Pet Trusts Explained: Ensure Your Pet’s Care After You’re Gone

Transcript

Hi, I’m Stacy Singer, an ACTEC Fellow from Chicago, Illinois, and I’m here with Susan Bart, an ACTEC Fellow from Chicago, Illinois, and Scottsdale, Arizona, and we’re here to talk about pet trusts.

What Is a Pet Trust?

So, Susan, can you tell us what a pet trust is and who would need one?

Susan Bart:  A pet trust is a highly specialized type of trust where you fund the trust, either upon your incapacity or death, with funds that will then be used for the care of your pet. And it’s probably a good idea to have a pet trust if it’s not clear that there’s a person who loves your pet as much as you do and is willing to step in and bear the financial burden of taking care of the pet after your death.

Pet Trust State Considerations

Stacy Singer: So, can you have a pet trust in any state?

Susan Bart:  You can. However, how the trust is technically drafted may have to vary state to state. There’s about 15 states that don’t have any particular legislation, and in those states, you have to be very wary of the traditional trust law rules, which are that a trust has to have an ascertainable individual human or charity as a beneficiary. So, the beneficiary can’t directly be your dog or cat. And also, in some states, there are limits on how long a trust can last, which in some cases might limit the trust to only lasting for 21 years, which does not work so well if you have a cockatoo or a parrot that could live for 80 or 90 years.

In many of the states, though-a majority-there is a specialized statute that allows for a trust to be established for a pet. The details may vary state to state, but a key factor to keep in mind is that in many states, the court would have power to reduce the amount of the money put into the pet trust if the court thinks that it’s excessive.

How to Set Up a Pet Trust

Stacy Singer:  So, how do I make sure that my pet-you know, my two beloved dogs-are going to be taken care of? I mean, how do I know that the money is going to be used for their benefit?

Susan Bart:  Well, in the trust, you want to create a system of checks and balances. So, typically, you’d have at least two independent parties, perhaps three. One party will be the custodian, whoever is going to actually care for the animal. Another party is going to be the trustee, and you might, in the trust, draft very specific provisions about how you expect the trustee to be checking up to make sure the animal is well cared for.

For example, you might want them to always be reviewing the veterinarian records. You may want to direct that a couple times a year, they do an in-house visit to the animal to make sure that it’s well cared for, and you may want to provide in the trust that if the animal’s not being well cared for, or if the custodian is becoming incapacitated themselves or dies, that the trustee can select a different custodian and remove the animal to the new custodian.

In some trusts, you can also put in a third party called an enforcer who can look over and make sure the trustee and the custodian are each doing their respective jobs.

Budget Considerations for a Pet Trust

Stacy Singer:  So, how much would you normally put into a trust like this? I know what vet bills cost for my dog, so I know it’s not inexpensive to be a pet owner.

Susan Bart:  It’s not at all, and as-Leona Helmsley’s dog, Trouble, had a very large pet trust. For one of my clients, the amount per dog is in excess of $250,000. It all depends how much money do you spend on your dog or your cat or your cockatoo, and how long they might live. And I’d suggest that you do a very detailed sort of accounting of how much you do usually spend. Do a realistic projection of how much medical costs may be for your dog or your cat in older years, and keep that as documentation because if anyone ever challenges your trust, that will help your trustee persuade the court that the amount is not excessive.

I think you also want to be very specific as to what expenses you want to cover in the trust, not only for purposes of supporting the amount you put into the trust, but also for purposes of preventing potential abuse by the custodian.

I have seen or heard instances where the custodian, for example, has demanded a new washer and dryer because the pet hair supposedly wore out the washing machine, or where they asked the trustee to purchase for them a nice shiny new big SUV for the dog. And so you want to be very specific about whether or not you think that would be an appropriate thing from your particular trust.

Addressing Pet Trust Issues

Stacy Singer:  So what happens if the custodian doesn’t work out, if for some reason there’s a problem with the custodian?

Susan Bart:  Well, in those cases, you want to give the trustee or the enforcer a number of options. You could list alternative custodians, but ultimately you want to draft it so that the trustee or enforcer could remove the pet from that custodian and find another one.

And in some instances, you may even want to give the trustee the ability to find an animal retirement home and make a donation to the retirement home, understanding that they will then care for the pet at the end of their life as appropriate. And you may want to do that because sometimes if the pet is older or needs a lot of care, it may not always be possible to find an individual custodian.

Pet Caregiver Incapacity

Stacy Singer:  I didn’t even know those existed, so I’ve certainly learned something new. So do these work if someone becomes incapacitated instead of, you know, not having passed away but just can’t take care of their pet any longer?

Susan Bart:  A good pet trust would be drafted so that it can become effective and get funded to some extent if the owner becomes incapacitated as well as dies.

And so you might include these provisions in your revocable trust along with instructions to the trustee of your revocable trust to be able to fund the needs that your animal would have if you just become incapacitated either for a period of time or indefinitely cannot take care of your own pet.

There are a couple other things you might consider doing, too. If you’re a pet owner, you get hit by a bus. Someone’s going to look in your wallet to find out who you are and who to contact, and you might just take a brightly colored sheet of paper and make yourself a wallet card that says, “I’ve got two dogs at home. Here’s my address. Make sure someone goes and takes care of them.” And you may want to tell family members or friends about what arrangements you have made for the care of your pets if you become incapacitated.

Pet Trust Tips

Stacy Singer:  This is so great. Do you have any other tips or tricks that we should think about as people who love our pets?

Susan Bart:  You know, I think that one of the most important things I have had my clients do is detailed letters of instructions for the pets. Because if a pet’s life is upended because suddenly you’re not there, you want them to know as much about how to take care of the pet as possible. And if your dog-what medicines your dogs take, how you get them to take them. Is it with pureed pumpkin, or is it inside some liverwurst? How do they indicate they want to go outside? Where do you pet them or scratch them? And where do they not like it? Their diet. Every detail you can think of and put in a letter is going to be very, very helpful to a successor custodian.

Stacy Singer:  I love that. My dogs would say thank you if they could. But instead, I will say thank you, Susan. And if you would like to see more videos about estate planning topics, please go to ACTEC.org.