The majority of United States households include a pet, whether that pet is a dog, cat, fish, or some other animal companion. According to Forbes, 66% of US households own a pet, with the average expenses for dog ownership being around $1,500 annually.[1] During the pandemic, many individuals and families added a pet to their household. Many clients consider their pets to be important parts of their families and want to provide for their care when the clients themselves are not able to. As estate planners, the question of whether provisions for the care of pets can be included in key estate planning documents is increasingly common.
The short answer is: yes, pets can be included in estate plans and included as the beneficiaries of their own separate trusts. The rules for these trusts trusts, called “pet trusts,” vary by state and are expressly permitted by Massachusetts statute.
When considering a pet trust, the following are the key questions to keep in mind.
Who cares for the pet?
The Settlor of the trust should designate a person to have physical custody of the pet. The person designated to care for the animal should be someone well trusted and familiar with animal care.
The caregiver does not have to be the trustee of the pet trust; however, it is important to consider how the caregiver and the trustee will work together. If the caregiver requires funds to pay for an unexpected expense, what problems could be created by a possible delay in receiving those funds if the trustee is a different person? Conversely, choosing different individuals for these roles could help ensure there is no mismanagement of trust assets.
How much to fund the trust with?
A pet trust should be funded with amounts sufficient to cover the costs of caring for the animal throughout its remaining life expectancy. For example, if a pet is on a special diet due to allergies and now has a food cost of $500 per year, then the trust should be funded with at least $500 for every year of the pet’s remaining life expectancy. When determining the amount with which to fund a pet trust, it is important to list out all of the expenses that may arise. A court could potentially reduce the amount of funds allocated to a pet trust, so a detailed list of current expenses and potential expenses can help show the intent concerning the amount with which the trust is funded.
What happens if the pet predeceases the owner?
Pet trusts are enforceable during the life of the pet, meaning the trust terminates when the pet or pets for which it is established die. Should funds remain in the trust after the death of the beneficiary-pet, then those funds will be distributed pursuant to the terms of the trust.
If no direction is provided in the trust, then, in Massachusetts, the funds are distributed to the heirs of the settlor (not the heirs of the pet) pursuant to Massachusetts intestacy law.
For this reason, it is important to provide directions for the distribution of unexpended funds held in the trust. Depending on how much a client intends to fund the pet trust, the pet trust could make distributions back to the Settlor or to a specific animal shelter or charity.
Conclusion
There are many factors to consider when establishing a pet trust. If you are interested in learning more about pet trusts or other estate planning strategies, please contact one of our estate planning attorneys in the Private Client Service practice at Wilchins Cosentino & Novins LLP.
This Article is not legal advice and should not be taken as such or relied upon as legal advice.