An Update on Planning for Pets and the Pet Trust

An Update on Planning for Pets and the Pet Trust

By Prof. Michael T. Flannery

Excerpt:

When preparing a revocable living trust for a client, consider the client's desire to plan for companion animals, which is an increasingly important option for pet owners.

As of mid-2011, approximately 62% of Americans (roughly 71.4 million households) owned pets. In 2010, pet owners spent approximately $48 billion on their pets. Projections for 2015 reach as high as $74 billion. In terms of growth, the pet industry is second only to electronics. Of the 50% of Americans who will execute a Last Will and Testament or other estate plan, 27% will include some provision for the continued care of their pets. Therefore, when preparing a revocable living trust for a client, consider the client's desire to plan for his or her companion animals upon his or her death or incapacity. To do so effectively, one must understand the legal resources that are available in each state to validate a client's wishes with respect to his or her pets. Historically, dispositions to pets as beneficiaries were deemed invalid for two reasons-the lack of a valid (human) beneficiary, and violation of the Rule Against Perpetuities. Accordingly, in 1999, only five states recognized the availability of "pet trusts" as a resource for providing for pets. However, by 2008, 39 states had recognized the validity of such dispositions by adopting legislation based on Uniform Probate Code § 2-907 or Uniform Trust Code § 4-408 -- both of which allow for third party enforcement of the trusts -- and by effectively abolishing the Rule Against Perpetuities by including a "perpetuities savings clause." As of 2011, 44 states validate dispositions to pets (only Kentucky, Louisiana, Minnesota, and Mississippi do not validate pet trusts). 1 However, the options vary within each state. The Form below provides standard provisions for a valid pet trust, 2 however practitioners are cautioned to make themselves familiar with the relevant provisions within specific jurisdictions. To avoid obvious concerns related to both § 2-907- and § 4-408- type provisions, a conditional gift in trust, in which the corpus of the trust is conditioned on the proper care of the animal, is recommended.

 n1 See Ala. Code §19-3B-408 (2011) ("trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime, upon the death of the last surviving animal"); Alaska Stat. §13.12.907 (2011) ("trust may be performed by the trustee for 21 years but not longer, whether or not the terms of the trust contemplate a longer duration"); Ariz. Rev. Stat. §14-2907 (2011) ("trust may be performed by the trustee for not longer than ninety years"); Ark. Code Ann. §28-73-408 (2011) ("trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one (1) animal alive during the settlor's lifetime, upon the death of the last surviving animal"); Cal. Prob. Code Ann. §15212 (West 2011) (trust is valid for the life of the animal); Colo. Rev. Stat. §15-11-901 (2011) (validating trusts for pets "for twenty-one years but no longer, whether or not the terms of the trust contemplate a longer duration"); Conn. Gen. Stat. Ann. §45a-489a (2011) ("trust shall terminate upon the death of the last surviving animal"); Del. Code Ann. tit 12, §3555 (2011) ("trust terminates upon the death of all animals living at the trustor's death and covered by the terms of the trust"); D.C. Code §19-1304.08 (2011) ("trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime, upon the death of the last surviving animal"); Fla. Stat.§736.0408 (2011) ("trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime, upon the death of the last surviving animal"); Ga. Code Ann. §53-12-28 (2011) ("trust shall terminate upon the death of such animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime"); Haw. Rev. Stat. §560:7-501 (2011) ("trust terminates when no living animal is covered by the trust"); Idaho Code Ann. §15-7-601 (2011) (allows for trusts created for any purpose); 760 Ill. Comp. Stat. §5/15.2 (2011) (trust may be performed until no living animal is covered by the trust); Ind. Code §30-4-2-18 (2011) (trust terminates upon the death of the animal or upon the death of the last surviving animal); Iowa Code Ann. §633A.2105 (2011) (trust may be performed by the Trustee for only twenty-one years); Kan. Stat. Ann. §58A-408 (2010) (terminates upon death of animal or, if to provide for more than one animal, upon death of last surviving animal); 18-B Me. Rev. Stat. Ann. §408 (2011) (terminates upon death of animal or last surviving animal); Md. Ests. & Trusts Code Ann. §14-112 (2011) (trust terminates upon the death of the animal or upon the death of the last surviving animal); Mass. Gen. Laws Ann. ch. 203, § 3C (eff. Apr. 7, 2011); Mich. Comp. Laws §700.2722 (2011) (trust may be performed for 21 years); Mo. Rev. Stat. §456.4-408 (2011) (trust terminates at death of animal or last surviving animal); Mont. Code Ann. §72-2-1017 (2011) (trust may be performed for twenty-one years, but no longer); Neb. Rev. Stat. §30-3834 (2010) (terminates upon death of animal or last surviving animal); Nev. Rev. Stat. §163.0075 (2010) (terminates upon death of all animals covered by the trust); N.H. Rev. Stat. Ann. §564-B: 4-408 (2011) (trust terminates at death of animal or last surviving animal); N.J. Stat. Ann. §3B:11-38 (2011) ("trust shall terminate when no living animal is covered by the trust, or at the end of 21 years, whichever occurs earlier"); N.M. Stat. Ann. §45-2-907 (2011) (trust limited to twenty-one years); N.M. Stat. Ann. §46A-4-408 (2011) (terminates upon death of animal or last surviving animal; §45-2-907, modeled on the Uniform Probate Code, was not repealed with the enactment of this statute, which is modeled on the Uniform Trust Code); N.Y. Est., Powers & Trusts L. §§7-6.1, 7-8.1 (2011) ("shall terminate when the living animal beneficiary or beneficiaries of such trust are no longer alive"); N.C. Gen. Stat. §36C-4-408 (2010) ("trust terminates at the death of the animal or last surviving animal"); N.D. Cent. Code §59-12-08. (408) (2009) (trust terminates upon the death of the animal or upon the death of the last surviving animal); Ohio Rev. Code Ann. §5804.08 (2011) (trust terminates upon the death of the animal or upon the death of the last surviving animal); Okla. Stat. tit. 60, §199 (2011) ("Unless the trust instrument provides for an earlier termination, the trust terminates when no living animal is covered by the trust"); Or. Rev. Stat. Ann. §130.185 (2011) ("trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal, upon the death of the last surviving animal"); 20 Pa. Consol. Stat. Ann. §7738 (2011) (trust terminates upon the death of the animal or upon the death of the last surviving animal); R.I. Gen. Laws §4-23-1 (2010) (trust terminates upon the death of the animal or upon the death of the last surviving animal); S.C. Code Ann. §62-7-408 (2010) ("trust terminates upon the death of the last surviving animal"); S.D. Codified Laws §§55-1-21 & 55-1-22 (2011) ("trust terminates when no living animal is covered by the trust"); Tenn. Code Ann. §35-15-408 (2011) (trust may not be enforced for more than ninety years); Tex. Prop. Code Ann. §112.037 (2011) ("trust terminates on the death of the animal or, if the trust is created to provide for the care of more than one animal alive during the settlor's lifetime, on the death of the last surviving animal"); Utah Code Ann. §§75-2-1001, 75-7-408 (2011) (limited to twenty-one years); Vt. Stat. Ann. tit. 14A, §408 (2011) (trust terminates upon the death of the animal or upon the death of the last surviving animal); Va. Code §55-544.08 (2011) ("trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime, upon the death of the last surviving animal"); Wash. Rev. Code §11.118.005 et seq. (2011) ("trust will terminate when no animal that is designated as a beneficiary of the trust remains living"); W. Va. Code § 44D-4-408 (eff. June 10, 2011); Wis. Stat. §701.11 (2011) ("no enforceable trust is created; but the transferee has power to apply the property to the designated purpose, unless the purpose is capricious. If the transferee refuses or neglects to apply the property to the designated purpose within a reasonable time and the transferor has not manifested an intention to make a beneficial gift to the transferee, a resulting trust arises in favor of the transferor's estate and the court is authorized to order the transferee to retransfer the property"); Wyo. Stat. Ann. §4-10-409 (2011) (terminates upon death of animal or, where created to provide for care of more than one animal, upon death of last surviving animal). For federal legislation regarding pet trusts, see the "Morgan Bill," H.R. 1796, 107th Cong. (2001); H.R. 1796, 108th Cong. (2002) (providing for pets and beneficiaries to be cared for for their entire lives, even if beyond twenty-one years).

 n2 There are a variety of "sample" pet trust provisions available; those included here are derived from a variety of sources that represent standard considerations. Attorneys are cautioned that all provisions may not be appropriate for all clients.

ABOUT THE AUTHOR(S):
Professor Michael Flannery is a Professor of Law at the University of Arkansas's William H. Bowen School of Law. He holds his Bachelor's degree from the University of Delaware and his JD from the Catholic University of America.
Professor Flannery joined the law school in 2003. While at the Columbus School of Law, he was a board member on the Moot Court Association, a staff member on the Journal of Contemporary Health Law and Policy, and special features editor for the Judicial Notice newspaper. After his 1991 graduation, Professor Flannery worked as an Assistant City Solicitor in Philadelphia from 1991 to 1994. While with the City Solicitor's Office, he represented the Department of Human Services in child dependency litigation and the County Office of Mental Health in mental health law litigation. Professor Flannery also worked in the special litigation division, focusing on prison riot litigation. In 1994 Professor Flannery became an associate for the law firm of Gold-Bikin, Clifford and Young in Norristown, Pennsylvania, where he practiced in the area of domestic relations and divorce litigation. He then joined the law firm of Wolf, Block, Schorr and Solis-Cohen before joining the faculty of the Villanova University School of Law in 1996. Professor Flannery taught at Villanova University School of Law until 2003, when he joined the faculty at the UALR Bowen School of Law. In 2006, he won the Faculty Excellence Award for Research. Professor Flannery teaches Family Law, Decedents' Estates and Trusts, Sports Law, Animal Welfare Law, and Reasoning, Writing, and Advocacy I and II. He has authored 3 books, 2 book chapters, and 11 law review articles.

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Comments

Anonymous
Anonymous
  • 11-24-2011

Professor Michael Flannery's commentary underscore the need for planning in advance regarding one’s estate, it also serve a useful purpose to highlight for the legal profession the need and importance of carefully including ones client's pets in their estate planning. There are many questions raised when planning for companion animals that bear discussion with clients and sometimes there are no easy answers. Professor Beyer was recently quoted by Nara Schoenberg in the Chicago Tribune as stating "When I first wrote about (pet estate planning) in 2001, people thought that it was funny," said Gerry W. Beyer, a professor at Texas Tech University School of Law. "It is something that has gone from almost a comical thing to something that people take very seriously and want. Attorneys are interested because it's a great way to get clients. People are sometimes more interested in taking care of their pets than their families. Even trust departments at banks now are interested in being trustees of pet trusts -- it's business." Forty-six states and Washington, D.C., have enacted laws that make it easy to provide for your pet in your will, up from about 10 states in 2001, said Beyer. Our intention when we created our book, ‘Fat Cats & Lucky Dogs’, was that it would be an easy to understand and complete resource of information and ideas that the general public and profession could immediately use; for providing guidance to those who would like to explore planning possibilities for their pets; and for stimulating attorney's and their clients to take action before they are in a position where they can’t. We hope as many attorneys and clients as possible will be encouraged to deal with this type of planning rather than leave it to others and the courts when they no longer can. In addition we believe our book is of great value to everyone who loves their companion animals. Sincerely, Barry Seltzer, Lawyer & Professor Gerry W. Beyer, Governor Preston E. Smith Regents Professor of Law, Texas Tech University School of Law A few observations about ‘Fat Cats & Lucky Dogs’ I have received ... a copy of your book, Fat Cats & Lucky Dogs. I look forward to reading it... Very truly yours, JUSTICE SONIA SOTOMAYOR, Supreme Court of the United States The book if full of wonderful anecdotes and sound advice. I know I will enjoy reading it. Sincerely yours, JUSTICE SAMUEL A. ALITO JR., Supreme Court of the United States Thank you for...your book...I look forward to reading it. It is so nice to see other animal lovers taking time to instruct people on how to care for their pet's well being. Martha Stewart.