Making Bequests to Your Pets in a Pet Trust

pet, dog, cat, pet trust, Illinois estate planning lawyerIf you’re a pet owner, odds are you consider your furry friend to be a member of the family. You love your pet during life, and might worry what will happen if it outlives you. Perhaps that is why an increasing number of Americans are making bequests to ensure their pets’ well being from beyond the grave. In 2012, nine percent of cat owners and nine percent of dog owners included financial provisions in their wills for their animals. That is an increase from six percent and five percent, respectively, from 2010.

But are such bequests valid? They are if done correctly. Illinois state law considers animals to be property, which means pet owners cannot bequeath money directly to them. Instead, owners may leave the money to a designated caretaker in their will, or they may establish a pet trust. The District of Columbia and 46 states permit pet trusts, up from 10 states in 2001.

Pet Trusts

A trust is a fiduciary arrangement that allows a third party to hold assets on behalf of a beneficiary. In this case, the beneficiary is an animal. The trust establishes how much money will be side aside for the pet, names the trustee who will control that money, and explains how to care for the pet. The pet trust terminates upon the death of the designated animal or animals. If you are considering this option, here are some important guidelines to keep in mind:

  1. A trust can be created by will, deed, or another written instrument;
  2. The owner appoints a trustee to administer the trust. If he or she does not appoint someone, then a court will designate the trustee;
  3. The money may only be used to take care of the pet. The trustee may not flout the owner’s intent by using the trust funds for a contrary purpose. This is one advantage that a trust has over a will. If you leave funds to a designated caretaker in your will, that person can use the money for another purpose;
  4. It is a good idea to indicate in the trust what the trustee should do with any remaining principal or income after the animal dies. Otherwise the extra money will pass through the residuary clause of the owner’s will or go to the owner’s heirs;
  5. A court may reduce the property amount if it substantially exceeds that which is required to fulfill the trust’s intent. For example, $12 million is probably too steep an amount. Leona Helmsley tried that already. A judge concluded that Helmsley’s Maltese could get by on $2 million;
  6. If the court reduces the property amount then the extra will be dispensed according to the owner’s intent (or if not expressed, the funds will go through the residuary clause or to the owner’s heirs).

We understand that your pet is an important member of your family. If you’re interested in establishing a pet trust or making suitable bequests in your will, contact our estate planning attorneys today.