Tag: Pet Trusts

Estate Planning for Millennials.

Part of a series involving practical solutions and tips for millennials to plan their Estates, as well as the consequences of failing to do the same.

Part One: Who gets the dog?

“Whatever one may think of treating our dogs like people- whether it is called ‘humanification,’ ‘personhood,’ or some other means of endowing dogs with humanlike qualities- it is impossible to deny the place they have in our hearts, minds and imaginations. From Odysseus’ ever-faithful dog Argo in Homer’s The Odyssey, to the All-American [C]ollie Lassie, to the Jetsons’ futuristic canine Astro, to Dorothy’s little dog Toto too, they are beloved figures in literature, movies and television. And in real life, where would we be without St. Benards and their casks of brandy in the Alps, Pavlov’s conditioned-response subjects, Balto the hero sled-dog racing to the rescue in the Artic, or, of course the [Obama’s] daughters’ [Portuguese Water Dog, Bo]?”[1]

As I write, my little dog, Princess, naps quietly at my feet. No doubt she is dreaming of chasing squirrels and eating treats. My love for her is immeasurable and I frequently refer to her as my baby. I am in my thirties, unmarried, and she is my constant companion. This dynamic is not uncommon for many millennials, particularly those of us who, through circumstance, or deliberate choice, have delayed or simply decided not to marry or have children. Indeed, millennials now make up the largest segment of pet owners in the country, with 7 out of every 10 of us owning a pet and 67% of those millennial pet owners, referring to the pet as part of the family.[2]

Courts in New York frequently deal with pet custody issues in divorce or family law cases. See Hennet v. Alan, 43 Misc 3d 542 (Sup Ct, Albany County 2014) (deviating from common law belief that pets are merely personal property, but rather a “special category of property,” such that a release agreement executed by defendant as to his rights in personal property did not relinquish his right to custody of the family dog); Travis v. Murray, 42 Misc 3d 447 (Sup Ct, NY County 2013) (where court declined to apply “best interest” standard in pet custody case but instead applied a “best for all” standard). But what about if you die without a will? What happens to your fur baby? For a single person this could mean your closest living relative, typically a parent or parents, will get the pet despite the existence of a long-term partner who you would prefer your pet to live with.

NY EPTL § 4-1.1 provides estate distribution rules when a person dies intestate, i.e., without a valid will. Subsection (a) (4) states that if the decedent dies “with one of both parents [then living], and no spouse and no issue, the whole to the surviving parent or parents.” Traditionally, New York courts have held that animals are personal property-i.e., property, exclusive of real estate, that you own; analogous to a piece of furniture or a vehicle. See Mullaly v. People, 86 NY 365 (1881); Schrage v. Hatzlacha Cab Corp., 13 AD3d 150 (1st Dept 2004); Rowan v. Sussdorff, 147 App Div 673 (2nd Dept 1911); Fowler v. Town of Ticonderoga, 131 AD2d 919 (3rd Dept 1987); ATM One, LLC v. Albano, 2001 NY Slip Op 50103 (U) (Nassau Dist Ct 2001) . What that means is that if you die without a will and you are unmarried, your beloved dog, cat, lizard, turtle, bird, or the like, just like your 2012 Honda, may be going directly to your mom or dad as part of your residuary estate. Even if your partner objects, the pet is still likely to end up with your relative.

“[In] non-matrimonial actions regarding ownership and possession of dogs [that] have generally come before New York Courts … it is the property rights of the litigants, rather than their respective abilities to care for the dog or their emotional ties to it, that are ultimately determinative.”[3]

Many people are reluctant to plan for their own deaths, it’s not a fun topic to think about. Especially as a young person. But think about what would happen to your pet if you died tomorrow without any direction as to how you want your pet cared for. Would your mom even know the name of the vet or what medications the dog needs to treat her elevated liver enzymes? Would your dad honor the cat’s bedtime routine of brushing her fur while listening to 90s alternative rock? No doubt your partner would. You share your life with this person. So how can you best ensure that your pet is cared for in the same manner as you would care for him or her in the event of your death or incapacity?

New York State allows people to provide for their pets in their wills under so called “Honorary Trusts.” See EPTL § 7-8.1. This trust is a relatively new concept in our legal history.[4] Under traditional common law, these trusts were invalid because a valid trust needed an identifiable beneficiary, and the beneficiary needed to be a person or corporation.[5] Why? Because only a person or corporation has standing to enforce their rights in the trust.[6] However, with the passage of time and the increasingly “humanization” of our pets, New Yorkers, as well as people nationwide, can now create these pet trusts.[7]

Pet owners in New York can now create a trust document and deposit funds to be held in trust for the care of their pet together with directions, ranging from general to exceedingly precise, as to how the funds are to be invested and distributed.[8] In addition, the settlor can identify a specific trustee to administer the trust, conditions for the termination of the trust as well as name remainder beneficiaries (i.e., those who get any remaining income and/or principal of trust assets upon its termination).[9]

In divorce and family law cases, such as Hennet and Travis, a recent trend has emerged. The court will not treat the distribution of pets in a divorce in the same manner as the distribution of personal property. The courts have recognized that pets, although traditionally designated as personal property, are special. When determining custody of dogs and cats the courts will now use a “best for all concerned” standard, applying such factors as how the pet was acquired, how the pet was cared for and the actual arrangement between the parties for spending time with the pet after the parties split up.[10]

Case law is silent as to whether this standard would be applied to determine pet custody between your partner and your parents in the event you die intestate without specific arrangements to care for your furry companion. Your death or incapacity should not be used as a lesson to the future lawyers of America about the harmful consequences of failing to provide for your pet. That’s why it is extremely important to work with a reputable and knowledgeable estate planner today to get more information on preparing a will with a valid honorary trust.

Contribution by Elizabeth A. Weikel, J.D. Ms. Weikel recently passed the Uniform Bar Examination and is awaiting admission to the Appellate Division, Third Department.

[1] Travis v. Murray, 42 Misc 3d 447, 451 [Sup Ct, NY County 2013].

[2] Carley Lintz, How Millennials Spend on Their Pets, PET BUSINESS available at http://www.petbusiness.com/How-Millennials-Spend-on-Their-Pets/ [May 29, 2018].

[3] Travis, 42 Misc 3d at 452-453.

[4] For an excellent discussion of the history, evolution and modern view on Testamentary Trusts, the reader is referred to Andrew B.F. Carnabuci, Note, Avoiding the Fate of Argos: The Duty of Pet Trust Protectors in Connecticut 31 QUINNIPIAC PROB. L. J., 281-334 [2018] available at: https://www.quinnipiaclawjournals.com/content/dam/qu/documents/sol/law-journals1/probate-law/volume-31/consolidated-pdfs/quinnipiac-probate-law-journal-volume-31-issue-3.pdf.

[5] See Jennifer A. Taylor, Note, A ‘Pet’ Project for State Legislatures: The Movement Toward Enforceable Pet Trusts in the Twenty-First Century, 13 QUINNIPIAC PROB L. J. 419, 420-421 [1999].

[6] See id.

[7] See Jim D. Sarlis, Pet Trusts: An Important Planning Tool, New York State Bar Association [summer 2018] available at  https://www.nysba.org/Journal/2018/Aug/Pet_Trusts__An_Important_Planning_Tool/  [last accessed Oct. 22, 2019].

[8] See id.

[9] See id.

[10] See Travis, 42 Misc 3d at 460.

Who Will Take Care of Your Pet? A Pet Trust is the Answer

People love their pets. I know from my own experience that my dog Kirby is a very important member of my family. I believe most pet parents feel the same way. What happens when you die, and you leave your poor pet all alone? Are you confident that someone will step in and care for him and love him? Well, unless you have included a pet trust in your estate planning, there is no guarantee that he will be taken care of after you are gone. It is not unreasonable to believe that your pet may outlive you. Some animals have a long life span. For example, a tortoise’s average life span is 75 years, a parrot’s average life span is 22 years, and a horse’s average life span is 18 years.

It may be hard for an animal lover to fathom, but New York law considers animals as personal property. Because they are property, you cannot leave money directly to your pet through a will. However, New York’s Estates, Powers and Trust Law § 7-8.1 was specifically designed to allow a pet owner to set up a trust for the care of a pet. Under this statute, the pet becomes a beneficiary of a trust and a legally visible being who can claim equitable title in the income and assets of the trust. Of course, your pet cannot assert his rights on his own or hire an attorney, therefore the law allows the pet parent to designate an individual to enforce the trust, or if no one is designated, the court is authorized to appoint someone to enforce the trust.

A pet trust is a contract between the pet owner and a trustee. The pet owner agrees to fund the trust and specify its terms, and the trustee agrees to carry out those terms. Those terms may include:

• designating the animal(s) who are the beneficiaries of the trust, including a detailed description of the pet(s) – such as photos, microchips, and even DNA samples;
• designating a custodian to physically care for your pet;
• designating the trustee and successor trustee;
• designating an enforcer who can bring the custodian or trustee to court to force him to carry out the terms of the trust for the benefit of the pets;
• detailed instructions for the care of the pet, such as,
• name of the veterinarian to care for the pet
• any medical conditions or allergies
• specify in detail the standard of living and care to be given to your pet
 brand name of pet food and snacks
 grooming instructions
 boarding instructions;
• instructions for the final disposition of your pet (for example, burial or cremation); and
• how the unexpended trust property is to be distributed after the death of the pet.

Under the statute, the trust will terminate only when all the animal beneficiaries of the trust are no longer alive. This provision creates an exception to the rule against perpetuities which would have limited the life of the pet trust to 21 years. Upon termination of the trust, the trustee will be required to transfer the unexpended trust property as directed in the trust.

Now, pet parents can be assured that their pets are going to be well cared for even after they are gone by setting up a pet trust.

Contributed by Jacque K. Vincent, J.D.

Trust Funds for Pets: It’s Not All Doggie Bones and Biscuits

Estate and trust litigation can occur for a variety of reasons. A trust fund dog named ‘Winnie the Pooh’ experienced this first hand. There, the trust manager and the pet’s new caretaking fought over the frequency and amount of money distributed from the trust.

The dog’s owner had set up a trust for $100,000 for the dog with the remainder for an animal hospital. The dog’s caretaker reportedly ended up having to sue the estate’s executor after he allegedly failed to make trust payments for the dog’s care. The caretaker further alleged that the executor had refused to provide records relating to the trust and the pet’s medical history, and that the executor was favoring the remainder beneficiary. The executor denied the allegations and blamed the caretaker for the confusion.

The merits of a case like this will depend largely on the fiduciary’s legal obligations under the law and the specific terms of the trust. Of importance would be the degree of discretion afforded to the trustee in the trust instrument for making payments. The parties should retain records to support their position, including copies of letters, payments, receipts, demands, refusals, and bank records. Relying on ‘he said, she said’ evidence will end up costing both sides a lot in legal fees, and it may even significantly reduce the trust if the judge awards attorney’s fees out of it.

Family members or remainder beneficiaries may also attempt to challenge a pet trust that leaves a large sum of money to a pet. Leona Helmsley left twelve million dollars in trust to her “beloved Maltese, Trouble.” The court held that twelve million dollars was excessive and reduced the amount to only two million dollars.

Another owner reportedly left $4,761,346 in trust for two cats (see Matter of Abels, 44 Misc 3d 485 [Sur Ct, Westchester County 2014]). The executor of the will argued that based on the cats’ life expectancy and estimated costs, the amount of the trust should be reduced to $440,000. The executor also argued that by selling the mansion and relocating the cats to a smaller residence, the tax liability could be reduced and the charities could receive more.

The judge denied the executor’s request to reduce the trust. The judge held that the decedent’s intent was clear and should be followed. The judge reasoned that the pet owner wanted the cats to live in the house they were comfortable in and made specific arrangements for this.  The judge concluded that it was not the court’s place to “rewrite the decedent’s will” and to give more to the charities than the decedent intended. 

Luckily, justice prevailed for these cats. They were able to stay in their mansion and enjoy their lives in luxury.

Trust Funds for Pets – What’s Next? Dogs in Tuxedos?

Historically, New York hindered pet owners from providing for their pets after death. If money was left to a pet in a will or trust, the courts would simply ignore it. A pet owner could only request that the money be used for the pet’s care. The problem was that the person designated to help the pet could decide to disregard the decedent’s wishes and instead discard the animal.

In 1996, New York finally recognized pet trusts. This meant that a trust could now be used to protect a pet from being abandoned or left at a shelter. Better yet, a trust could be used to continue a pet’s standard of living and provide it with treats and toys for the rest of its life.

Pet trusts operate largely like any other trust. A person is named as a trustee to act as a manager and distribute the trust funds. The trust has a beneficiary. The trust also contains terms for the trustee to follow. Such terms may include the brand name of pet food, the type of snacks, a schedule for eating and grooming, the name of the boarding facility to place the pet if the custodian goes on vacation, pet medications, and end-of-life care.

There are however two unique components to pet trusts. First, unlike human beneficiaries, pets cannot assert their own rights or hire counsel. The pet trust law (NY EPTL § 7-8.1) therefore provides for an enforcer to enforce the trust terms. Second, the courts may reduce the size of the trust if it is excessive.

So, now that pet trusts are valid, what’s next? Tax deductions for doggie day care? Hamsters with checking accounts? Turtles with charge cards? Cats on deeds? Marriage certificates? Well, that just sounds crazy! But only time will tell. Until then, we will have to settle for make-believe, dressing up our pets in silly little outfits like mini-tuxedos and treating them like children.