28 March 2011
Estate Planning for Clients with Pets
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By: Megan J. Ballard
Reprinted with permission from the author and the Washington State Bar Association’s Real Property, Probate and Trust Section. Originally printed in the RPPT Section’s Winter 2010-11 newsletter.
Estate planning may now be for the dogs – literally. A confluence of factors has led many Americans to seek to include their pets in their estate plans. For example, the trend to provide for pets is logical in light of demographic data. The percentage of U.S. households owning pets is increasing; the amount of money pet owners are spending on their pets is increasing, despite the recession; and the general U.S. population is aging.
In addition, there is growing media attention to pet owners who provide for the care of pets after death. While the cases reported in the media involve multimillionaires, such news coverage does let people know that it is possible to plan for the care of their pets after they die. Most recently, Gail Posner, daughter of leveraged buyout pioneer Victor Posner, died in March 2010 with a trust characterized as providing $3 million for her dogs. The trust gave her dogs the right to live in her Miami Beach mansion and provided her trustees with up to $3 million to pay “all of the carrying costs of the Residence”. The trust, however, provides Posner’s son and only living child, Bret Carr, with $1 million in trust. Carr filed a suit with the Dade County Probate Court June 11, 2010 challenging Posner’s trust and will. Perhaps more well-known, Hotel heiress Leona Helmsley died in August 2007 leaving $12 million in her will to her dog, Trouble. A judge later knocked this down to $2 million after agreeing to a settlement between the trustees and the grandchildren Helmsley tried to disinherit.
Finally, courts have become more willing to uphold reasonable bequests and trusts to care for pets. Judges previously thwarted testators’ attempts to care for their pets after their deaths, finding that animals could not be trust beneficiaries in part, because the law considers them as personal property — property cannot own property. Statutory developments that authorize pet trusts and social acceptance have significantly changed courts’ approaches.
Planning for pets after a client’s death is no longer an extraordinary measure taken on behalf of pampered pets of the rich and famous. Even clients with modest means have pets about which they care deeply and low-cost planning techniques are available to set these clients’ minds at ease.
To help estate planners meet the needs of their clients with pets, this article first reviews trusts for animals, focusing on Washington’s Animal Trust statutes. It reviews various provisions to include in an animal trust, as well as the potential tax implications of trusts for pets. The article also briefly mentions the additional planning techniques of an outright gift to care for a pet, as well a power of attorney and an “Animal Document” detailing elements of care for a pet.
View the entire article here.
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