Estate Planning for Your Beloved Pets

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Estate Planning for Your Beloved Pets. Gerry W. Beyer Governor Preston E. Smith Regents Professor of Law Texas Tech University School of Law. Pet Ownership in America Today. 71.1 Million households own at least one pet (63% of all households) Dogs = 43.2 million households - PowerPoint PPT Presentation

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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

2

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

3

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

4

Replacement “equipment”

5

The Parrot Owners’ Estate

The Parrot Room

Inside Parrot Cage One

Inside Parrot Cage Two

Pearl

Pearl

Pearl and Cat [one of four]

Parrot Food

Prof. Beyer with Parrot

Short Term Planning

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Long Term Planning

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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

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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.

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Traditional Pet Trusts – Factors to consider1. 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.

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Traditional Pet Trusts – Factors to consider2. 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.29

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.

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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.32

Traditional Pet Trusts – Factors to consider6. 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

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Traditional Pet Trusts – Factors to consider7. 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

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Other Planning Options1. 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.42

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