Some of your clients may own pets (dogs, cats, horses or exotic animals) and may be concerned that these animals receive the best of care if they’re orphaned by the deaths of the client(s). There are extensive resources available on the internet that will provide you with the legal background, form language and suggested care facilities to facilitate estate planning for pet care.
Estate planning for pets in general
Prof. Gerry Beyers’ website, Estate Planning for Pet Owners, at http://www.professorbeyer.com/Articles/Animals, is a great place to start your research. Click on “Sample Provisions” for forms and drafting suggestions. Click on “Estate Planning for Non-Human Family Members” (updated November 17, 2011 for his article, by that title, that discusses traditional and statutory pet trusts, enabling legislation and related tax issues). A longer version of this article is, Pet Animals -- What Happens When Their Humans Die?, 40 Santa Clara L. Rev. 617 (2000), Michigan State U. Animal Legal and Historical Center.
The website of the Animal Law Section of the Oregon State Bar provides links to websites addressing many areas of animal law and pet care.
The Animal Legal & Historical Center at Michigan State University, DCL College of Law features links to online articles and websites on estate planning for pets, pet custody information and a table of legislation. The Animal Legal & Historical Center also includes a summary of pet trusts and links to related articles on estate planning for pet owners.
The ASPCA website offers extensive information and suggestions for planning for a pet’s future, including horses and exotics, such as discussions of guardian arrangements, documentation for pet identification, funding do’s and don’ts and various arrangements (formal and informal) for future care of a pet.
The Estate Planning for Pets website, offers links to legal resources for pet estate planning and sample documents.
Extensive comments and materials for estate planning for pets may be found on Rachel Hirschfeld’s PetTrustLawyer.com website. It links to a number of articles and podcasts on pet trusts and pet protection, including Hirschfeld, “Ensure Your Pet’s Future: Estate Planning for Owners and Their Animal Companions” (9 Marq. Elder’s Advisor 155, 2007) and Hirschfeld, “Estate Planning for People Who Have Pets – Wills, Pet Trusts and Pet Protection Agreements” (Trusts & Estates). See also, Herschfeld, “Estate Planning Issues Involving Pets,” 26 GPSolo (Aug. 2009), discussing estate planning documents for people with pets. Her book Petriarch: The Complete Guide to Financial and Legal Planning for a Pet’s Continuing Care is available at the AICPA Store.
Casteel, “Estate Planning for Pets,” 21 Prob. & Prop. 8 (Nov/Dec 2007) provides a comprehensive review of the background and planning techniques for estate planning arrangements for pets and Ballard, “Estate Planning for Clients with Pets,” RPPT Journal (Winter 2010/2011) is a helpful review of techniques in this area.
Voklek, “America Gets What It Wants: Pet Trusts and a Future for Its Companion Animals” (UMKC Law Rev, Sum. 2008) discusses social values relating to pet animals, the legal status of pets, the history and legal context of pet trusts and pet trusts today.
The New York City Bar Association brochure Providing For Your Pets In The Event of Your Death or Hospitalization (March 2013) provides information for pet owners, as well as information and sample will provisions for attorneys.
Blaney, “Pet Trusts – Planning for the Long-Term Care of Companion Animals,” Animal Guardian (Fall/Winter 2005) is a helpful resource for providing information to clients.
The Washington Animal Rescue League (Washington, D.C.) provides brochures with information for pet owners at Planning for Your Pet’s Care When You Can No Longer Care for Them and Pet Trusts.
Authorization of pet trusts
Salazar, “Pet Trusts: Begging for Some of Your Estate” (2010 Kansas City Estate Planning Symposium), examines the legal concept of pet trusts and drafting issues for such trusts.
See, estateplanningforpets.org for a list of pet trust statutes by state. A map of the states having pet trust authorizing legislation and links to state statutes is available at the Animal Legal & Historical Center. Prof. Beyers’ website includes a comprehensive list of state pet trust statutes.
The Animal Legal & Historical Center at Michigan State University, DCL College of Law, includes a quick overview of the Uniform Trust Code Section 408 trust for care of animals. Pet trusts under the Uniform Trust Code are analyzed in Abert, “PET TRUSTS: The Uniform Trust Code Gives Enforceability a New Bite,” New Hampshire Bar Journal (Winter 2006).
Taxation of pet trusts
Rev. Rul. 76-486, 1976-2 CB 192 provides that if a trust for the benefit of an animal is valid under state law, the trust itself will be subject to income taxation without deductions for distributions on behalf of the animal to be cared for. If the net taxable income from the pet trust exceeds $100, the trustee is, generally, required to file a fiduciary income tax return (IRS Form 1041) and pay any income taxes. Rev. Rul. 78-105, 1978-1 CB 295 held that no portion of the amount passing to a valid trust for the lifetime benefit of a pet qualifies for the charitable estate tax deduction, even if the remainder beneficiary is a qualifying charity.
Lower overall tax rates may be achieved by creating separate trusts for each animal to be benefited or by directing that distributions be made to an individual caretaker. In the latter instance, the problem is how to require the individual to actually provide care for the animal. If the distributions are on the condition of the distributee providing such care, does the distributee become a trustee; thus, subjecting him to taxation at trust rates?
Beyers, Estate Planning for Non-Human Family Members (updated November 17, 2011) at IX discusses the income, gift and estate tax ramifications of pet trusts. A more detailed review of taxation of pet trusts is Beyer & Wilkerson, Max’s Taxes: A Tax Based Analysis of Pet Trusts (2009).
DiTata, Estate Planning for Pets: Closing Life’s Loopholes (Nassau County Bar Ass’n 3/3/2011), in addition to a discussion of pet trusts, fiduciary selection for pet trusts and alternative arrangements discusses taxation of pet trusts, adresses federal taxation of transfer of pet and caretaking funds to a caretaker or trustee. Income taxation of pet trusts is also discussed at PetGuardian (scroll down).
Forms and provisions for pet trusts
Pet Trust is a comprehensive Pet Trust Illustration by Miriam Abrams Goodman.
Prof. Gerry Beyers website furnishes sample will provisions to provide for a pet animal. Prof. Beyer's website includes PowerPoint shows, many articles and Frequently Asked Questions About Pet Trusts.
Prof. Beyer’s website also includes sample will provisions to provide for a pet animal.
Prof. Robert O. Dawson’s Dear, What Will Become of Ol’ Dobbin After We’ve Gone? offers drafting suggestions.
Estate planning for pets.org includes a detailed discussion of the laws governing estate planning for pets and drafting provisions for estate planning documents.
The RocketLawyer provides a free pet trust for lay persons to create, which has provisions that may be of interest to planners of pet trusts.
Organizations providing care for horses and other pets
Habitat for Horses has an established sanctuary program for the long-term care of your horse after you're gone, provided that financial arrangements are made in your will.
PetGuardian lists a number of organizations in the Midwest providing pet care options for a variety of animals.
Pet Estates, inc., near Albany, N.Y., offers a sanctuary for pets, based on pet trusts expressing the client’s wishes.
Blue Moon Meadows provides care for animals in the event of the owner’s death or illness.
The Bottom line
As with many subjects, the internet offers a plethora of free resources on planning for pets in a client’s estate provisions, state law authorization for pet trusts, form language for pet trusts and third party resources for pet care after the death of the pet owner.
Trusts & Estates magazine is pleased to present the monthly Technology Review by Donald H. Kelley -- a respected connoisseur of software and Internet resources wealth management advisors use to further their practices.
Kelley is a lawyer living in Highlands Ranch, Colo. and is of counsel to the law firm of Kelley, Scritsmier & Byrne, P.C. of North Platte, Neb. He is the co-author of Intuitive Estate Planner Software, (Thomson - West 2004). He has served on the governing boards of the American Bar Association Real Property, Probate and Trust Section and the American College of Tax Counsel. He is a past regent and past chair of the Committee on Technology in the Practice of the American College of Trust and Estate Counsel.
Trusts & Estates has asked Kelley to provide his unvarnished opinions on the tech resources available in the practice today. His columns are edited for readability only. Send feedback and suggestions for articles directly to him at [email protected]