How to incorporate pet trusts into estate planning, and why this will add value to your practice
For many people, animals are part of the family. Dogs, cats, rodents, reptiles, birds, and other pets are important members of millions of households, and yet they are not always accounted for when planning for the future. Many people overlook pets when embarking on estate planning and are unaware that these loved ones should be accounted for in the event of owner death or incapacity. As an attorney, adding pet trusts to your legal repertoire can add value to your law practice and potentially capture a whole new client base. Pet trusts can be easily and quickly added to an existing estate plan. Still, there are a few guidelines to follow to ensure pet owner intentions are honored in the event an animal outlives them.
Why you should set up a trust
Notably, real estate billionaire Leona Helmsley left her Maltese a $12 million trust when she died, but most pet trusts will not be as opulent. The intent of a pet trust is to account for basic pet care — not diamond-crusted water bowls. To ensure this goal is met, it’s important to decide on the correct legal measure.
It is generally better to set up a pet trust rather than include animals in a will. Owners that account for pets in a will might have the right intention, but in a practical sense this can lead to a lapse in pet care. For example, money cannot be accessed until court approval which makes it difficult to care for a pet prior to a court ruling. While setting up a trust is a little more expensive for your client, it’s an overall smoother and quicker process because you can bypass the probate.
There are two types of pet trusts: honorary and enforceable. The type of trust that is created will depend on state legislation since some states do not allow enforceable trusts. With an enforceable pet trust, a trustee and caregiver (or beneficiary) will be assigned. The trustee will manage the money and the caregiver will handle pet care. The trustee and caregiver relationship is in place to create a system of checks and balances and prevent financial exploitation. For this reason, it is important clients follow a few guidelines when choosing people for these roles.
What to consider when assigning a pet trustee and caretaker
Clients should recognize that these roles are a service and should be considered as such when outlining an estate plan. Matters of compensation should be part of the conversation since trustees and caretakers will take on additional responsibilities. A caretaker should be someone who has demonstrated care and affection for the pet in the past. To ensure all bases are covered, clients might also consider setting up a provision for a replacement caretaker or give trustee authority for naming a replacement. Trustees cannot name themselves as caregivers due to conflicts of interest.
To ensure proper care is given to pets, owners might want to outline instructions in a pet trust information sheet. This document details specific care instructions to which the caretaker should refer. As an attorney, you can set up a contract to make caregiver instructions legally binding. Another legal consideration will be accounting for the trust after the pet dies. Setting up provisions for assets and funds within a pet trust in the event of pet death is required. Often, owners will leave remaining funds to family or donate it to charity.
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