Life then imitated art (art?). Leona Helmsley left the bulk of her estate, estimated at more than $4 billion, to the Leona M. and Harry B. Helmsley Charitable Trust. She left instructions that the Trust, now valued between $5 and $8 billion, be used to benefit her dogs. She also left her Maltese, named Trouble, a separate $12 million trust fund.
Planning for what will happen to your companion animals if something happens to you is not just for fictional characters or eccentric billionaires. Estate planning for pets is something that those of us with pets should consider. For many it may simply be giving Fido to a trusted friend, however, for others it may be more complicated. Without such planning, the care and fate of beloved pets may be put in the hands of a complete stranger.
Once the decision to plan for your pets is made, it is important to have a will and, if necessary, a trust document that deals with the care of your animals. Indeed, the Uniform Trust Act (“UTA”) recently adopted language to address issues surrounding estate administration for pets. Under the UTA, charitable trusts established for the purpose of caring for pets at the time of a settlor’s death are valid. Such trusts end when there is no living animal covered by that trust and, generally, such a trust may not exist more than twenty one years. No portion of the property of a trust authorized by the UTA may be applied to any use other than its intended use unless the court determines that the value of the trust property substantially exceeds the amount required for the intended use. The intended use of a trust authorized by the UTA may be enforced by a person designated for that purpose in the terms of the trust or, if no person is so identified, by a person appointed by the court.
A trust established for the care of pets must explain how to dispose of any remainder of the fund after the animal dies. Some pet owners appoint a trustee to keep an eye on a designated caretaker and to ensure that he or she provides adequate care for the entrusted animals. Unfortunately, the tax code does not address the situation of pet owners who set up trusts for their furry companions, since the code limits its definition of beneficiary to human beings; a trust; estate; partnership; association; company or corporation.
When estate planning with the care of pets in mind, the pet owner should not only consider what happens upon his or her death, but what should happen should he or she become incapacitated. In that contingency, care of pets can be delegated to an agent in a power of attorney.
In undertaking such planning, care must be taken to allot sufficient money for the care of your pets. The calculation should include the annual costs for care, which may vary depending on the health and age of the animals. The amount should also include a reasonable amount to compensate both the trustee and the pet(s) caretaker. While it is critical to provide sufficient funds, a pet owner should avoid grossly overfunding a trust, since some courts have cited overfunding as a reason to overturn a pet trust fund. Instead, the estate planner should calculate the amount based on the cost of boarding the animal at a good kennel for his or her maximum expected life expectancy.
Some pet owners may decide it best to have an animal companion euthanized upon his or her death, if they cannot find a responsible person who can commit long-term to the animal. Some courts have ruled this type of provision to be invalid, particularly if the animal is young or in good health. Note that there may be a suitable alternative, some organizations, such as the Popcorn Park Zoo in New Jersey may care for animals of the decedent as part of their charitable function.
There are a few nursing homes and long-term care facilities that allow residents to bring their pets with them, which may be a consideration when choosing a facility.
Should you have concern for what will happen to your animal companions should something happen to you, contact our office to see how we can put your mind at ease.
— J. Ken Butera