We Americans love our pets and consider them members of the family. We treat them like our children, and even refer to ourselves as their Mommies and Daddies.1 While it is true that we take care of them, the relationship is far from one-sided. In addition to unconditional love, there are many other benefits our animal friends bestow upon us. Elders and people with health issues, in particular, are known to derive therapeutic benefits from interaction with animals. These benefits include lower blood pressure and decreased anxiety, increased circulation and mental sharpness, and reduced loneliness due to the enhanced opportunities for social interaction and the distraction of focusing on the pets' needs.2 It is also well documented that the presence of pets in nursing homes increases the longevity of residents.3
As with any loved ones for whom we are responsible, the concern arises: How can we make sure that our pets continue to receive care if the time comes when we ourselves can no longer provide it? One possible answer is a pet trust.
What is a pet trust?
A pet trust is a legal arrangement whereby a person can provide for the care and maintenance of dogs, cats, and other animals in the event of the person's disability or death. Although they may take different forms and have to comply with varying laws in different jurisdictions, pet trusts are set up much like any other trust. The "grantor" is the person who creates the trust. The "beneficiary" is the pet or other animal that is to be cared for. The "trustee" is the person who holds legal title to the assets for the benefit of the animal. In addition, a "guardian" or "caretaker" is appointed to actually care for the pet, and even an "enforcer" can be named to make sure the trust terms are followed. Like other trusts, a pet trust can be inter vivos, taking effect during the grantor's lifetime, or testamentary, taking effect upon the grantor's death.
Providing for pet care, past and present: Defining the issue
The public is mesmerized by the multi-million-dollar pet care cases emphasized in the media.4 However, most people have more modest concerns. They just want to make sure that someone will take care of their pets, and see to it that their pets will have food, shelter, and veterinary care. The problem was that, prior to the enactment of pet trust legislation, if a pet owner wanted to earmark money for the care of a pet, there was no functional mechanism to do so. For example, a regular bequest made to an individual with the expectation that he or she would act as the caretaker of the pet lacked any oversight or enforcement mechanism to make sure the person did, in fact, use the money to take care of the pet. Similarly, money left in a regular trust attempting to name the pet itself as the beneficiary would fail5 since pets and other animals cannot be beneficiaries of Wills and traditional trusts because of their legal classification as personal property in every U.S. jurisdiction.6
This left people who wanted to protect their pets and arrange for their care with little choice but to try some creative things in an attempt to do so. Thus, in the past, people tried to ensure a pet's well being after the owner's death by making a conditional testamentary gift to a friend or family member for the pet's care and maintenance - the condition being the care of the pet.7 However, conditional gifts are difficult to enforce, since there is no trustee or overseer to ensure that the funds given to the caretaker are actually used for the benefit of the pet.
Pet trusts to the rescue: their nuts-and-bolts and advantages
Unlike these prior imperfect methods, a pet trust is designed specifically for pet care planning and alleviates all of these shortcomings. First and foremost, the pets or other animals are expressly recognized as the beneficiaries. As with other trusts, the maker of the trust may specify a trustee and a successor trustee. The trustee should be someone other than the individual who will be the pets' caretaker. The caretaker can be an individual or an organization, but most owners select a friend or relative who knows the pets and is ready, willing, and able to care for them. If no friend or relative can be found to take the pet, another good choice would be a charitable organization whose function is to care for or place companion animals; for example, a humane society or shelter might agree to accept the animal along with a cash bequest to cover expenses.8 Alternate caretakers may be named as well. The trust must also name a "remainder beneficiary" - i.e., the individual or organization that will receive any funds left in the trust after the death of the last pet beneficiary. An inter vivos trust, which takes effect during the life of the pet owner, can provide for the care of the animal in the event that the pet owner becomes incapacitated, as well.
A pet trust also takes the various advantages that a trust has as compared to a Will, when it comes to caring for a vulnerable beneficiary, and expressly applies them to the care of pets and other animals:9
- Bequests in a Will are geared towards disbursing property in one shot after probate of the Will - not in ongoing steps over a period of time. By contrast, that is precisely the function of a pet trust.
- Wills have an inherent time gap between the testator's death and probate during which there is nothing in place to govern what happens. In the meantime, who cares for the pet and where will the pet stay? By contrast, an inter vivos pet trust remains in effect seamlessly during the pet owner's life, at the moment of death, and after death, with no interruption.
- Because the probate process necessarily puts the Will before a judge for confirmation, it increases the possibility that a Court will tinker with the Will's pet care provisions. By contrast, a free-standing inter vivos pet trust is a private document that needs no judicial confirmation or intervention.10
- Wills do not put care in place for pets during the owner's lifetime if the owner suffers illness or incapacity. By contrast, this is precisely what an inter vivos pet trust can do.
- Pet provisions in a Will may be considered "honorary" or "precatory" and, therefore, unenforceable.11 By contrast, a pet trust allows owners to expressly establish trust accounts for the ongoing care and maintenance of their domestic or companion animals, with safeguards in place to ensure compliance.
Like other trusts, a pet trust can - and, perhaps, should - be very specific.12 The trust may name one or more veterinarians to care for the pets, state how the trustee will finance the caretaker's pet expenses, and indicate how often the trustee should visit the caretaker and pets to ensure that the trust's terms are being followed. It should detail how the pets should be maintained, and can specify the particular brand of food the pet prefers, or specify that the pet likes to play frisbee in the park. Since pet owners know the particular habits and preferences of their companion animals better than anyone else, they can describe the exact kind of care their pets should have and identify the individuals who should be involved in that care.
Overcoming the Rule Against Perpetuities
One of the reasons that special pet trust laws are required is to overcome a significant obstacle to effective estate planning for pet owners: the Rule Against Perpetuities, which requires that a trust be measured in human lives. Over the years, many state courts ruled that the life of a domestic or companion animal could not be used to sustain a legal trust agreement. As a result of this prohibition, many early decisions involving pet care trusts held that the trusts were only honorary, and therefore technically unenforceable.13
Pet trusts are exempt from the rule against perpetuities. This makes sense if you consider that some pets have a very long lifespan. While some states limit the maximum duration of the trust to 21 years, New York allows the trust to continue for the life of the pet without regard to such a 21 year limit.14 This is important for animals that have an extended life expectancy, such as horses (40 years), parrots (as much as 100+ years), and turtles (over 120 years).15
Pet trust statutes have been enacted by all 50 states
All fifty states and the District of Columbia have enacted some form of pet trust law.16 New York's is codified in Estates, Powers and Trusts Law ("EPTL") Section 7-8.1.17 The statute has six main parts, providing:
1. That such a trust is valid for the care of a "domestic or pet animal." This is generally considered to include dogs, cats, birds, guinea pigs, hamsters, fish, rabbits, lizards, horses, turtles and tortoises, even other domestic animals.18
2. That a person can be appointed with the ability to enforce the terms of the trust.19
3. That the trust terminates upon the death of the animal or animals for which it was created.20
4. That, upon the trust's termination, the trustee shall transfer the remaining trust property as directed in the trust instrument or, if there are no such directions in the trust instrument, the property shall pass to the estate of the grantor.
5. That a court may lower the amount of money to be transferred into the trust for the pet's care if the amount is unreasonably large.
6. That the court may appoint a trustee if no trustee is designated or no designated trustee is willing or able to serve.
Other options exist for those who do not want to create a pet trust, or whose state does not have a pet trust law. Here are a few examples:
- Believe it or not, there are pet retirement homes. Some are sponsored by schools for veterinary medicine, for example Purdue University, University of Minnesota, Oklahoma State University's Center for Veterinary Health Sciences, and Texas A&M University's Stevenson Companion Animal Life Care Center; others are privately operated.21 The requirements of the particular organization should be researched.
- It may also be possible to create a pet trust by establishing a connection with a state that has a suitable pet trust law, such as the state in which the trustee or caretaker lives, the state in which the chosen pet retirement home or charitable organization is located, or some other basis. A lawyer in that other jurisdiction should be consulted if a client wishes to explore this option.
- Arrangements could be made with a humane society, animal rescue group or animal rest home to take possession and care of the pet.
Pet Powers of Attorney
Given the degree of planning we do for our clients so that all kinds of contingencies are addressed, we might consider adding a paragraph like the one below in our Durable Powers of Attorney, or even doing a separate Pet Power of Attorney, appointing an agent to handle pet situations:
I, (name of owner), do hereby appoint my (relationship, name,
address and all telephone numbers of agent) my attorney-in-fact
to act in my place and stead in any way which I myself could do if I
were personally present with respect to the following matters, to the
extent that I am permitted by New York law to act through an agent:
to care for any animals I have and to follow the instructions in a pet
trust, if I have one; to prepare a pet trust if I do not have one or if the
one I have has expired or is otherwise not valid; to expend funds for
the care, safety and maintenance of my animals; and to place my
pets with temporary or permanent caretakers if appropriate.22
In all cases, carry emergency instructions with you
It is important for pet owners to have instructions for the care of their pets readily available in the event of an emergency. This is particularly true for people who live alone (that is, without human roommates or family). The New York City Bar Association's Committee on Legal Issues Pertaining to Animals even recommends that pet owners carry a copy of instructions in their purse or wallet indicating what happens to their pets in the event of an emergency, disability or death, with information on who should be called in the case of emergency, how they can be contacted, and what arrangements should be made.23
Pet trusts enable us to set aside assets, knowing that they will be applied for the care and maintenance of our animal friends when we can no longer provide the care ourselves due to disability or death. Such trusts are the best choice to ensure ongoing care for our pets, while giving us peace of mind.
SAMPLE TRUST FORM
The following is a sample trust for the care of dogs and cats based on the form suggested by the New York City Bar Association, Committee on Legal Issues Pertaining to Animals:
I give the sum of Fifty Thousand Dollars ($50,000) and all of my dogs, cats, and any other animals of mine living at the time of my death to the trustee hereunder, IN TRUST, for the following purposes and subject to the following terms and conditions:
This trust is created pursuant to New York Estates, Powers and Trusts Law Section 7-8.1 for the benefit of all of my dogs, cats, and any other animals of mine living at the time of my death (the "Beneficiaries" herein).
The trust shall terminate upon [the earlier to occur of the following events:] the last to die of the Beneficiaries [, or if required by New York law, twenty-one (21) years from the date of my death].
During the term of the trust, the trustee shall apply for the benefit of the Beneficiaries, any or all of the net income of the trust and so much or all of the principal of the trust from time to time, as the trustee shall in the trustee's discretion determine to be advisable for the care, including veterinary care, of the Beneficiaries. Any income accrued but not distributed for the benefit of the Beneficiaries shall be added to the principal of the trust.
[Describe details of care, specific instructions, and veterinarians and other individuals to be involved with the Beneficiaries' care]
I appoint (name and address) to be the trustee of such trust. If such person has predeceased me or for any other reason is unable to act as such trustee, I appoint (name and address) to be the trustee of such trust.
I designate (name and address) to be the caretaker of the Beneficiaries. If such person has predeceased me or for any other reason is unable to act as such caretaker, I designate (name and address) to be the caretaker of the Beneficiaries. If such person has predeceased me or for any other reason is unable to act as such caretaker, the trustee shall select another person to act as caretaker of the Beneficiaries. The Trustee, in the trustee's discretion, may pay a stipend from the trust to the person acting as such caretaker.
I designate (name and address), as the person to enforce the trust, if necessary. If such person has predeceased me or for any other reason is unable to act in this capacity, I designate (name and address) as the person to enforce the trust, if necessary.
I am creating this trust to provide for the care of my animals and the trustee does not need to consider the interests of the remainderman when making distributions. The trustee, in the trustee's discretion, may use all of the trust property for the benefit of my animals; even if the result is that nothing will pass to the remainderman.
Upon the termination of the trust, if any property remains in the trust at the time of termination, the trustee shall distribute any such income and/or principal to (name of trust remainderman-charity that rescues animals recommended), located at (address). If such charitable organization is not in existence at the time of termination, I give the trust remainder, if any, to a charitable organization that benefits animals [described in Section 170(c) and 2055(a) of the Internal Revenue Code], to be selected by the trustee.
This article originally appeared in the Winter 2017 edition of Laws & Paws, a publication of the New York State Bar Association's Committee on Animals and the Law. The article has been updated since that time to reflect the most current changes in the law. (6/18)