We are thrilled to announce that attorney Seth Bier is now a published contributor in Rethinking65 with his article “Pet Trusts Often Overlooked in Planning“. Rethinking65 is website dedicated to supporting financial advisors who embrace new thinking and want to add value by helping clients who are 50 and over plan for and make the very best of a 100-year life.
Pet Trusts Often Overlooked in Planning
Establishing a pet trust will ensure your furry (or feathery or scaly) friend will be cared for after you’re gone.
By Seth Bier
Charlie, now 18 years old, was rescued in 2010 by estate-planning attorney Seth Bier and his wife Leann.
[Author’s note: When I talk to clients about their pets, they go from clients to friends. So, if a financial advisor can move a conversation from numbers to pets (and numbers), I think it’s a win-win. I met two dogs on Zoom just this week.]
Did you know that nearly 1 million pets are euthanized each year in the U.S. because they’ve been abandoned? Over half of these cases are due to the death or disability of their human companions. What’s worse is that those pets could have been protected with just a little planning. Think about it: What will happen to your pet if you become disabled? What if you’re no longer able to speak for yourself? How can you make sure that your beloved animal doesn’t end up in a shelter somewhere? Or worse, alone on the streets? Because sadly, it happens all the time.
When friends and family of a deceased pet owner are not willing to care for an orphaned pet, an unfortunate common practice is to drive the pet far away from home and dump it. This once-cherished family member is now forced to fend for itself in a world in which it is not equipped to do so. There are few happy endings to this situation.
Our introduction to pet dumping
My wife Leann and I first learned of this heartbreaking practice when we rescued our cat, Charlie. Clients have heard him on our phone calls since he’s now deaf and doesn’t know how loud he is! He often pounces on the desk during Zoom calls and has playfully (debatable) attacked my arm during meetings. I share his story with you so you can make sure nothing like this ever happens to your own fur babies.
In the fall of 2010, Leann was performing in a play. The small theater didn’t have much space, so she and the other actors congregated in the alley behind the theater when they were not on stage. One rainy night, Leann and her friend Royana were approached by a soaked, emaciated, sickly looking cat they had seen a few nights in a row. They offered the little guy a Dorito, and he ate it as if his life depended on it (which it might just have).
One of the actors offered to take the cat, but had to go back to his home country to deal with Visa issues. He asked if anyone else would take him until he returned. Leann’s big heart couldn’t say no, and we corralled this frightened feline into our SUV. We got him home, dried him off, and went to the store to buy him food. He was happy to eat but unable to walk in a straight line; something was definitely wrong. We quickly took him to our local VCA Animal Hospital.
After stabilizing him with antibiotics and electrolytes, the vet had surprise news for us: Charlie was microchipped. Meaning someone wanted to him to be identified if he ever got lost. That meant someone cared for him and was likely looking for him! Or so we thought.
Return to sender
The animal hospital explained the protocol for a chipped animal. They had to try to contact the owners, first by phone. If that failed, they would need to send a letter by mail, allowing the owners two weeks to respond. The call went unanswered. The letter came back undeliverable but with a forwarding address more than 45 miles from where we found him. The hospital followed protocol and sent a letter to the new address, allowing another two weeks for a response.
All the while, we had to leave Charlie in the facility. We visited him at least once a day. Leann and I became pretty attached to the little guy, and we started secretly hoping he wouldn’t be claimed. After an entire month in pet jail, Sir Charles was considered officially abandoned and we were allowed to adopt him. We were elated. Thirteen years later (and estimated to be 18), he is still the feisty, finicky feline he’s always been.
How pet planning changes everything
Our vet believed Charlie was most certainly a victim of what he called “pet dumping” — something he’d seen many times. The owner had likely passed away and the family drove 45 miles to ensure the cat couldn’t find his way home. We were horrified that this was something people did, and that there was actually a term for it.
When I meet with clients who have not considered any sort of planning for their pets, I tell them this story in the hope that they will make arrangements for someone to care for and protect this vulnerable member of their family if they are no longer able to.
Pet owners must consider not only what will happen to their pet if they pass, but also in the event that they become disabled or incapacitated.
There are informal options, such as 1) speaking with loved ones and determining who would be willing to take or adopt your pet; or 2) writing a Letter of Final Wishes to tell family or friends all about your companion and how you hope they will care for him or her. A copy of this letter should be included with one’s planning documents so it will be easy to find.
There are also formal methods of planning for a pet. In a comprehensive trust-based plan, you can include pet provisions that provide money from your estate to a named caretaker. A client can also create a full-blown pet trust that names a trustee to manage the care of the pet with funds set aside specifically for that pet. A pet trust is fully enforceable by the courts, so a client can rest easy knowing that their pet’s well-being will always be a priority.
Don’t forget incapacity planning
Pet trusts are valid in every state, but the laws governing them can vary from state to state. There are two significant differences to note.
- Some states require the pet trust to terminate after 21 years. Many, however, allow it to remain in place until the animal(s) passes away. For our feathered, scaled, and equine kids, this can be an important consideration.
- The majority of (but not all) states allow the pet trust to be established during the lifetime of the pet owner, so their incapacity can trigger the trust. Incapacity planning, both for our pets and ourselves, is where most people fail to plan. Consulting with an attorney who is knowledgeable about the pet trust laws in your state can help ensure that your pet is provided for in the event of incapacity.
Just like planning for your human heirs, you can include instructions for care of your animal heirs and be as detailed as you want — no one knows your pet as well as you do — or allow your trustee or caretaker some discretion.
The most important aspect of all successful estate planning is communication, and for pet trusts it is no different. You must be certain your caretaker is willing to take on this responsibility. Once you do, you’ll need to discuss every aspect of your pet’s life with them to make the transition as easy as possible for both. After all, like the rest of us, many pets do grieve for the loss of their loved ones.
Enforcing the pet trust
Like any trust beneficiary, a pet has the right to benefit from his/her trust under the terms or instructions set by its owner. But what happens if the trustee or trust manager isn’t living up to his or her duties? The owner can designate someone in the trust to represent your loved one in court.
An alternative that can eliminate the potential for costly court battles is to set up a checks and balances system in the trust itself. By naming one person as caretaker for your pet and another as trustee to manage the funds, you can assure a devoted, compassionate person will be treating your pet with the love it deserves while a more financially focused person will be handling the money you leave.
What happens when your pet passes away (or 21 years pass in some states)? Either event will terminate the trust, but you will choose new beneficiaries to inherit whatever is left. It can be people, a charity, etc. — you are free to choose. You can also specify what to do with your pet after he or she passes away.
The million-dollar question
We’ve all heard the stories of people leaving millions of dollars to their pets — Leona Helmsley left $12 million to her dog. But these trusts, when challenged by unhappy human heirs, are usually reduced to a reasonable amount to properly care for the pet.
So how do you come up with a number? Start by looking at what you currently spend annually and multiply that by your pet’s remaining life expectancy. For a dog, the yearly costs can be anywhere from $500 to $3,500 and beyond. This will be the bare minimum. Your vet can help estimate any future health-related costs based on your pet’s his age, health, species, breed, etc.
You’ll also want to think about paying your pet caretaker, the trustee, and how inflation may impact your pet’s plan. If yearly costs are $3,000 and the pet’s remaining life expectancy is 8 years, you’re starting with at least $24,000 in the trust. Making sure a pet trust is properly funded and factoring in inflation can mean the difference between your peace of mind and a nightmare for your companion.
Pet insurance is another way to help your plan work, financially. Thankfully, most insurance companies allow policies to be transferred to the new owner/caretaker. Your pet trust can also instruct the trustee to maintain the policy with trust funds.
One of the hallmarks of an exceptional estate plan is that it makes life as easy as possible for your successor trustees. They will be thankful that you kept not just all of your legal planning documents organized in one place (usually a three-ring binder), but also provided contact information for advisors (and pet caretakers), letters of instructions and wishes (e.g. A day in the life of my pet), and insurance policies.
Help prevent your pets from becoming additional abandonment statistics.
Seth Bier and his wife, Leann, run Bier Law, an estate planning law firm in Los Angeles’ South Bay. Their goal is to educate and empower individuals to make informed decisions about their future, providing them with the peace of mind that comes with being prepared and free to live their lives without worry. Seth can be reached at firstname.lastname@example.org or (323) 999-1230.