Estate Planning With Pets

I love animals and anyone who knows me is aware of my obsession with dogs.  I have admittedly gotten professional pictures taken of my dogs, Dunder and Scraggles...here's one.
 

I am involved in various animal rescue organizations.  I have seen many animals offered for adoption who have come to the rescue because an owner passed away and the family members could not, or would not, take care of the pet.  I consider my pets family members, as do many people.  An increasing number of people have started to plan for the care of their pets once they become incapacitated or pass away.  There are various methods utilized to plan for pets from the very basic pet cards and door signs to pet trusts.  The tools which are right for you will depend on your specific goals, financial situation, available and willing animal caregivers and numerous other factors.  If you are considering planning for your pet, it is wise to meet with an estate planning attorney to ensure your intent is carried out through your estate plan.

Estate Planning Methods to Protect Your Pet

Pet Card:  A pet card is a small wallet alert card which can be kept in your wallet, purse or on your person.  It specifies how many pets you have, the type of pets and names an emergency pet caregiver.  If you are involved in an accident or are otherwise unable to care for your pets, this card alerts the people assisting you to address the care of your pets and contact the emergency pet caregiver.

Emergency Caregiver Form: This form is an enhanced Pet Card.  It describes your pets, designates an emergency caregiver for your pets, contains pertinent veterinary information and outlines how your pet is to be cared for.  Once copy should be kept in a place where it can readily be found by someone caring for your pets, for example on the fridge or next to the dog food bag.  Another copy should be kept with your estate planning documents.

Emergency Notice Door Sign:  Posting emergency notice signs on the front and back doors of your home are critical in the event of a fire or other emergency.  These signs let emergency responders know how many and what type of pets are inside the residence.  This may be particularly important if you have pets which are prone to hiding or otherwise may go unnoticed. 

Durable Power of Attorney:  A Durable Power of Attorney should be included in every estate plan and gives your designated agent the power to mange your finances in the event of your incapacity.  If you already intend to execute a power of attorney, you may wish to include provisions in your durable power of attorney authorizing your agent to care for your pets, spend your money on care for your pets, and perhaps authorizing the agent to deliver your pets to the named emergency caregiver. 

 

Some people execute a special durable power of attorney just for the care of their pets.  An example of such a document may be found at the link below:

http://elderpet.org/Documents/durable%20power.3.pdf

Traditional Pet Trusts:  There are two main types of pet trusts, Testamentary Pet Trusts and Intervivos Pet Trusts.  A Testamentary Pet Trust is a Trust created within your Will and it only comes into existence upon your death.  An Intervivos Pet Trust comes into existence as soon as it is executed and funded.  The benefit of an Intervivos Pet Trust is its capacity to initiate care of your pets prior to your death, for example if you become incapacitated.  A Testamentary Pet Trust only comes into existence upon you death, thus providing no protection for your pets should you become incapacitated.  Further, if there is a time delay between your death and probate (typically there is), the Trust will not be immediately funded and will not be capable of caring for your pets in the interim between your death and probate.  Since animals need food, water, medical care and other things on a daily basis, a Testamentary Pet Trust is generally not the best way to provide for day-to-day care of your pets. 

 

Many people prefer a Testamentary Pet Trust over an Intervivos Pet Trust, because it is cheaper since the Testamentary Trust is contained within the Will, thus there is no separate Trust document which must be paid for.  In addition, the Testamentary Pet Trust does not have to be funded, as it is funded upon your death through probate.  An Intervivos Pet Trust must be funded when it is created, requiring the pet owner to put resources into the Trust during his or her life.  Despite the additional cost, an Intervivos Pet Trust is the most reliable tool for ensuring your pets are properly cared for in the event of death or incapacity. 

 

Statutory Pet Trust:  Pursuant to Section 112.037 of the Texas Trust Code, a trust may be created to provide for the care of an animal.  A simple provision in a Will such as "I leave $5,000 in trust for the care and comfort of my dog, Dunder "may be enough to create a Statutory Pet Trust.  If no other terms of the Trust are specified, the statute fills in the gaps of the Pet Trust and provides the following:

 

• The Trust terminates on the death of Dunder. (If more than one animal is named, it terminates on the death of the last surviving animal);
• The court may appoint a trust enforcer, essentially this person make sure the $5,000 is spent on Dunder's care and comfort;
• A person interested in Dunder's welfare may request the court appoint a trust enforcer or to remove a person who has been appointed to enforce the trust who is not doing their job of caring for Dunder;
• The $5,000 may only be used for Dunder's care and comfort, unless there is a court determination that the $5,000 is excessive.  Any excess must be distributed to the pet owner, if he/she is living.  If the pet owner is not living, the excess is distributed to his/her beneficiaries under the pet owner's will.  If there is no will, to the pet owner's heirs. 
• If there is excess when the Trust terminates, any excess must be distributed to the pet owner, if he/she is living. If the pet owner is not living, the excess is distributed to his/her beneficiaries under the pet owner's will. If there is no will, to the pet owner's heirs.

Creating a Statutory Pet Trust has obvious disadvantages, specifically the simplicity.  The pet owner is relying on the Trust Code to essentially fill in the blanks of the Trust, rather than laying out a specific plan for the care of the pet.  With a full Intervivos or Testamentary Pet Trust, the pet owner often specifies how the animal is to be treated and what the trust funds are to be used for, such as food, medical expenses, specific treats, doggie day care, grooming, birthday cakes, daily exercise regimen, clothing, etc.  This specificity ensures not only that the animal is cared for in the manner the pet owner desires, but justifies the funds in the trust, leaving little room for the trust assets to be considered "excessive."

 

Gift of the Pet:  Since animals are treated as personal property, a pet owner can gift their pet in their will.  There are various options for gifting a pet which include, gifting a pet along with funds which are to be used to care for the pet, gifting a pet to a veterinarian, shelter or rescue, or gifting a pet to a life care center.  These options are generally risky and unappealing as unlike a trust, there is no one to police the gift and ensure the animal is being properly attended.  Most often they are considered when the pet owner has limited assets available to provide for the pet's care and/or does not have anyone available or appropriate to serve as a caregiver for the pet.

 

You wouldn't forget to feed, water or walk your pets, so do not overlook your pets when contemplating estate planning.  Make sure your pets continue to enjoy their current standard of living after your death or incapacity by discussing pet planning with your estate planning attorney.  The only way to absolutely ensure your pets are protected and your wishes are honored, is to execute an estate plan which incorporates your beloved pets.

Estate Planning to Protect Your Children

If you passed away or became incapacitated, who would take care of your children?  What assets would be available to provide for your children?  Who would make decisions in your absence?  Is there someone you absolutely do not want to care for your children?  If you don't have a comprehensive estate plan, you probably cannot answer these questions with certainty.  Anyone with a child or children needs a comprehensive estate plan.  There are three primary estate planning tools used to protect children, a Designation of Guardian for Minor Children, Designation of Health Care Agent for Children, Contingent Trusts and Special Needs Trusts. 

Designation of Guardian for Minor Children

If you passed away or became incapacitate, who would you select to care for your children and their estates? A Designation of Guardian for Minor Children can be contained in your Will or executed as a separate document.  It is used to name a person or couple to care for your minor children if both parents of the children die or become incapacitated.  In most circumstances, if one parent dies, the surviving parent is the natural guardian of the minor children (even if the parents are unmarried or  divorced). This document may also specify persons you do NOT want to be appointed guardian. 

If you do not name a guardian for your minor children in your Will or ancillary documents, the court will make the decision for you.  Generally there is a priority for appointment based on familial relation, so the judge will decide who to appoint as guardian between your relatives (parents, grandparents, and so on), if there are any.  If you have named a guardian, the court must appoint the named person unless they fail to qualify or it is not in the best interests of the child.  If the designated guardian does not qualify or fails to serve for any reason (death, resignation, refusal), the court will look to the named alternate.  Only if the designated guardian and all alternates fail to qualify, do not serve the best interests of the child, or fail to serve, does the court proceed to appoint a guardian based on the statutory priority list.  You know better than anyone what is best for your children.  Deciding who to choose to care for your children in the event of your demise is a critical decision and should not be left to a court.

Designation of Health Care Agent for Children

If you plan on being away from your children for an extended period of time, a Designation of Health Care Agent for Children allows the person caring for your children in your absence to make medical decisions on behalf of your child.  For example, if you went on a trip and could not be reached when your child needed imminent medical attention, the agent designated in this document could make the required decisions. 

Contingent Trusts

Minor children who inherit property do not have legal authority to mange the property until they are 18.  Depending on the value of the property inherited, a child who inherits may need a custodian under the Texas Uniform Transfers to Minors Act to receive and hold the property, or alternatively the appointment of a guardian to manage the child's estate.  One way to avoid the necessity of a custodian or guardian, while ensuring children gain access to their inheritance at a responsible age, is to include Contingent Trusts in your Will. 

A Contingent Trust is a trust created by your Will which holds a child's inheritance until a specified age or ages.  For example, many people request the trust be drafted to allow the Trustee to make distributions to the child for his or her health, education, maintenance and support, with 1/2 of the trust property distributed to the child at age 25, 1/3 of the remaining property at age 30 and the balance at age 35.  Once the child reaches the maximum age established in the trust, the trust terminates and the balance distributes outright to the child.  This distribution scheme ensures the child does not gain access to the property until he or she is mature enough to handle the inheritance and distributing the funds in portions prevents a child from "blowing" all of the property at one time.    For the very wealthy, this scheme allows for children be taken care of, while not saturating them with funds, enabling them to do nothing with their lives.

Any person with minor children who is executing an estate plan should make sure their Will contains Contingent Trusts.

For most parents, their children are their pride and joy.  Don't fail to plan for their futures.  Make sure you secure a comprehensive estate plan which takes into account the needs of those most important to you, your children. 

Texas Codicils

Many people view estate planning as a static process.  They secure the recommended checklist of estate planning documents and assume they are forever done with estate planning.  However, estate planning is a dynamic process which requires attention in order to reach the desired outcome.  Constant changes in the law, particularly in regard to Medicaid planning, and changes in family relationships require the wise to periodically revisit their estate plan to ensure it still meets their needs and goals.  In fact, most estate planning attorneys recommend clients review and consider revising their estate plan every three year to five years.

In order to avoid the time and expense associated with executing a new estate plan, many people look to a codicil.  A codicil is an instrument which amends a previously executed will.  A codicil is executed with the same formality as a will, but modifies, deletes or qualifies language contained in the will. 

A codicil can be very advantageous for minor changes to a will.  For example, if the nominated executor in your will passes away, you may wish to execute a codicil to update your first, second and third choices for nominated executor. 

For anything other than minor changes, although it is legal to use a codicil, it may not be advisable or practical.  A codicil is a separate document from your will.  It is possible you may lose the codicil or misplace it where it is not found upon your death.  Even if you store your will and codicil together, there is no guarantee they will remain together or be presented to the court together (assuming probate is needed).  For example, lets say John Doe (John) executes a will leaving everything to his children.  He subsequently meets a woman, and although he does not marry her, he executes a codicil to his will leaving everything to his new woman friend.  John does not mention this codicil to any of his family or friends.  John dies and his children locate his will and codicil.  His children decide the codicil is not what John would have wanted and throw it away.  They then proceed to probate the will, which leaves everything to them.  This hypothetical illustrates the danger of a codicil and why it should not be used for substantial changes to a will.

Several life events require estate plan re-examination, but that are too significant for a codicil include, but are not limited to: 

• You get divorced
• A beneficiary or a named party in your will divorces
• A beneficiary or a named party in your will dies
• You adopt or have a child
• A beneficiary adopts or has a child
• You anticipate the need for long term care services in the future
• You inherit a large sum of money
• Your net worth increases substantially
• One of your named beneficiaries becomes incapacitated or disabled
• You become disabled

Just because one of these events occurs, does not necessarily mean you must re-execute your estate plan, however it is best to check with your attorney to make sure your plan still meets your goals.  It is worth it to spend the extra money to have a periodic review of your plan, and if necessary properly re-execute your estate plan, rather than relying on a codicil.  You have worked hard your whole life to build a legacy for your family, so make sure the legacy is distributed exactly according to your wishes.