I was speaking with a woman recently in my Marietta law office and she was concerned what would happen to her children if something unexpected were to happen to her. I asked her how many children she had and she said "three" and they were named "Fido, Rocky, and Sparky." I then realized she was referring to her pet dogs and that she didn't actually have any children at all. But, her concern is among the many valid concerns people have when it comes to getting their affairs in order. Approximately 65% of American households include beloved pets, and it is not uncommon for a pet to outlive its owner.
Because state law views pets as "property," we cannot name our pets as beneficiaries in a Last Will and Testament.
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In Georgia, animal owners and estate planners attempted to create ways in which the person's intent could be met after they passed away. For example, some people would state in their will that they leave the pet and a sum of money to someone they trusted to take care of the pet. These methods, unfortunately, left the person with a moral but no legal obligation to take care of the pet.
However, a few years ago, in 2010, the Georgia Legislature passed a law that allows pet owners to create a trust for their pet. Interestingly, the law allows for the creation of a trust for an "animal" instead of the more restrictive term "pet." This allows people to create trusts for animals that, while are not necessarily "pets," provide services or happiness to an owner such as race horses, hunting dogs, or companion animals for disabled individuals.
Before we get into pet trusts, let's quickly review what is a trust. In general, a trust is a legal document that gives a trustee instructions on how to handle certain assets upon your death rather than have the Courts determine the distribution of your assets. Each type of trust is designed to accomplish different objectives depending on your estate planning goals. You can access an article I've written on the Top 10 most common types of trusts in Georgia by clicking here. You can also access an estate planning beginner's guide by clicking here.
Pet Trusts can be incorporated into your Marietta estate plan. In setting up a Georgia pet trust, it is always a good idea to consult with an experienced Marietta Estate Planning Attorney and there are several important steps to consider.
First, ownership of the pet must be very clear since state law still considers animals to be property. The ownership of the pet must be pre-determined. Microchipping your pet with your name and address, keeping tags on your pet and other precautions can help prove ownership if a pet becomes lost. Providing photocopies of your trust to everyone involved can help ensure ownership of the pet is clear.
Second, your pet trust must name a "guardian" (the person or organization who will be taking care of your pet) and a "trustee" (the person or organization that will handle the trust's finances.) The guardian and trustee can be the same person or organization, but I don't always recommend it. Since the trustee oversees the guardian's care of the pet, having a separate trustee can ensure the guardian is following your care instructions. You will also want to select a successor guardian and successor trustee should the original individuals be unable to perform their roles.
Third, your pet trust must be properly funded. Otherwise, the guardian may not have the proper incentive to care for your pet the way you wish. Make sure to consider your pet's age (they are more expensive with age), the type of pet (race horses require more care than the average dog), and any special care needs. You can specify every aspect of your pet's care, including the brand of food it eats, how much food to feed, your chosen veterinarian and more.
And finally, you will need to name remainder beneficiaries. While the pet is the primary beneficiary of the trust, remainder beneficiaries will receive whatever is left over once the pet dies. Typically, owners will name a charity or animal hospital as a remainder beneficiary, but you could also name a family member.
A pet trust is an excellent way to make sure your beloved pet will receive proper care after you pass on. The problem, of course, is that you won't actually be there to see that your wishes are carried out. It's critical to set up a pet trust correctly to ensure there are no loopholes or unforeseen situations that could make your plans go awry. Here are 5 tragic mistakes people often make when leaving their assets to their pets.
1. Appropriating more than the pet could ever need.
The gossip stories about such-and-such celebrity who left his or her entire fortune to a pet are the exception rather than the rule. Leaving millions of dollars, houses, and cars to your pet is not only unreasonable, but it's more likely to be contested in court by family members who might feel neglected. To avoid this pitfall, leave a reasonable sum of money that will give your pet the same quality of life that she enjoys now.
2. Providing vague or unenforceable instructions.
Too many pets don't receive the care their owners intended because they weren't specific enough in their instructions or because they did not use a trust to make the instructions legally binding. Luckily, a pet trust can clarify your instructions and make them legally valid.
If you leave money to a caretaker without a pet trust in place, hoping it will be used for the pet's care for example, nothing stops the caretaker from living very well on the pet's money. But when you use a pet trust to designate how much the caretaker receives and how much goes for the pet's care, you've provided a legal structure to protect your furry family member. You can be as specific about your wishes as you'd like, from how much is to be spent on food, veterinary care, and grooming. You can even include detailed care instructions, such as how often the dog should be walked.
3. Failing to keep information updated.
Bill sets up a pet trust for his dog Sadie, but what happens if Sadie passes away? If Bill gets a new dog and names her Gypsy, but he doesn't update this information before he dies, Gypsy could easily wind up in a shelter or euthanized because she's not mentioned in the trust. This is a common yet tragic mistake that can be easily avoided by performing regular reviews with your estate planning attorney to ensure that your estate plan works for your entire family.
4. Not having a contingency plan.
You might have a trusted friend or loved one designated as a caretaker in your pet trust, but what happens if that person is unable or unwilling to take that role when the time comes? If you haven't named a contingent caretaker, your pet might not receive the care you intended. Always have a "Plan B" in place, and spell it out in the trust.
5. Not engaging a professional to help.
Too many people make the mistake of trying to set up a pet trust themselves, assuming that a form downloaded from a do-it-yourself legal website will automatically work in their circumstances. Only an experienced estate planning attorney should help you set it up to help ensure that everything works exactly the way you want.
Not long ago, pet trusts were thought of as little more than eccentric things that famous people did for their pets when they had too much money. These days, pet trusts are considered mainstream. For example: in May 2016, Minnesota became the 50th (and final) state to recognize pet trusts. But not every pet trust is enacted exactly according to the owner's wishes. Let's look at 3 famous pet trust cases and consider the lessons we can take away from them so your furry family member can be protected through your plan.
Leona Helmsley and Trouble
Achieving notoriety in the 1980s as the "Queen of Mean," famed hotelier and convicted tax evader Leona Helmsley passed away in 2007. True to form, her will left two of her grandchildren bereft and awarded her Maltese dog Trouble a trust fund valued at $12 million. The probate judge didn't think much of Helmsley's logic, however, knocking Trouble's portion down to a paltry $2 million, awarding $6 million to the two ignored grandchildren and giving the remainder of the trust to charity. Furthermore, when Trouble died, she was supposed to be buried in the family mausoleum, but instead she was cremated when the cemetery refused to accept a dog.
Lessons learned: Leaving an extravagant sum to a pet may not be honored in a lawsuit and can cause family conflict. It's best to leave a reasonable amount to provide for the care and lifestyle your pet is used to, for the rest of his or her life. If you are looking to disinherit one or more family members, make sure to specifically talk with your attorney so you can have a game plan to make the disinheritance as legally solid as possible.
Michael Jackson and Bubbles
Most Michael Jackson fans will remember his pet chimpanzee Bubbles, who was the King of Pop's constant companion. Jackson reportedly left Bubbles $2 million. After the singer's death, Bubbles' whereabouts became a point of speculation amid allegations that Jackson had abused the pet while he was alive. The good news is that Bubbles is alive and well, living out his years in a shelter in Florida. The bad news is that if he was actually left $2 million, he never received it; and he is being supported by public donations.
Lessons learned: Always be clear about your intentions and work with your attorney to put them in writing so your furry family member is cared for and doesn't wind up in a shelter.
Karla Liebenstein and Gunther III (and IV)
Liebenstein, a German countess, left her entire fortune to her German Shepherd, Gunther III, valued at approximately $65 million. Tragically, Gunther III passed away a week later. However, the dog's inheritance passed on to his son, Gunther IV; the fortune also increased in value over time to more than $373 million, making Gunther IV the richest pet in the world.
Lesson learned: It's possible for pet trust benefits to be passed generationally, so make sure your estate plan reflects your actual wishes and intentions.
Things don't always go according to plan. On the other hand, sometimes pet owners can get a bit creative when providing for their pets. Let's take a look now at 3 more famous cases involving pet trusts and distill important lessons from them.
David Harper and Red
David Harper, a wealthy, reclusive bachelor in Ottawa, Canada, wasn't exactly famous during his life. In his death, however, he made headlines by reportedly leaving his entire $1.1 million dollar estate to his tabby cat, Red. Just to make sure his wishes were carried out, Harper actually bequeathed the fortune to the United Church of Canada under the stipulation that they take care of Red for him! The ploy worked.
Lesson learned: You can be creative in your approach to making sure your pets receive proper care after you're gone. Let's chat about your goals and wishes when it comes to your pets.
Maria Assunta and Tommaso
In a four-legged and furry version of the classic rags-to-riches story, wealthy Italian widow Maria Assunta rescued a stray cat from the streets of Rome and gave him a proper home and name: Tommaso. As Assunta's health failed, she tried for several years to find an animal organization to entrust Tommaso. When no suitable organization was found, Assunta left the estate valued at $13 million directly to the cat in her will and named her own nurse as caretaker. She passed away in 2011 at the ripe old age of 94, knowing her beloved Tommaso would be well taken care of.
Lesson learned: The best way to ensure the care of your pet is in writing, with a proper estate plan.
Patricia O'Neill and Kalu
Patricia O'Neill, daughter of British nobility and ex-spouse of Olympian Frank O'Neill, had designated a fortune worth $70 million to her chimpanzee, Kalu and other pets, in her will - or so she thought. It was discovered in 2010 that the heiress herself was virtually broke, thanks to the shady dealings of a dishonest financial advisor. This story provides perhaps the most famous example of a pet trust gone dry while the owner is still living.
Lessons learned: You can only give away what you have. If caring for your pets after your death is important to you, make sure your financial plan is in line with your estate plan and that you've taken appropriate steps to oversee your advisors.
As you can see, there are many different issues you may face when setting up a pet trust. That's why it's always a good idea to consult with a seasoned and experienced Marietta Estate Planning Attorney when you are preparing an estate plan.
Mr. Farrell is the author of Estate Planning for the Modern Family: A Georgian's Guide to Wills, Trusts, and Powers of Attorney. You can learn about his book here and learn more about John here. Join the more than 1,500 people who subscribe to his Newsletter here. Feel free to send John a message here.
