2004 Lane Reports

See Spot Smile: Pet Trusts Gain in Popularity

Tuesday, June 1, 2004

More than one-third of the states (and now including Illinois) allow pet owners to provide directly for their pets should they become unable to do so, either during the owner's lifetime or after the owner's death. For many pet owners, the legislation enacting "pet trusts" has been long-awaited. According to some estimates, more than 500,000 pets are euthanized each year because they survive their owners and another person isn't willing or able to provide for them. Other sources estimate that millions more pet owners worry about the care of their pets, should, for example, the owners predecease them or have to move to a nursing home or another location where pets are not allowed.

Background

Traditionally, providing for the care of a pet after the death of the owner has been cumbersome. Since a pet animal is legally a person's personal property, a pet cannot be the direct beneficiary of a monetary gift. So, a concerned pet owner could only make a monetary gift to a person he or she hoped would care for their pet and request that the funds be used only for the pet's care. As gifting in this manner relies heavily on the pet caretaker's honoring the deceased pet owner's wishes - - and spending the money entrusted to him or her only for the pet's benefit, these arrangements were commonly known as "honorary trusts."

Although pet trusts have been proposed as a possible solution for many years, there were legal issues about whether such a trust would be enforceable; how and when the trust would terminate; and whether the caretaker or trustee might get away with misappropriating the trust funds, as a pet has no legally enforceable rights. These issues have now been addressed in pet trust statutes adopted throughout the country.

The Pet Trust Solution

A pet trust (typically provided by state statute but, in some cases, recognized by state courts) allows a pet owner to provide directly for the care of his or her pet. A pet trust exists for as long as the owner's pet is alive, but may be limited in duration to 21 years, depending upon state law and its "rule against perpetuities." During the pet's lifetime, funds are spent only for the pet's care and benefit. Afterwards, any remaining trust funds are distributed to the owner's heirs or other named beneficiaries, including charities or organizations which support the care of animals. If the remainder beneficiary is a charitable organization, the bequest may be deductible for Federal estate tax purposes.

A pet trust creates an interest enforceable by third parties (e.g., the pet caretaker) as a pet itself has no legally enforceable rights. A court may also intervene to enforce the terms of the pet trust, if necessary. Moreover, at the time of funding the pet trust, a court may limit the amount of funds passing to the pet trust if, in the judge's opinion, the bequest made for the pet's benefit is excessive.

Conclusion

A pet trust can be an effective way to provide for a loved pet during its lifetime and then gift any remaining funds to heirs or other beneficiaries or desired organizations. Pet owners seeking such a solution should take care when integrating a pet trust into their estate plans. If you have questions, or if we can implement a pet trust for you, please let us know and we'll be happy to assist you.


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The Lane Report is a publication of The Law Offices of Marc J. Lane, a Professional Corporation. We attempt to highlight and discuss areas of general interest that may result in planning opportunities. Nothing contained in The Lane Report should be construed as legal advice or a legal opinion. Consultation with a professional is recommended before implementing any of the ideas discussed herein. Copyright © 2007 by The Law Offices of Marc J. Lane, A Professional Corporation. Reproduction, in whole or in part, is forbidden without prior written permission.

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