July 15, 2009 – People typically make arrangements for the care of their pets when heading out of town for the weekend, but what about ensuring the pets’ wellbeing in the event of an owner’s death?

Carol Wessels, an attorney at Nelson, Irvings & Waeffler S.C. in Wauwatosa, said that she thought to include her animals in her estate planning, but many of her clients simply trust a surviving family member will look after a pet.

But Wessels cautioned that taking responsibility for a pet comes with bills for food and veterinarians that might surprise a decedent’s well-intentioned friend or family member. Accordingly, a pet may be better off if the owner thinks about these issues in advance.

In a nation of animal lovers, more than one million Wisconsin households have pets. And considering the heightened status Baby Boomers attach to their companion animals, Wessels predicted interest in this area of estate law is likely to grow.

Practitioners can earn one hour of CLE credit learning about the topic through a State Bar CLE telephone seminar conducted at 12 - 1 p.m. on Tuesday, July 28, 2009, by Texas Tech University School of Law Professor Gerry Beyer.

Beyer said after he authored an article on estate planning for pets in the Santa Clara Law Review, he received many requests from both attorney and lay groups to discuss the topic.

“At first, my presentations were treated by CLE attendees as a “light” topic,” he said. “When I asked if anyone had ever written a pet trust, no one raised his/her hand. Things have changed. A few weeks ago, I spoke to a group of sophisticated estate planners and about one-third indicated they had drafted pet trusts.”

Speaking of his own experience in the area, Beyer said, “The most interesting work I’ve done in this area is for an organization of parrot owners, Phoenix Landing. Parrots can live 100 years and thus require great planning. Plus, they have special needs – they make lots of noise, are messy, and require large “free-flight” areas.”

Pet trusts

New York hotelier and real estate magnate Leona Helmsley made headlines with her will leaving $12 million in trust for the care of her dog. New York is one of 40 states with enforceable pet trust laws. Specific pet trust laws are necessary to overcome traditional obstacles to gifts in favor of nonhuman recipients, including the beneficiary animal’s lack of standing to enforce the trust.

Wisconsin does not have a specific pet trust law, but Wis. Stat. § 701.11 allows for the creation of an honorary trust that can benefit a pet. Although the honorary trust is unenforceable, the statute states that if the person entrusted with the gift fails to apply it toward the designated purpose “within a reasonable time,” then “a resulting trust arises in favor of the transferor's estate and the court is authorized to order the transferee to retransfer the property.”

Beyer reports that all states allow for a “traditional pet trust” by which the pet owner names a human beneficiary who is charged with caring for the pet according to the pet owner’s instructions. A trustee allocates money to the beneficiary for payment of expenses so long as the beneficiary is taking proper care of the pet.

On his website, Beyer provides answers to many questions about pet trusts, including the distinction between trusts created while the owner is still alive (inter vivos) and those included in the will (testamentary).

Beyer explained that an inter vivos trust takes effect immediately and will be operating in the event of death or disability. “This avoids delay between your death and the property being available for the pet’s care,” Beyer said.

However, an inter vivos trust often has additional start-up costs and administration fees. The inter vivos trust also needs to be funded at the time it is created, although supplemental funding can be provided with a “pour over” provision in the will or by directing proceeds from a life insurance policy or other contractual arrangement to the trust, Beyer said.

By contrast, testamentary trusts are less expensive because they do not take effect until a court certifies the validity of the will, Beyer continued. But that means funds may not be available during the time between the owner’s death and the court probates the will. “In addition, a testamentary trust does not protect your pet if you become disabled and unable to care for your pet,” Beyer said.

When funding a trust, Beyer advised, a pet owner needs to consider the type of animal, its life expectancy, its standard of living, its potential medical needs, and whether the trustee is to be paid for his or her services.

“You should avoid transferring an unreasonably large amount of money or other property to your pet trust because such a gift is likely to encourage your heirs and beneficiaries to contest the trust,” Beyer added. “If the amount of property is unreasonably large, the court may reduce the amount to what it considers to be a reasonable amount.”

Alternative to a trust

Beyer noted that some pet owners may not have estates large enough for a trust. In those instances, an owner might consider making “[a]n outright gift of the animal coupled with a reasonable sum to care for the animal which is conditioned on the beneficiary taking proper care of the animal.”

“If the owner elects this method, the owner needs to decide if the condition of taking care of the pet is a condition precedent or a condition subsequent,” Beyer said. “If the owner elects a condition precedent, the caregiver receives the property only if the caregiver actually cares for the animal. Thus, if the animal were to predecease the owner, the caregiver would not benefit from the gift.

“On the other hand, the owner could create a condition subsequent so that the gift vests in the caregiver and is only divested if the caregiver fails to provide proper care,” Beyer explained.

The Wisconsin Human Society invites pet owners to explore its Guardians for Life program. To participate, the pet owner is asked to complete a questionnaire about the animal, including the animal’s medical needs, its responsiveness to certain commands, and the particulars of its daily routine. The information is kept on file with the Humane Society, and the pet owner should keep a notice of this fact with all other important documents, including estate planning papers.

Pets deserve consideration

“Estate planning provides a method to provide for those whom we want to comfort after we die and to those who have comforted us,” Beyer concluded in an article on estate planning for pets. “Family members and friends can be a source of tremendous support, but they may also let you down in a variety of ways ranging from betrayals to orchestrating your own death. Pet animals, however, have a much better track record in providing unconditional love and steadfast loyalty.

“It is not surprising that a pet owner often wants to assure that his or her trusted companion is well-cared for after the owner’s death,” Beyer wrote.