Monday, September 6, 2010

Pet Trusts 101: Estate Planning for the Benefit of Animals in Texas

Americans spend $41 billion a year on their pets. That’s more than the gross national product of all but 64 countries in the world, according to Packaged Facts, a consumer research company in Rockville, Md. The yearly cost of buying, feeding, and caring for pets exceeds what Americans spend on the movies ($10.8 billion), video games ($11.6 billion), and recorded music ($10.6 billion) combined. The American Pet Products Manufacturers Association reports that 42% of dogs now sleep in the same bed as their owners, up from 34% in 1998. Pet food reflects every fad in human food—from locally sourced organic and vegan snacks to gourmet meals supplemented by, say, glucosamine to ward off stiff joints. Half of all dog owners say they consider their pet's comfort when buying cars and almost a third buy gifts for their dogs' birthdays. The numbers are expected to be even higher for horse owners.

Even in tough economic times, pet ownership is on the rise. Americans continue their love affair with pet ownership, elevating their pets to the status of family members. People do so because pets offer their humans support, consolation, love, and stress relief. In return, humans view their pets as family. In Texas, it is possible to provide for pets in a will or in a pet trust.

While animals are considered property under Texas law, the law permits the creation of pet trusts designed to pay for pets’ care. To benefit a pet, a will may contain any one of several provisions. Each has a unique approach.

First, a will may contain language making a bequest of an animal to a friend or relative. This approach makes an outright ‘gift’ or bequest of the animal to the beneficiary. The beneficiary becomes the legal owner of the animal, and he or she may keep or sell the animal.

Second, a will may create a trust for the care of the pet. Section 112.037 of the Texas Trust Code permits creation of a pet trust for the care of an animal. Upon the death of the maker of the will—known as the testator—a trust is created. The will leaves a specific dollar amount to fund the trust, and the trust is overseen by a person serving as a trustee. The trustee then uses the money in the trust to pay for the pet’s wellbeing.

When making a pet trust, there are a few things to keep in mind. The caretaker of the animal and trustee should be people who are in good mental and physical health. Each person should have agreed in advance to serve. Even better, the pet caretaker, beneficiary or trustee should promise to care for the animal in writing. The trustee should be a reliable, prudent person whom the testator trusts. In order to avoid any potential conflict of interest, it would be best if the trustee and caretaker are not the same person. To safeguard the animal, the executor of the will could be given the power of inspection so that he or she could visit the pet to be sure that the animal is receiving quality care.

In order to avoid a will contest, the amount of money placed in the pet trust should be reasonable. The situation of the testator’s relatives should be considered. A will creating a large trust for a pet while leaving small bequest to human family could be vulnerable to a will contest if the relatives were so inclined. Take, for example, the case of Gail Posner (the widow of legendary hostile-takeover executive Victor Posner) who died in March in South Florida leaving a will that endowed her beloved Chihuahua Conchita (and two other dogs) a $3 million trust fund plus the run of her $8.3 million mansion for their remaining dog years. (Conchita's bequest includes a four-season wardrobe, diamond jewelry and full-time staff). Posner's only living child, Bret Carr, who admits that he had issues with his mother, is challenging her $26 million-plus will (that left him $1 million) because he says Posner's staff and bodyguards will wind up with the bulk of the riches as they care for Conchita.

Most people do not have an $8.3 million estate or a multi-million dollar bequest to animals at the expense of their relatives. Still, it is important to carefully consider any bequest, the possibility of a will contest, and charitable giving.

Besides considering the creation of a pet trust, the testator should also consider the terms under which a trustee serves. The testator may wish that the trustee serve without bond, that the trustee receives reimbursement for necessary expenditures, and that the trustee receive reasonable pay.

If a pet trust seems too complicated, a third approach may be preferable. A will may simply leave a gift to an animal charitable organization for the care of the pet. The will may leave funds to a non-profit organization that houses and cares for animals, onsite. The Stevenson Companion Animal Life-Care Center at Texas A&M University in College Station, the Dealey Life Care Cottage associated with the SPCA in McKinney, Habitat for Horses in Hitchcock, or the Wildlife Rescue & Rehabilitation, Inc. in Kendalia are examples of centers that accept donations for the care of animals bequested, there. In contrast, other donations may be made to organizations that take responsibility for an animal and re-home it, such as the Pet Guardianship Program at the Humane Society of San Antonio.

When making charitable donations in a will, it is important to provide specific information in the will. Use the charity’s correct name. Many names are similar, so double-check and get the name right. Also, it is helpful to include the mailing address and tax identification number for the nonprofit organization that is selected in the will.

When drafting documents, especially wills and other ancillary documents, a do-it-yourself approach is not the wisest course of action. Because of the difficulty in drafting wills creating pet trusts or bequests to charities, it is important to consult with an attorney familiar knowledgeable about estate planning.

Online or fill-in-the-blank documents may not contain all elements required by state law in order to be valid. Because every estate plan is unique, individuals should consult the advice of an attorney before finalizing wills and other documents.


About Lisa C Smith

Attorney Lisa C. Smith believes that many legal problems can be resolved by working out agreements, legal documents, and creative solutions for businesses and families. Her goal is to provide quality legal representation with personal service and respect.

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