Pet Trusts: Protecting Fido at Your Death

Pets play an integral role on our daily lives. Some people have pets simply because they love animals. For others, pets offer companionship and unconditional love. Some people enjoy going for walks with their pets or playing fetch. Research has shown that pets offer significant impacts on our health by lowering blood pressure, reducing stress and depression, lowering the risk of heart disease, shortening the recovery time after a hospitalization, and improving concentration and mental attitude. See A Dog’s Life (or Cat’s) Could Benefit Your Own, San Antonio Express-News, May 18, 1998, at 1B (explaining how some insurance companies lower life insurance rates for older owners of pets).

It is also true that the majority of pet owners treat their animals as members of their families. Think about the devastation and void that you feel when you lose a beloved pet. Growing up I had a collie named Jaxon. He was the best friend a kid could ask for. It was his routine to wait by the door for me to come home. When I opened the door he would greet me with his tail wagging, jump on me and start licking my face. He (and I) loved bed time when he would curl up next to me on my bed and sleep the night away.

I had him from the time I was in 4th grade until I was in college. He was a part of many good and bad times but I could always count on his unconditional love for me. For all of the fun times I had though, I will never forget when I had to take him to the veterinarian to be put to sleep. He had suffered a stroke which completely debilitated him. I can still remember the look in his eye as I left the room before he was about to be put to sleep. He was saying thank you, I love you, and we’ll see each other again someday.

The love that owners have for their pets transcends our own deaths. Studies have shown that between 12% and 27% of pet owners include their pets in their wills. The most famous case was billionaire Leona Helmsley who left $12 million in her will to a trust to benefit her white Maltese named Trouble. Cats too have been provided for in wills. Singer Dusty Springfield’s will required that her cat, Nicholas, have his bed lined with Dusty’s nightgown, that Dusty’s recordings be played each night at Nicholas’ bedtime, and that Nicholas be fed imported baby food.

So how then do we ensure that our pets are taken care of in the event of our deaths? What if we become incapacitated due to an accident or illness and can no longer care for our pets? Is there a way to make sure that our wishes are followed when it comes to our pets? The simple answer is YES! The more complicated answer is the same but we must think about how we want to accomplish our wishes for our pets.

While we can certainly provide direction in a will as to how to care for our pets, a more effective method is to use a pet trust. This article answers frequently asked questions as well as gives guidance regarding things to think about and consider when making a pet trust.

What is a pet trust?

A legal arrangement whereby you can ensure that your pet receives the proper care and affection you desire after your death or in the event of your disability/incapacity.

How Does a Pet Trust Work?

A pet trust works in a similar fashion to all other trusts. The trust must be in writing to be legally valid. Oral trusts are legally insufficient. There are three parties to the written trust:

  • You as Settlor;
  • Arusted person or bank as Trustee; and
  • Your designated care giver as Beneficiary.

Under this arrangement, you as Settlor give your pet and sufficient money or other property to a trusted person or bank who serves as the Trustee. The Trustee then delivers the pet to the person you have designated to be caregiver as Beneficiary.

The Trustee is under a legal duty to follow the terms of the trust and manage the property of the trust for your pet’s benefit. The Trustee must pay all related expenses of caring for your pet (or whatever else the Trustee is required to do under the terms of the trust).

One primary advantage to using a trust is that you can put in your wishes which must be legally followed! If you want your dog to be walked at 6:00 a.m. and 6:00 p.m. every day then that can be accomplished. If you want your cat to have a bowl of warm 2% milk, three times a day, that can be done. If you want your pet snake to have an exotic cage, so be it. Point is, whatever you want, no matter how ridiculous it may seem to others, can be arranged.

Not All Pet Trusts are Created Equal!

Two distinct types of pet trusts can be utilized. The first is termed a “traditional pet trust”. Traditional pet trusts are valid in every state and allow you to put very specific instructions to the trustee as to your pet’s care and well-being. After your death, the Trustee’s job is to help the Beneficiary providing care to your pet by paying for the pet’s expenses according to your directions as long as the beneficiary takes proper care of your pet.

Contrast “traditional pet trusts” with what are known as “statutory pet trusts”. Statutory pet trusts are authorized by the legislature of each state. As of the writing of this article, there are approximately 40 states that have enacted statutory pet trusts. This type of trust is a basic plan and the terms of these trusts are not specifically specified by the settlor. In other words, the state law determines how these trusts operate and how they can be used.

Most people elect to use a “traditional pet trust” so that they can write in the specific provisions they want for their pets. A traditional pet trust also allows you to name alternate beneficiaries, alternate trustees, the type of care your pet will receive, and what happens when the pet dies. In short, there are many advantages to using a traditional pet trust and very few disadvantages.

When Do I Create My Pet Trust?

Pet trusts can be created either while you are alive or at your death. If created while you are alive, the trust is known as an “inter vivos” or “living” trust. If created at your death, the trust is known as a “testamentary” trust. In order to create a testamentary trust at your death, you must have specific provisions included in your last will & testament! Failure to include these provisions means that your wishes for your pets most likely will not be followed.

An inter vivos pet trust takes effect immediately and will already be functioning at your death or disability. The advantage to this is that there is no time delay between your death and the property being available for the pet’s care. If your pet needs something the day after you die, the money or other property is already set aside to handle the pet’s needs. The downside to an inter vivos pet trust is that additional start-up costs and administration fees do exist.

A testamentary trust, on the other hand, becomes effective at the time you die and your will is declared valid by a court process called “probate”. While testamentary trusts are a much less expensive option, there is likely to be a time delay between your death and the funds being available to take care of your pet. Additionally, a testamentary trust does nothing for your pet if you become disabled and unable to care for your pet.

So I Created a Trust, What Now?

As with all other types of trusts, your pet trust must be “funded” with actual money or property to be used for the care of your pet. Failure to fund your pet trust means that your trustee has nothing to distribute on your pet’s behalf. This unfortunate scenario means that your pet trust is completely worthless.

How Much Can I Put Into My Pet Trust?

The short answer is that the law allows for you to place a “reasonable” amount of property into the trust. There is no legal definition of reasonableness. It is a case-by-case evaluation and what is reasonable for one person or type of pet is not reasonable for another person or pet. Factors used by courts include the type of animal, the animal’s life expectancy, the standard of living you wish to provide for the animal, the need for potentially expensive medical treatment, and whether the trustee is to be paid a fee for his or her services. The size of your estate must also be considered.

An unreasonably large amount of money or property transferred to your pet trust is likely to be seen as unreasonable. This gives your heirs and beneficiaries fertile grounds upon which to launch a trust contest. A court is allowed to reduce the amount of money or property in the trust to what it considers reasonable.

When Do I Fund My Pet Trust?

Depending upon when your pet trust is created depends upon when it needs to be funded.

For inter vivos trusts created while you are alive, you should place money or other property into the trust at the time it is created. You can always add additional money or other property to the trust at a later time.

For testamentary pet trusts created at your death, you should fund the trust at that time by including pertinent provisions in your last will & testament. Again, failure to include any language pertaining to your pets causes unintended consequences.

How Do I Fund My Pet Trust?

For inter vivos pet trusts, created while you are alive, you need to transfer money or other property to the trustee. This must be properly documented for the legal requirements to be given effect. This means that money should be payable to the trustee of the trust and specialized language must be included. For transfers of land, a deed must be prepared transferring the land into the trust and recorded in the county clerk’s office. Other means of funding include using “pour-over” will provisions which add property to the trust from your estate; use of life insurance proceeds with the death benefit payable to the trust; using pay-on-death accounts, annuities, retirement plans, and other contracts that are payable to the trust upon your death.

For testamentary trusts, created at your death, you must ensure that specific provisions are included in your will/trust that give both your pet and property to a trust for the pet’s benefit. Specialized language should be utilized to ensure that there is no question as to your intent to create the pet trust, to place your pet into the trust, and to transfer money or other property to the trust.

Should I Name Alternate Caregivers?

YES! You want to name at least two (2) but probably three (3) in the event one of the named caretakers is unwilling or unable to serve as such. Just because you name someone as a caregiver does not mean that he or she has to perform those duties. He or she can always refuse. In that event we use the next named caregiver that you have designated.

What Happens When My Pet Dies?

As with caregivers and trustees, you should name an alternate beneficiary to receive any property remaining in the trust at your pet’s death. You can name anyone or any organization of your choosing. Keep in mind that naming your trustee or your caregiver as the remainder beneficiary is generally not a good idea since it creates an incentive for the caregiver or trustee to not take care of your pet.

If you would like further information on pet trusts and how you can integrate them into your estate plan, call Green Law, PLLC today at (806) 548-2953, or email us at info@greenlawtexas.com. We look forward to protecting you and your pets and ensuring that your wishes are followed in all respects.