Pets have been a saving grace for many folks coping with the stress caused by the COVID pandemic. New studies are confirming the mental health benefits that pets are providing these days to deal with the stress and social isolation.
Perhaps not surprisingly, pet adoptions have soared across the country in 2020. I read where about two-third of US households now own a house pet. Some experts are now concerned that the rash of impulse adoptions in 2020 will eventually lead to masses of abandoned pets due to the reality of the cost and responsibilities of pet ownership.
Carrie and I love other people’s dogs. We enjoy them for short episodes, free of any commitment to visit dog parks or take pre-sunrise walks in the dead of winter carrying a loaded plastic bag. It is amusing to match the happiness exuded by a dog on a morning walk with the misery on the face of the owner.
We are, however, cat owners. Felines are strange critters that often appear to need intense therapy for their neuroses. However, unlike a dog, you can leave a cat at home for days supplied with a full gravity feeder and water bowl and they don’t notice or even care that you’ve been gone. They make for great empty nester pets.
Our two dudes - Harvey and Rocky - have indeed been a nice distraction during COVID, I just wish they wouldn’t channel Bob Wiley whenever we have house guests and stay hidden. Please tell me you recognize the name Bob Wiley as the hysterically funny patient in the movie What About Bob? One of the funniest movies of all time.
One of interesting facets to COVID has been the rush of people getting their estate affairs in order due to mortality anxiety. Estate planners are as busy as a one-armed barber with hives these days.
For years, pet lovers have conducted funerals and memorial ceremonies for lost pets and pet cremation services is now a big business. Most folks have not thought about what the future would hold for Fido or Whiskers in the event of their demise; perhaps they should incorporate pet caretaking into their personal estate planning.
There are some funny stories about wealthy celebrities who took pet estate planning to the extreme. Leoma Hemsley, the wealthy business tyrant, set up a $12 million trust fund to provide for her dog following her death in 2007. After her family heirs objected, a judge reduced the amount to $2 million and ruled that the rest of the money was to be sent to Helmsley’s charitable foundation. Still, until its death in 2011, the dog lived in luxury; the trust spent $100,000 on its care, including a full-time security guard.
There are also stories about Oprah Winfrey and Betty White having established multi-million trusts-under-will for their pet dogs as well.
Every state now has a pet estate law, specifically allowing for pet trusts. No state permits you to leave money directly to a pet in your will - how can it open a bank account? Your pet is deemed personal estate property, which means it is bequeathed to an heir like heirloom jewelry.
Unfortunately, if you do not expressly name a new pet owner in your will, the animal is likely to end up in a shelter if no family member adopts it.
One short cut is to leave your pet and some money to an heir to provide for future pet care in your will. However, the pet “guardian” is no under legal obligation to spend the money on your pet.
If safeguarding the future care of your pet is really that important, a popular pet estate planning move is a pet trust. This testamentary (after death) trust will reduce the risk of your pet landing in a shelter due to financial reasons, since at your death the trust is funded with money to pay for its future caretaking and final expenses.
Importantly, the trustee of the pet trust has a legal (fiduciary) responsibility to care for your pet and can be held accountable. The trust agreement can be very specific about any special dietary needs and other caretaking expectations. A successor caretaker should be included (if available), plus remainder beneficiaries named to inherit any residual money left once your pet dies.
Per the Helmsley example, an overly exuberant amount of money appointed to the pet trust could be challenged by heirs. There’s a Pennsylvania case from the 1970s in which a woman set up a testamentary trust instructed to fund $50,000 annually to provide custodial care for her horses and dogs. Since the regular cost of their care proved to be much less, a state judge allowed the trustee to give the surplus money to alternate beneficiaries in her will.
Therefore, if you decide on the pet trust planning strategy, first get out your calculator and figure out Fido’s annual expenses, multiply this figure by his remaining life expectancy and then pad it for future unexpected veterinary bills and funeral costs to arrive at how much cash to add to the pet trust. Be sure to include instructions regarding the desired disposition of your pet’s remains.
Finally, to avoid the potential for any trust fraud, think about ways to properly identify your pet so the trust does not continue for decades, if you know what I mean.
As you can see, a pet trust is rather complicated and not without legal expense. You may even have to pay the trustee to carry out their trustee duties.
If no family member wants Fido, a less complicated option would be leave him to an animal welfare organization like the SPCA, an animal rescue organization and even trendy pet retirement homes, per your will. I wonder if the pet retirement homes offer happy hour?
This blog made me realize that our estate plan has a hole in it; we need think about a pet estate plan of our own.
Until next time, be well….Tim