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.

Disinheritance Problem Solved – Part 2

Solution

New York law permits a person making her estate plan to cut a pre probate deal with the person who will be cut out.  More specifically, this includes before the testator’s or parent’s death or lack of capacity.  This means that the person to be cut out can be dealt with directly by the testator or parent during the testator’s or parent’s life and on the testator’s own terms.  There are many benefits to this.  First, the person being cut out is required to deal directly with the testator or parent during the testator’s life – rather than fighting with siblings after the testator has died.  The strategy can reduce family strife after the decedent has died.  The commonly asked “why question” in connection with the testator’s estate plan, is answered during the testator’s life, i.e. by the parent, rather than in the court room in the context of a 1404 hearing.  There is immediacy.  In fact, the person cut out of the estate receives his funds (the carrot absent the string) first and before all those sharing in the estate.  There is certainty.  Attorney’s fees and the substantial costs of litigation are curtailed or eliminated. 

Mrs. Cook and Her Niece

Here is how the rule evolved from the thoughtful estate planning efforts of a widow.  In the early 1920s the Court of Appeals decided In re Cook’s Will 244 NY 63, a case which arose in Washington County.  Mrs. Cook was an elderly widow of wealth and decided to make a will disposing of her property to charities.  Her only heirs and next of kin were a sister, a niece and two nephews.  They all were all adults and not close with her.  In preparing for the disposition of her property, she wrote to her niece as follows:

Dear Katherine:

In making my will, it was my intention to bequeath you something.  After consideration, it occurred to me that it will give me greater pleasure to give it now, and you to receive it now, and in doing so I am asking you if you would be willing to sign and receipt an agreement, agreeing that in consideration of this gift now, that you agree that you will not at any time contest or join with others in contesting my will.  The same conditions apply to your (2) brothers, who must also sign such an agreement. *** Kindly let me have full names and addresses of your brothers.

Her niece’s reply indicated that she was glad to receive the gift from her Aunt as her brothers and herself were trying to secure a home for their respective families.  Having failed to state, however, anything about contesting the will, another letter followed on February 8, 1924, written by G.E Knowlton, on behalf of Mrs. Cook, where he stated:

Dear Mrs. Russell:

Mrs. Robert H. Cook has handed me your letter of January 21st in which you state that you would appreciate a gift from her, but you do not say that you will refrain from contesting her will.

May I ask you to be good enough to advise Mrs. Cook as to your attitude in this matter.

A few days afterwards her niece replied:

Dear Aunt Julia:

I am sorry that I omitted to state in my letter that I would agree to the agreements mentioned in your letter. I both appreciate and agree to those conditions.

Thereafter, her niece signed and sent to Mrs. Cook the following agreement:

Dated March 5, 1924.

Received from: Francis Julia Cook

….Dollars

As a gift from her and in consideration of this gift, I agree that I will not at any time contest or join with others in contesting her Will.

The court was confronted with the question:  Having received the advances or gifts under the circumstances, can these heirs and next of kin of Mrs. Cook now contest her will? 

Despite these writings they tried to do so. They alleged that Mrs. Cook was incompetent, and that her will was procured by fraud and undue influence.  In upholding the validity of the agreements not to contest Mrs. Cook’s will, the court held that agreements not to contest another’s will are not void as against public policy.  Further, the court stated that agreements made between heirs and next of kin after the death of the decedent have always been found valid when made in good faith.  Agreements made before the death of the testator regarding the future disposition to be made of the estate are akin to those implied in the taking of a legacy bequeathed upon the condition stated in the will that no contest shall be made.

The rule in New York, is that where a distributee in consideration of a gift from the family member (testator/decedent) during her lifetime, has agreed not to challenge the decedent’s will, he shall not file objections.  The central element of the rule is that by contracting with the decedent for the present day benefit, the distributee divests himself of legal standing to challenge the will.

The effective solution is an arrangement structured as a deal or a contract.  The deal is that the distributee receives present day benefit (payment) in exchange for the agreement not to the challenge the parent’s will on death.  The problem person or child is required to contract away, relinquish and waive the right to challenge the decedent’s will.  The approach is well founded in New York law such that it must be considered as an alternative to years of potential litigation between the disinherited distributee and the estate after the testator has died.

There are some important steps to be followed to avoid litigation.  The proper approach is significant because the ultimate arbiter of the validity of the agreement will be the Surrogate Judge after the testator has died and the distributee attempts to get out of the agreement.  It is recommended that experienced and strong lawyers be involved in the process.  To this end, it is important to have the distributee represented by his own lawyers.  He should not be represented by the decedent’s lawyers.  If money is an issue, the gift can include payment of the distributee’s legal fees under certain circumstances.  The process should be considered as one involving the negotiation of a contract or in the planning context, similar to negotiation of a waiver of a spousal right of election.

As was the case for Mrs. Cook, when done correctly a pre mortum and pre probate gift to a problem person or child can be efficacious and highly successful strategy to avoid estate litigation.

Disinheritance Problem- Solved

Intentions to disinherit in connection with the making of wills are not uncommon.  Disinheritance circumstances give rise to acrimony and much litigation.  In many cases, children and family members often find themselves dealing with these circumstances.

Clients planning their estates often are confounded with how to deal with a formed intention to cut someone out of sharing in the estate.  Putting feelings and emotions aside, it is a matter of carrying out the decedent’s intentions, money and fairness. 

Common Ineffective Solution Attempt

In estate cases in New York, many challenged estate plans contain an in terrorem clause with an additional provision stating that the particular person is cut out or left nothing.  It is not uncommon for a will to make specific reference to the fact that the decedent specifically considered and deliberately intended to leave the person out of the plan.  In some instances, no reasons are stated.  In other cases, no mention of the person is made. 

There are other cases where the will expressly states that the person cut out will not benefit from the will and advances the intended double whammy threat that if the person cut out challenges the will, that person is automatically cut out.  The client drawing the will feels satisfied.

This is a failing strategy and plan.  Coupling the in terrorem clause with a provision that the ditributee, problem person or child receives nothing sets up a guaranteed challenge to the will.   The double whammy threat is empty, meaningless and ineffectual.  In fact, in practice the attempted solution often invites litigation and has no estate litigation deterrent effect whatsoever.

Better Solution Attempt

Quite simply and more properly the in terrorem clause should actually be coupled with a sufficient and enticing incentive.  Think of the cart driver dangling the carrot in front of the mule on the stick extended in front of the animal’s mouth.  For illustration, include in the will an in terrorem clause with a specific bequest of say $20,000 for the problem person.  The incentive of a specific bequest in the plan coupled with the potential for enforcement of the in terrorem clause creates significant risk of forfeiture of the bequeathed sum.  The particular sum in each case must be thoughtfully determined, and often it is not or circumstances change.

This solution is entirely acceptable but in the context of litigation, can be a failure. The carrot and stick approach still subjects the plan to risk and chance – up in the air for future lawsuits.  There is a better approach, which will be discussed in the next blog post.