“There are three faithful friends: an old wife, an old dog, and ready money.” – Benjamin Franklin
Have you included your pet in your estate plan? A recent survey has found that sixty-five percent of Americans have a pet, and nearly ninety percent of owners consider their pets to be part of their family. When planning for their family’s future, pet owners should chew over: what will happen to their pet if something happens to them?
Your estate plan can provide for your pet in the event of an emergency, incapacity or death. You can include your pet as an outright gift in your will. However, because a will is only effective at death, it does not protect a pet in the event of an emergency or incapacity. Therefore, you should consider establishing a pet trust to plan for the care and maintenance of your pet in the event of an emergency, your incapacity or hospitalization, or even the time period between your death and the administration of your estate.
Florida has a pet trust statute wherein a trust may be established for a pet’s lifetime to provide for the care and maintenance of the animal. If the trust has been established to care for more than one animal, the trust will continue until the death of the last animal. The pet trust can designate a trustee; or, in the absence of an appointed trustee, the court can designate a trustee. In addition, a trust protector may be appointed to enforce the terms of the pet trust or to remove a trustee who is not following the trust’s terms.
In establishing a pet trust, you need to consider the funding necessary to care and maintain your pet and provide for the expenses, fees, or compensation for the trustee, trust protector, and even your pet’s caretaker. The amount of money necessary for the care of your pet will depend on numerous factors, such as the type of pet you own; your pet’s life expectancy; the standard of care you desire for your pet, including food, boarding, and grooming; and your pet’s medical treatment.
The pet trust can provide an outright distribution of money to your pet’s caretaker for the benefit of your pet. In the alternative, the trust can allocate a dollar amount or a percentage of your estate to be paid directly to your pet’s caretaker or to the trustee to be managed as part of an ongoing pet trust.
You may wish to leave your entire estate for the benefit of your pet. The pet trust would be administered for the purpose of investing, managing, and distributing your estate assets while your pet is living. When your pet passes away, the trust would terminate and any remaining trust assets could then pass to your family or to a charity.
Although Florida law authorizes pet trusts, there are federal hurdles and tax implications. Under the Internal Revenue Code, the income of a pet trust is taxable. Moreover, assets passing to a pet trust due to the pet owner’s death are included in the decedent’s taxable estate. Further, the IRS has determined that no portion of money passing to a pet trust qualifies for the charitable estate tax deduction, even if the remainder beneficiary is a qualifying charity. Accordingly, a pet owner should consider how estate taxes attributable to a pet trust will be paid.
In establishing a pet trust, you will also need to consider the appointment of a caretaker who will be responsible for the care and protection of your pet in your absence. Although the appointment of a caretaker is not governed by Florida law, it is as crucial as the appointment of the trustee. The appointment of the trustee and the pet caretaker guarantee the success of the pet plan to meet your needs and, in the end, your pet’s needs. The pet caretaker should be a person or organization willing and able to provide daily care and maintenance to your pet in the event you are unable to do so yourself. The pet caretaker should be someone willing and able to provide for your pet’s needs in a manner consistent with the care, love, and affection you provide your pet. You should also consider a successor pet caretaker in the event the pet caretaker is unwilling or unable to assume care for your pet.
At MacLean & Ema, we want to ensure your estate plan provides for everyone you love. This includes some of the most precious members of your family, your pets. We encourage you to consider establishing a plan, or including a provision in an existing estate plan, for your pet in the event of an emergency, incapacity or death. Pet trusts are a viable tool in this regard and provide pet owners the peace of mind that comes with knowing their pet will be loved and cared for throughout its life. If you want to provide for your pet in the event something happens to you, contact MacLean & Ema to speak with an attorney regarding your wishes, desires, and ability to support the needs of your pet.