PET TRUSTS ARE A NECESSARY PART OF ESTATE PLANNING

BY CAROL RYDER, ESQUIRE

Do you believe you and your loved ones are protected because you have a will, or, if you don’t, that NY’s intestacy laws will protect your loved ones? Think again. No estate plan is complete without at least these 4 or 5 crucial documents-a will, a living will, a Health Care Proxy and a Living Will, plus a Pet Trust if you have a pet(s). Each document accomplishes a different purpose.

The will ensures that your assets go where you wish them to. Absent a will, NY steps in and distributes your assets according to default rules under the Estates, Powers and Trust Law (“EPTL”). This is true even if you tried to bypass the will by distributing assets before you passed away. A Health Care Proxy and Living Will protects you from the Terry Schiavo situation, so that a trusted loved one can make health care decisions for you as per your Health Care Proxy and end-of-life decisions designated in your Living Will, and not have to go through heart-wrenching, expensive, intrusive guardianship legal proceedings. A power of attorney allows a trusted person you designate to take care of financial affairs. For those concerned with turning over such rights too soon, the power of attorney can be drawn so that it is “springing”, meaning it only springs into effect upon some happening, such as brain death, Advanced Alzheimers, etc. Moreover, you can initial off only those powers that you wish to grant, and self-dealing by the holder is not permitted. Additionally, as of September 1, 2009, NY amended its power of attorney laws to avoid the problem of holders of such forms from gifting away the grantor’s money then using the old-style power of attorney form, which only required an initial in a box, as a shield in civil and criminal court cases where they were accused of stealing from the grantor. Instead, since 9/1/09, a separate rider, duly witnessed, must be written before gifts can be given out of the grantor’s funds.

Absent these documents, many terrible things can happen to you and those you love (see Carolryderlaw.comfor more information). Moreover, other documents, such as certain trusts and a carefully planned estate plan to avoid excessive estate taxes, may be needed in addition to those 4/5 documents, depending on one’s assets. I am going to focus this article on document not as well known as the other estate planning documents-the Pet Trust. This document is so important that I include it, pro bono, when I prepare the other four key basic estate-planning documents.

Many animals end up in shelters, and I have been there many times in my capacity as an animal rescuer/shelter volunteer to see the suffering, all because the pet’s owner did not set up a pet trust (animals are legally considered “chattel”, a.k.a. property, under the law, hence the term “owner”), which is far easier than it sounds. The animals suffer losing their owners, then get dumped into a scary, smelly, noisy, crowded shelter, suffer, and are often subject to euthanasia, especially since many are elderly themselves and tough to adopt out-everything the decedent or incapacitated person never wanted to happen, all for lack of a proper estate plan.

Many people are concerned, incorrectly, about the legality of pet trusts after the debacle with Leona Helmsley’s attorneys’ pet trust. There, she left $13 million to her dog, wishing that the balance (in legal terms, “the remainder”) after his death to go to animal charities. The courts can reduce the bequeath if its too large, as they did here (to $2 mil). Then, because Helmsley’s trust left the choice of charities to the discretion of the trustees, they instead donated her money to their choices of charities, not animal charities. The key to avoid such problems is to use an attorney who not only is knowledgeable about estate law but also loves animals.

However, there are laws Helmsley’s attorneys could have abided by to achieve her wishes. New York’s Estate, Powers and Trust Law, as statutes in 40 other states do, specifically provide for Pet Trusts. There, the “settlor” bequeaths the pet(s) and money to a trustee, who is under a duty to make arrangements for the proper care of the pet(s) according to the settlor’s instructions. The trustee will deliver the pet to the designated “beneficiary” (caregiver) and then use the property transferred to the trust to pay for the pet’s expenses. Important caveat here: Don’t name the pet- it should be something like “All the pets in Carol Ryder’s care at the time of her death” not “Fluffy Ryder”. This is because the named pet may not be alive at the time of the settlor’s death, will eventually pass away, and/or the settlor may have more pets.

A Pet Trust can be set up while the settlor is alive (inter-vivos) or take effect after death, called a “testamentary trust”. However, if a testamentary trust is chosen, it does not take effect until the will is probated. This leaves a coverage gap from the time of the settlor’s death until the will is probated. Moreover, what happens to the pet(s) if the settlor is incapacitated and not deceased? While an intervivos trust may involve more start-up costs and fees, it is still preferable because it can “spring” into effect upon death.

The intervivos pet trust is funded by the settlor. Usually, the best way is to write a check to, for example, “Carol Ryder, trustee, as trustee of the Mary Smith’s Pets’ Trust”. The memo line of the check should say something like “Carol Ryder, in trust, under the terms of the Mary Smith Pets’ Trust.” The settlor can also deed land over to fund the trust but remember, there should be some money and/or income from the asset (such as rent) to maintain the pets’ needs. Settlors can arrange to add more to the trust by leaving a life insurance policy and/or willing property, funds, and other assets in the will so those assets “pour over” into the trust.

It is recommended that any money left over after your pet(s) have deceased be bequeathed to someone with no beneficial interest in the pets(‘) death(s), such as a trusted animal charity, to avoid the conflict of interest between the caregiver and the needs of the pet even if you trust that person so much to care for your pet. Instead, you may wish to, as many people do, leave that person a separate bequeath having nothing to do with the pet, such as your car, some money, maybe even your home.

Also critical is to name multiple alternate trustees in ANY situation where you are caring for anyone dependent on you, not just pet(s) (children, mentally challenged family members, etc.). Anything can happen to your first and even second choices.

So, these are the basics on pet trusts. There is much more information on this subject, much of it included onCarolryderlaw.com, and a free seminar, already conducted regularly, including at a local law school, can be arranged at your locale to discuss this and other issues of interest to the pet lover (titled “Animal Law and Guidance for the Pet Lover”). The seminars can be customized for your group’s needs (e.g. for a group with many attendees with service animals, more time is spent on the Americans With Disabilities Act and other statutes, laws and rules governing service animals). Please feel free to contact Carol.Ryder@ymail.com or call (631) 848-1204

IMG_2137

Advertisements

Happy Adoption Story!

December 8, 2012

Hello All!

I write this from my living room (decided to work from home this morning so I can occasionally throw toy mice at Hannah [now known as Lola]), with Lola sitting by my elbow, “helping” me type.

Lola spent her first night with me (Alex graciously delivered her to me yesterday evening), and I think she’s settled into her night time routine – which consists of gently nudging me off my silk pillow so she can use it instead.  High thread-count cotton apparently does NOT suffice for her.  It’s silk or bust.   *laughing*

I just wanted to thank all of you for all your help!

As I told Alex, I had contacted three different organizations for three different cats, and All Sentient Beings was the ONLY one who even emailed me back.  The whole process was marked by such responsiveness and generosity and I wanted to express my appreciation.  I’m now mercilessly harassing my friends who are currently running cat-deficits to correct their situations, ASAP.

Thank you again!

Warmest Regards,

Clara

535412_10151348101241528_492593238_n 252242_10151350028316528_1071778345_n 154374_10151353172186528_1591688542_n

Meet Lucy one of our girls!

December 8, 2012

cropped-img_2831_2.jpgLucy has an interesting story. Blog manager Donna has written some articles and even penned a book for children (ok it is not published!) about the escapades of this born blind kitty. The truth is too many kittens and puppies are born, we need to educate on spay and neuter and help those who think they cannot afford it, especially in todays’s economy. Not all animal owners have the money for this and there are resources available.

Back to Lucy- she does not know she is different than her other cat housemates Annie and Shanti. She gets along just fine, thank you very much! Animals do not think of handicaps the way we do..they are real troopers and all need loving homes. Lucy found hers and it’s actually a pretty interesting journey. But you have to wait for the book:)

Hello Fellow Animal Lovers!

December 6, 2012

We plan to start a new Latest Mews in 2013! This is the blog for All Sentient Beings, a nonprofit rescue in New York City run by Gregg Mayer, a devoted animal rescuer.

We will provide helpful articles for your pet care, adoption and rescue questions as well as product recalls and anything pertinent to pet care.

Questions and comments welcome; please join our family of animal lovers whose aim is to help us be the best caregivers and home finders for our furry friends!