Establishing a pet trust
Gina M. Barry, Esq.
Planning for the care of your animals
By Gina M. Barry, Esq., Partner, Bacon & Wilson. P. C.
Special to PRIME
With the arrival of Valentine's Day this month, many of us reflect on the relationships that are most important to us. While the focus is typically on romantic love, many of us also have an equal love for our pets. The Massachusetts legislature has finally recognized the strong bond that exists between man and animal by passing legislation that allows a pet owner to establish a trust fund to provide ongoing care for any animals alive during their lifetime.
This January, Governor Deval Patrick signed into law "An Act Relative to Trusts for the Care of Animals," which will take effect on April 7, 2011. The act states simply that "[a] trust for the care of one or more animals. . . is valid." Prior to this legislation being enacted, an animal owner had to leave funds with a caretaker, who would then agree to provide care to any animals.
The statute provides that the trust will not terminate until the benefited animal, or the last of several animals, has passed away. This assumes that the trust contains enough funds to continue to exist for that length of time. Thus, it is not enough to merely create a trust. You must also ensure that enough assets will be placed into the trust to provide the desired care.
If your animal has specific care requirements, you should clearly describe those requirements.
Some people overcome the lack of present funds by purchasing a life insurance policy that will pay into the trust when they pass away. Conversely, if the trust receives an excessive amount of assets, the statute allows for a reduction of the funds, so long as there will be no substantial impact on the animal.
When creating a pet trust, it is necessary to name a trustee, who will be responsible for managing and investing the funds, as well as making distributions for animal care. Fortunately, failure to name a trustee will not be fatal as the statute provides that the court shall name the trustee in this case.
The legislation also provides safeguards by restricting distributions to the trustee, with the exception of trustee fees, costs of administration and any other distribution authorized by the trust. Further, the statute allows for court enforcement of the trust if the trust funds are being misused.
When the last of the animals passes away, or if there is a reduction as indicated above, the funds would first be distributed as directed in the trust. If there is an absence of direction, the funds would be returned to the person who created the trust, if they are still alive.
If they are not alive, then the funds would pass pursuant to the residuary clause of their will. In the absence of a will, the funds would pass in accordance with the laws of intestacy, which distribute your assets if you pass away without a will. The best trust would provide for distribution of the balance within its terms.
Another important decision when planning for your pet is determining who will serve as your pet's caretaker. While the statute does not restrict the trustee from acting as the caretaker, this arrangement is not recommended as it could lead to a lack of oversight with respect to animal care, trust fund management, or both. It is also recommended that you name at least one alternate caretaker, if not several, who would provide care if the originally named caretaker was unable to do so.
To ensure that the plan is carried out as intended, you should also address the following concerns. Remember that your pet will pass through your estate as personal property; therefore, you must leave your pet to the trust in your will or by assignment prior to your passing.
In addition, your plan should clearly describe the animal to avoid "replacement" of the animal by an unscrupulous caregiver who desires to continue receiving payments from the trust.
If your animal has specific care requirements, you should be sure to clearly describe those requirements and to specifically authorize any expenditures that might be considered unusual or excessive. Finally, you should be sure to include strict guidelines for euthanasia and to address the final disposition of your animal.
Planning for the ongoing care of your animals has never been easier. If you have a current plan in place for the care of your animals, you should update your plan to take advantage of this new law. If you do not have a plan in place for the care of your animals, there is no time like the present to establish one.
Gina M. Barry is a Partner with the law firm of Bacon Wilson, P.C., Attorneys at Law. She is a member of the National Association of Elder Law Attorneys, the Estate Planning Council, and the Western Massachusetts Elder Care Professionals Association. She concentrates her practice in the areas of Estate and Asset Protection Planning, Probate Administration and Litigation, Guardianships, Conservatorships and Residential Real Estate. (413) 781-0560 or gbarry@baconwilson.com..
