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Pet Trust

Chicago Estate Planning

Taking Care of Loyal Friends

Are you a "pet owner" or a "pet parent," even an "animal companion?" Do you own your dog or cat-or does your dog or cat own you? Have you ever bought a birthday present for your pet, scheduled a play date with his "friends" or allowed your pet to sleep on your bed? Have you ever made a major decision on where you live or go on vacation based in great measure on your pet being able to accompany you?

If you answer "yes" to any of these questions, your pet is a beloved family member, not just a possession. 2007/2008 American Pet Product Manufacturer's Association National Pet Owners Surveys said that Americans spent over $40 billion annually buying and caring for pets, including an estimated 88 million cats and 75 million dogs. These expenditures exceed the gross domestic product of more than half the countries in the world. Some of these billions are spent on such consumer items and services as:

  • Premium dog walking, luxury doggy daycare and spas, fancy foods, boutique clothing and jewelry.
  • Pet psycho-therapy, chiropractic and acupuncture.
  • Animal cosmetic procedures, including canine braces to fix crooked teeth; and Neuticles B), a testicular implant that makes neutered pets look anatomically correct and improve self images.
  • Medical procedures including cancer surgery and expensive drugs. Operations costing $5,000 to $15,000 and more are not unusual.

Making Difficult Decisions About Pets

Difficult end-of-life decisions about pets are compared to those involving humans. Will a treatment or operation add quality or merely extend life? Cost should not be a factor, but reality argues otherwise. When you not around, will anyone care enough about your pet to spend the money for cancer surgery or expensive drugs using the same criteria you would? You may feel better knowing that, medically and in other ways, your pet is being provided for the way you would wish.

This is why your pets merit a few paragraphs in your estate plan. A simple way to accomplish your goals may be simply to gift the pets and some cash to someone who can be trusted to take care of them. That type of arrangement usually works as intended.

If you prefer to formalize the arrangement and ensure that your desires have teeth, you must comply with the requirements of your state for a valid and enforceable pet trust. More than 3/4th of all states have pet trust statutes intended to give you peace of mind that your cats won't end up homeless, friendless, caged or euthanized. Typical pet trusts, whether established under statute or not:

Typical Pet Trusts

Identify the pets who are lifetime beneficiaries after you die or become incapacitated. With the right language, you can cover pets you acquire in the future as well as your current ones, so that even if they are not named in your trust your new pets will still be beneficiaries. Identification of your pet beneficiaries also means ensuring that the right animals benefit from your planning. Photos or microchip implanting may be recommended to prevent misidentification or outright fraud.

Set aside a suitable amount, anywhere from $5,000 to $50,000 or more. The amount required to properly fund a pet trust varies, depending on the age and health of the animal beneficiaries, the type of care you specify and the compensation level, if any, for both the trustee and the caretaker. A court may reduce the amount of money transferred to a pet trust if it determines that the amount substantially exceeds the required use. According to a poll by Lawyers Weekly USA, the average amount used to fund a pet trust is $25,000.

Select a human or corporate trustee who will keep pet trust money invested during your pets' lifetimes and dole it out to the caretaker for the pets' care. Always select contingent trustees in the event that the trustee you select is unable or unwilling to act. No, your pet cannot act as trustee.

Select a caretaker. If you select an individual, list contingent ones in case the first selection can't or won't act. Talk to the caretaker about willingness to take your pets.

If you lack a suitable individual to act as caretaker, you or your future trustee can pick a nice pet retirement home or resort. There are numerous professional pet caretakers, exemplified by Merry Lynn Pet Estates. Pet Estates, located on 7 acres in Melrose, New York, offers your pet warm meals and heated beds in the serenity of their own private rooms. Daily stimulation includes private walks along the hills and pond, ball throwing games, boat rides, swimming in the pond. Quiet times include soothing petting, massage therapy and other personal interaction. The care is 24/7. Much different from sad looking cages in a chain-link fence kennel.

Consider tax issues. If investment earnings are retained in the pet trust, the trust will pay income taxes. If paid out in the form of compensation to the trustee or caregiver, it is ordinary income to the recipient, though expenses are most likely deductible.

Select an "enforcer," if you feel that one is necessary, who has the authority to physically check up on the pet and/or audit the trust's finances. Make sure that person's expenses are also covered.

Leave a detailed plan of care including such elements as a preferred veterinarian, any medical conditions of the animal, feeding (brands, amounts and supplements), grooming needs and other idiosyncrasies.

Must terminate when no living animal is covered by it. Name a human or charitable beneficiary who will receive the assets remaining in the pet trust after the pets die. Pet trusts are part of your taxable estate and cannot be regarded as a charitable gift, even if a charity eventually ends up with whatever is left after both you and your pets are history.

Consider whether the trustee or caretaker have a built-in conflict of interest. Do they stand to inherit when the pet dies? Does it make a difference to you?

Must comply with the law so that they either are exempt from or otherwise do not violate the medieval Rule Against Perpetuities. If the trust can possibly, through the most convoluted thinking, be interpreted as covering pets born after your death that might live for more than 21 years, and the issue is not handled correctly, it can cause huge problems to your entire trust. As long as the pet trust definitely terminates when the animals living at the time of your death (see above) die, then this is not a problem.

May direct ultimate disposition of the pets remains after they die. Cremation? What to do with ashes?

Can provide that if you become incapacitated and relocation to a skilled care facility is required, you and your pet remain together if possible.

As the Beatles said, money can't buy love. Leona Helmsley left $12 million (reduced by a judge to $2 million) in trust for the benefit of Trouble, her beloved Maltese. The people she selected for the job did not want the trouble of caring for the little beast. The trustees eventually found someone willing to take Trouble for $5,000 a month salary. Additional annual costs were estimated to be $100,000 for security, $8,000 for grooming, $12,000 for food, and veterinary care of up to $18,000.

Not everyone with a beloved pet needs a pet trust. My chocolate lab Chloe doesn't need a trust. My only planning dilemma is deciding how to establish rotating custody with fair visitation rights to her many devotees.

If you live in the Chicago or Lake County area, and need an experienced Trust attorney, please contact Matlin Law Group, P.C..

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