We all Love our Pets, So why not

Provide Your Pet with a… Trust Fund

 

Daisy, the dog, can be a member of the family, but what happens to Daisy after you are gone? How can you ensure your pet will be cared for? One option is to create a Pet Trust. While you can give directions in your Will to leave your pet to a caretaker, there is no guarantee that the caretaker will continue to care for your pet. A Pet Trust can provide a little more security for the pet because a third party — the trustee — is obligated to ensure the pet is cared for.

A Trust is a legal arrangement through which a person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.”  With a Pet Trust, the trustee makes payments on a regular basis to your pet’s caregiver and pays for your pet’s needs as they come up.

The federal tax code does not recognize a pet as a beneficiary of a trust.  However, 37 states, including NYS, have laws allowing Pet Trusts.  When you create a trust (as the “Settlor”), you fund the trust with assets to provide for your pet’s expenses that occur during its lifetime.  The person you select to hold the funds as the “trustee” has the legal obligation to follow your instructions and can be authorized to make payments to the caregiver of your pet. Some of the preliminary issues that you should consider for your Pet Trust include:

• Caretaker – The trust will need to name a caretaker who will be willing and able to care for your pet. The caretaker should be someone who is  comfortable with your animal.
• Care Instructions – The trust should include specific instructions on all aspects of the pet’s care,  including the brand of food, activities the pet  enjoys, and the preferred veterinarian.
• Funds – The amount of money necessary to fund the trust depends on the individual animal. Typically, you can leave the money to the trust in your Will. –
• If a Pet Trust isn’t right for your situation, you can also provide for your pet with conditional bequests (money given to a specific person with the condition that the person takes care of your pet) or bequeathing your pet to a specific person.

Establishing a Pet Trust – Under law of most states, including New York, an animal can be the beneficiary of a trust created to care for the animal. New York enacted its pet trust statute in 1996. The statute enables persons to create trusts for their animals, and such trusts can be enforced in the courts. The trust can be a testamentary trust, created under a Will, to take effect upon the death of the pet owner, or an inter vivos trust, created and effective while the pet owner is alive. A trustee is named in the trust instrument to manage the trust and use the funds in the trust to care for the animals. If the trustee cannot take physical possession of the animals, a different person can be named as the caretaker. Alternate trustees and caretakers should always be named in case the first-named person is not available to act when the pet owner dies.

The New York pet trust statute has a 21-year limitation, even if the life span of a particular animal is longer. A suggestion for owners of parrots, horses and other long-lived animals is to create a pet trust that goes for the 21-year period. Name an animal sanctuary (one that cares for the species of animal that is the beneficiary of the pet trust) as remainderman of the trust to take the animal and remaining funds, at the end of the 21-year period. The pet trust statutes of most states does not have the 21-year limitation and can continue for the lives of the animal beneficiaries. The Legal Issues Pertaining to Animals Committee of the NYC Bar Association is working on a project to amend the pet trust statute so that the 21-year limitation is eliminated. For information, contact the NYS Bar Association.