Estate Planning for Your Pets
What Is a Pet Trust?
A pet trust is a trust created for the continued care and maintenance of a particular animal or animals. The trust is usually funded by money or property, and has a designated trustee assigned to administer the trust. Historically, the law has been reluctant to allow people to leave assets to their pets. Today, many states recognize pet trusts as a way pets can receive care after their owners have passed.
Common Issues with Pet Trusts
When drafting the terms of a trust, there may be many potential obstacles in your path towards the fulfillment of the trust's terms, these can include:
- Different states have different laws regarding pet trusts: The state where the trust is to be administered may not be the same one as in which it was drafted and may not have laws recognizing the validity of pet trusts
- Problems involving the Rule Against Perpetuities: With the rule against perpetuities, pet trusts in some states may only be valid for a limited number of years, usually twenty-one, which may be insufficient for some animals, such as a tortoise or horse
- Mental capacity of the trust drafter may be questioned: The choices of some pet owners may seem outrageous to outsiders, raising questions of mental capacity
How Are Pet Trusts Affected by Taxes?
For pet trusts, the Internal Revenues Service generally cannot tax the pet or the trustee. The IRS does stipulate that in states where pet trusts are recognized, the trust can be taxed at a rate that is much lower than that of the average trust.
Are There Any Alternatives to Pet Trusts?
Instead of a trust, a conditional gift could be made to a person with the stipulation that the money is used for the care and maintenance of an animal. However, conditional gifts may not be favored in some states and a court might then declare it invalid, perhaps finding a pseudo trust, or it might void it, in which case the gift might be invalidated altogether.
In some states, a pet trust may also be created in less formal ways by giving the animal to a person, along with money to care for the animal. But not all states will recognize this as a pet trust, in which case the recipient may be taxed on the animal¿s value along with the money devised for its care.
Should I Consult an Attorney?
Pet trusts are a novel creation in many state laws and can be confusing when different states impose different laws. An experienced estate planning attorney can help make sure that your pet trust is valid and enforceable. An estate planning attorney can also help you draft the pet trust.
Consult a Lawyer - Present Your Case Now!
Last Modified: 04-18-2014 04:39 PM PDT
Did you find this article informative?
Link to this page