How a Pet Trust Functions
Pet Trusts are simply another financial tool for providing care for a beneficiary, while naming a third-party to faithfully execute fiduciary duties. Trusts come in many different forms that function to provide the following: care for an individual with special needs, income, necessities for minor children, a residual designation under a will, or the care of a pet. A pet trust creates a legal, financial mechanism for a pet beneficiary.
More specifically, the pet isn’t a traditional beneficiary, the trust is created for the care of a pet. In 2001, Washington state recognized that pet trusts were unenforceable under common law, thus the state enacted law to validate such arrangements. RCW 11.118.005-11.118.110. A key provision under this law is the presumption that language creating the trust “is not merely precatory or honorary in nature. . .” RCW 11.118.080. This means that a legally created trust is executed for legitimate purposes, not as a pet eulogy. Like trusts created for humans, pet trusts may be: Revocable or Testamentary.
Revocable Pet Trust
A revocable pet trust is a useful tool that may be effective the moment an owner becomes sick, injured, or otherwise incapacitated. When discussing pet trusts, there is a tendency to focus on the life of the pet. While that is the ultimate goal, this unique tool takes into consideration the life of a pet owner. Each state may vary in the realm of pet law, but it is important to understand the broader purpose of a pet trust: making a plan for pets in the absence of the owner or when an emergency occurs.
A revocable pet trust can operate during the life of the pet, making funds available for food, veterinarian services, daily care, and recreation. It is even possible to name a number of different people or successors that will manage a pet’s care. There is a fiduciary duty that all Trustees owe and may have consequences for failing to meet that standard.
Testamentary Pet Trust
A Testamentary Pet Trust may operate under the provisions of one’s will. It only provides general guidance on how to care for animals upon the Testator’s death as it relates to asset distribution. The most important aspect here is that this type of trust may be funded from the estate’s assets. In a will, the testamentary trust is created upon death and names specific pets to be cared for.
Additionally, the pet owner may designate a beneficiary when the trust terminates (on either death of the pet or after 21 years). Beneficiaries, such as a humane society, may receive the funds left in the trust. We are beyond the days of a pet being named as a beneficiary in the traditional sense. Those provisions have almost always been unenforceable and held invalid. The care of a pet is not. Fashion designer and director Karl Lagerfeld left his sweetheart, Choupette, an estimated $200 million under an arrangement in his will. Although Choupette, a Burmese cat, doesn’t have the financial savvy for this kind of cheddar, the money is most likely handled by someone for her care.
Necessity Versus Luxury
The luxurious aspect of this may be off-putting, particularly toward those pets on the Pet Rich List. The vast majority of pet owners may have other reasons for this plan. The most unique nature of a pet trust, is the ability to customize specifications for the care of a pet. This may include where a pet enjoys walking, the type of food it eats, or certain limitations it has. One of the most difficult aspects of owning a pet, is keeping a pet and owner together. As life circumstances change, it may not be feasible or allowable for a pet and owner to stay together in a long-term care facility. A person may die with no friends or family, leaving a pet abandoned. Pets may ultimately be put down for lack of space availability.
In 2019, Seattle was reported to have more dogs in the city than children. Although, there is often a default to cats and dogs when it comes to pets, that is not always the case. Pets may include horses, birds, fish, or other animals. Washington state provides that “animal means a nonhuman animal with vertebrae.” Expensive vet bills or specialized foods required make this planning tool all the more smart. When viewing this as a sort of savings account for pet expenses, it’s common sense to have a plan.
Other Options
Pet Protection Plans
There are alternatives to a trust that can accomplish similar goals. Pet Protection Plans are contracts that a pet owner enters into with an individual to provide care for a pet before and after an owner’s death. These may cost a few hundred dollars and will be narrowed to the terms of the contract. Any breaches would typically follow traditional contract law issues, including mediation or arbitration. This may not be what a pet owner wants to engage in, especially if they become incapacitated.
Pet Insurance
If you more interested in how to immediately “protect your furriest friends from head to tail,” look into Pet Insurance. From surgery to behavioral therapy, these services are unique and require special attention. When faced with a decision of whether that expensive surgery is worth it, don’t pretend that you don’t quickly grab the checkbook and declare, “money is no object on this one.” USAA offers a number of options for how to protect and preserve the quality of life for a pet:
What is covered:
- Breed-specific conditions
- Emergency room and specialist care
- Cancer treatment
- Surgery, hospitalization and nursing care
- Chronic conditions
- Alternative therapies and rehabilitation
- Congenital conditions
- Prescription drugs
- Diagnostic testing and imaging
- Behavioral therapy
What is not covered:
- Preexisting conditions
- Breeding, whelping and pregnancy
- Injury caused deliberately by you or any other person or pet residing in your home
- Injury or illness resulting from fighting, racing, cruelty or neglect
- Cosmetic procedures, such as tail docking, ear cropping and dew claw removal, unless medically necessary
- DNA testing or cloning
- Stem cell therapy not deemed medically necessary
Whether you are a pet person or not, you may be in a position to help develop a plan for pet care. You may also have the task of finding someone to take on that role. It is worth the time, cost, and energy to take care of these important issues as part of an estate plan.
