Who Will Take Care of Spot and
Smudge?: Trust For Pets
Trusts for pets are every bit as complex as trusts
for people. In 2005, Hawaii adopted a new law which
allows pet owners to set up trusts to protect their
pets.
The American Pet Products Manufacturers Association
estimates that 69 million American households have a
combined total of 358 million pet birds, cats, dogs,
equines, fish, reptiles and other small animals. Inevitably,
with so many pets in so many households, pets sometimes
outlive their owners.
Many people have wanted to leave money in a trust
to care for their pets. In some cases, they succeeded.
In many cases, they did not. This occurred because,
historically, the law treated animals, however beloved
by their owners, as property. You could give away an
animal, but you couldn’t give anything to an animal.
The law being the way it was, state courts were forced
to either invalidate trusts set up for pets, or to fashion
legal theories that allowed such trusts. The results
varied from state to state. In a few states, the courts
granted trusts for pet some protection. In many states,
the courts granted little or no protection for such
trusts. In other states, like Hawaii, the courts never
definitively decided the issue.
Faced with uncertainty, pet owners lobbied their state
legislatures to pass laws recognizing trusts and other
arrangements for pets. Wisconsin passed such a law in
1969. It took another 22 years until California passed
its own law in 1991. From 1995 through 2005, more than
30 additional states adopted such laws. Hawaii joined
the pack in 2005 by adding H.R.S. Section 560:7-501
to its Probate Code.
H.R.S. Section 560:7-501 specifically allows trusts
for “the care of one or more designated domestic
or pet animals.” These trusts largely work as
you would expect. There is a trustee to manage the monies,
the pets are the beneficiaries, and the trust tells
the trustee who receives the remaining funds after the
pets have died.
When designing a trust for a pet, there are special
considerations that do not normally come up with people.
For example, most trusts do not give the trustee the
power to end the life of the beneficiary. So, should
the trustee have the power, upon the recommendation
of a veterinarian, to have a crippled or suffering animal
euthanized?
Another consideration is the trustee. You may trust
your son to be trustee for his siblings, or his children,
but do you trust him to manage money for your pet? If
the trustee simply takes the money (or gives it to the
family), your pets are not going to call the police,
hire an attorney or go to court. Someone has to do that
for them. If the trustee took money belonging to people-beneficiaries,
those people (or their parents or conservators) could
call the police, hire an attorney and go to court, if
necessary. Pets need someone to speak for them.
There is also the cost of administering the trust—trustee
compensation, state and federal income taxes, the costs
of preparing the tax returns, and legal fees—if
the trustee needs advice from an attorney on a trust
matter. If you plan to leave a fairly small sum of money
for a pet, you may be better off leaving the pet and
the money to a trusted person who will adopt the pet.
There will be no trust, and less of the money will go
to administrative overhead and more to caring for the
pet.
While trusts for pets largely work as you would expect,
there is one major exception. HRS Section 560:7-501
contains the following provision:
“The court may reduce the amount of the property
transferred if it determines that the amount substantially
exceeds the amount required for the intended use and
the court finds that there will be no substantial adverse
impact in the care, maintenance, health, or appearance
of the designated domestic or pet animal.”
You can leave $1 million to a person, but if you did
the same for your pet, the contingent beneficiaries
of the trust could ask the court to reduce the amount
of the pet’s trust to whatever amount they can
convince the judge is sufficient to take care of the
pet. If the pet has a life expectancy of 5 years, and
the judge decides that $5,000 a year is sufficient to
care for the pet, then the judge might reduce the pet
trust from the $1,000,000 you intended to only $25,000.
Careful drafting may help to protect the amount you
selected, either by explaining why you feel the amount
selected is appropriate, or by discouraging beneficiaries
from asking the judge to reduce the pet trust.
If you have a pet, you must consider what will happen
to your pet should you become incapacitated or die.
Have a plan and discuss it with your relatives or friends.
In many cases, family members or friends will adopt
a deceased owner’s pet. Unfortunately, though,
some pets will end up at the local animal shelter where
their only hope for survival is to be adopted. Younger
and popular animals have the best chance of being adopted.
Older and unpopular animals face longer odds. If you
would like to explore formal legal arrangements for
your pet, please contact our office for an appointment.
You can also contact the Hawaiian Humane Society to
request their “A Legacy of Caring” packet,
which contains useful information and forms relating
to the care of pets who outlive you, or your ability
to care for them.
By Richard J. Sakoda
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