Why Every Millionaire (and Other Pet Owners) Should Have One
When the late hotel entrepreneur, Leona Helmsley, left $12 million for the care of her Pekinese dog, Trouble, the media treated this news and the subsequent reduction in the amount of the trust as major news. Many people presume that unless they, too, are millionaires, it is too much “trouble” to provide even a modest bequest for one of their companion animals when they can no longer care for them because of illness or death.
The truth is that everyone who cares for their pet(s) should—and most probably want to—provide for their care. Americans love their animal companions. It is well-documented through anecdotal evidence and by looking at the amount of money that is spent annually by Americans caring for their pets: an estimated $57 billion in 2013 alone.
But what happens to the animals when something happens to us? This is the key reason to include a pet trust in your estate planning portfolio. Even if you have few assets to dispose of in a will, planning for the care of your pet(s) still has an important place as it allows you to designate a caretaker for the future—a provision that can take effect immediately, prior to probate on a will because the physical needs of your animals will not wait.
When most people think of estate planning, they are thinking of what will happen to their possessions once they are gone. For many individuals, there may be no sense of urgency to preparing documents for the future, especially if your estate is small or you have no clear sense of what should be done with your assets after death. Families with children have a different sense of urgency in their estate planning, as they must plan for contingencies if something happens to them while the children are still minors. This involves not only a disposition of real property, but provision for guardianship in the event that both parents die suddenly in an accident.
The creation of a trust allows funds to be set aside for the care of minor children, or even for adult children, where a trustee is appointed to oversee the investment and disposition of funds for the benefit of those children. A guardian can also be designated for care of the physical person in the case of minors or individuals without the capacity to make decisions for themselves. The courts now recognize that allowing individuals to provide for their companion animals in much the same way is just good policy.
Spending on companion animal care doesn’t end with the demise of the owner. It has become increasingly common to make provision for the care of animals in trusts, especially with the recognition of the legality of such pet trusts in all but nine states. The National Conference of Commissioners on Uniform State Laws’ adoption in the 2000 Uniform Trust Code of a provision for the drafting of trusts specifically for the care of animals has given a boost to the recognition of pet trusts as many states have adopted the Uniform Trust Code in its entirely. A complete list of states that have adopted pet trusts, and the Uniform Trust Code provision are available on the Animal Law Resource Center.
Under current law, animals are legally characterized as property. The law does not permit a person to leave their money to a piece of property. Creating a trust for the care of the animal is a way to provide for your pet(s) without making a direct bequest of money to the animal.
Even before trusts to benefit companion animals were recognized under law, individuals made provisions in their wills for the care of their pets. A bequest could be made to a willing caretaker who agreed to care for the designated animal(s). However, this strategy is successful only where the caretaker is trustworthy and conscientious. The courts traditionally viewed such legacies as free of any contingency—even if the language of the bequest was conditional on caring for the animals—and monies could be released to the caretaker regardless of their care of the animal(s).
Furthermore, a large sum of money left in such circumstances could cause family heirs to challenge the provision, and the courts have exercised a great deal of discretion in reallocating a windfall meant for the care of companion animals to the heirs’ estate. This can be true even with the legal recognition of a pet trust if the value of the trust is out of proportion to the realistic cost of providing for an animal.
A case in point is the Helmsley decision, where a surrogate court judge, with the agreement of the New York State Attorney General’s Office, reduced the $12 million trust fund left for the care of her dog to $2 million. According to a New York Post report, the trustees determined that Helmsley’s dog, Trouble, did not need all of the money designated for the care of Trouble and $10 million was redirected to Helmsley’s charitable foundation. Both her brother and grandson—who were named as caretakers in the trust—declined to take care of her dog. Carl Lekic, the general manager of the Helmsley Sandcastle Hotel and caretaker/guardian of Trouble, agreed to the trustees’ recommendation, which still leaves two million dollars to pay for Trouble’s maintenance and welfare until her death, including a $60,000 annual fee to the guardian.
One of the main advantages of establishing a trust for the care of your companion animal(s) is that if the named caretaker cannot or will not accept the responsibility for that care, or if the care provided is inadequate, the trustee or executor of the estate has the authority to find a more able caretaker. The trust funds would then be available for the new caretaker to use for the care of the animal(s).
The key to ensuring that a pet trust is enforced to the necessary extent required to provide for the optimum care of a pet is fourfold:
- Appoint a trustee who is in a position to monitor the health and welfare of the animal(s) with some regularity and who would be willing to intervene if the animal is not being properly treated;
- Appoint a guardian under the trust who has agreed to undertaking the responsibility and—if possible—has exhibited concern and care for the animal(s) during the decedent’s lifetime.
- Populate the trust with funds to provide adequate—even lavish—care for the pet(s) in question, including a fee for the guardian if appropriate, based on a reasonable life expectancy and the possibility of serious illness at some point in time. Tying up money in a pet trust in excess of any and all possible scenarios for lifetime care of the animal(s), including disposal of the remains, invites judicial intervention and a redirection of the assets in contravention of the intended purpose of the trust.
- Lastly, it is necessary to designate in the trust the disposition of any remainder of assets after the death of the pet. By leaving the residual trust to a charitable organization, you ensure that the parties in interest caring for the pet(s) have a vested interested giving them the best possible care during their lifetime without the expectation of further benefit once they are gone. A booklet with information on charitable giving, A Legacy of Compassion,is available free of charge from the National Anti-Vivisection Society (1-800-888-6287).