Estate Planning for Your Beloved Pets

1. Estate Planning forYour Beloved Pets Gerry W. Beyer Governor Preston E. Smith Regents Professor of Law Texas Tech University School of Law

2. Pet Ownership in America Today • 71.1 Million households own at least one pet (63% of all households) • Dogs = 43.2 million households • Cats = 37.7 million households • Fish = 14.7 million households • Birds = 6.4 million households

3. Potential Benefits of Pet Ownership • Unconditional love • Companionship • Lowered blood pressure • Lessened risk of heart disease • Improved concentration and mental attitude • Shortened recovery time after hospitalization

4. Treatment of Pets • Surveys reveal: • 79% sleep with pets • 70% would rather be stranded on desert island with pet than spouse • 31% take off work to be with a sick pet • 68% dress up pets for the holidays • Huge rewards for return of lost pets or locating person who kills pet

5. Replacement “equipment”

6. Cat – a prisoner’s best friend

7. Famous Examples • Leona Helmsley – Trouble (dog) • Dusty Springfield – cat • Doris Duke – dog

8. The Parrot Owners’ Estate

9. The Parrot Room

10. Inside Parrot Cage One

11. Inside Parrot Cage Two

12. Pearl

13. Pearl

14. Pearl and Cat [one of four]

15. Parrot Food

16. Prof. Beyer with Parrot

17. Underserved area of estate planning • Vast majority of people do not have wills. • Of those with wills, only a small percentage plan for their pets. • What planning is done, is often inadequate.

18. Short Term Planning

19. Short-Term Care Planning • 1. Animal Card • Carry in wallet to alert emergency personnel Front

20. Short-Term Care Planning • 1. Animal Card • Carry in wallet to alert emergency personnel Back

21. Short-Term Care Planning • 2. Animal Document or Notebook • Detailed information • Easy for caregiver to find • Consider keeping near food • Include all important information and documents

22. Short-Term Care Planning • 3. Door Sign

23. Short-Term Care Planning • 4. Durable Power of Attorney • Authorize agent to spend pet owner’s money for pet care. • Authorize agent to place pet with caregiver and to pay caregiver’s expenses and/or a fee.

24. Long Term Planning

25. Long Term Planning Overview • 1. Traditional Pet Trust • Effective in all states.  • Caregiver/Beneficiary receives funds for pet care in accordance with pet owner’s (settlor’s) directions. • Comprehensive plan • Analog to gift in trust for children • The “gold standard” of pet planning

26. Long Term Planning Overview • 2. Statutory Pet Trust • Authorized in 46 states (including Texas) and D.C. • Simple plan • Statute provides operation and enforcement provisions • Analog to Uniform Transfers to Minors Act gift for children. • The “better than nothing” pet plan.

27. Long Term Planning Overview • What factors would you consider when creating a traditional pet trust?

28. Traditional Pet Trusts – Factors to consider • 1. Inter Vivos or Testamentary • Inter Vivos • Avoids delay and gap in pet’s care. • Increased lifetime costs and hassles. • Testamentary • Probate of will required. • De minimus lifetime expense.

29. Traditional Pet Trusts – Factors to consider • 2. Designate Caregiver/Beneficiary • Interview carefully. • “Test” animal in person’s household. • Name alternates. • Never name trustee as destroys checks/balances. • Consider animal care panel to select alternate caregivers.

30. Traditional Pet Trusts – Factors to consider • 3. Nominate Trustee • Individual or corporate? • Compensation? • Name alternates

31. Traditional Pet Trusts – Factors to consider • 4. Transfer animal to trust – “animal funding” • Inter vivos = deliver animal to trustee along with appropriate ownership documents. • Testamentary = specific bequest of animal in pet owner’s will to the trustee, in trust. • Trust then provides for trustee to deliver custody (not ownership) of animal to the caregiver/beneficiary.

32. Traditional Pet Trusts – Factors to consider • 5. Transfer other property to trust • Factors: • Type of animal • Life expectancy • Potential of expensive medical costs • Fee for trustee and/or caregiver • Liability insurance injuries pet causes • Health insurance for pet • Size of pet owner’s estate • Warning • Do not transfer unreasonably large amount of property as it triggers contests by heirs and beneficiaries.

33. Traditional Pet Trusts – Factors to consider • 6. Describe pet’s standard of living • Daily care • Routine medical care • Emergency care • End of life plans • Should be specific, detailed as to each pet • Can be documented during lifetime to support long-term care monetary calculations • Should provide for accountability • Should consider changing circumstances • Should not be so rigid as to be inflexible

34. Traditional Pet Trusts – Factors to consider • 7. Specify distribution method for pet’s care • Fixed sum • Simple • Not account for change in circumstances • Fix sum with trustee discretion to pay additional expenses. • Expense reimbursement only

35. Traditional Pet Trusts – Factors to consider • 8. Consider additional distributions for caregiver/beneficiary • Distributions may increase quality of care. • Distributions decrease amount available for pet care.

36. Traditional Pet Trusts – Factors to consider • 9. Limit duration of trust • Comply with your state’s version of the Rule Against Perpetuities.

37. Traditional Pet Trusts – Factors to consider • 10. Designate remainder beneficiary • Consider charity which benefits same type of animal. • Do not name caregiver as then caregiver lacks incentive to keep animal alive.

38. Traditional Pet Trusts – Factors to consider • 11. Identify animal to prevent fraud • Special Identifying marks • Tattoo • Microchip • DNA

39. Traditional Pet Trusts – Factors to consider • 12. Require trustee to inspect animal • Random unannounced at-home visits.

40. Traditional Pet Trusts – Factors to consider • 13. Provide instructions for final disposition of pet • Pet cemetery • Cremation • Memorial site on Internet

41. Statutory pet trusts • “I leave $10,000 in trust to care for Rover.” • Statute “fills in the blanks” • Person to enforce • Use of money • When trust ends • Distribution of remaining property • Exact method depends on state statute

42. Other Planning Options • 1. Outright gift of animal and money • Risky and uncertain, but cheap and easy. • 2. Transfer to life care center • Good for hard-to-place animals (exotics, farm animals, etc.). • May require significant “endowment.” • Quality varies tremendously so due diligence is essential.

43. Questions?

44. For more information: http://www.professorbeyer.com/Articles/Animals.html Gerry W. Beyer Barry Seltzer