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Web posted Monday, January 5, 2004

Estate planning can include pets

By Robert L. Manley
For the Journal

photo: wealthbuilders

 
Manley

Then one day the poet, suddenly did die.

But he left all of his royalties to Spooner, his old hound;

Growing old on steak and bacon, in a dog house ten feet round.

- Jimmy Buffet, Death of an Unpopular Poet (c) 1973

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The components of estate planning include protecting and looking after loved ones and protecting against financial difficulties and loss due to the depredations of creditors including the tax authorities. More than two-thirds of Americans report that they consider their pets to be important family members. In some cases parents are estranged from their children and actually receive most of their emotional support from pets. Most people take significant care in dealing with their assets and personal possessions. However, the difficult problem of how to deal with a pet is sometimes ignored.

When pet owners do nothing, the last stop that the family makes when going from the funeral to the airport may be to drop the decedent's pet off at the local animal shelter. Often times friends and family don't know what else to do especially where the decedent has left no instructions or made no plans.

In ancient Egypt, it was customary for pets to be subjected to euthanasia and buried with their owners. Sometimes an ill, disabled or aged pet cannot adapt to a new home. This may be particularly true with dogs which sometimes waste away after the death of a beloved owner.

Some owners feel it is appropriate to go to significant lengths to avoid the possibility that their beloved pet will be subjected to euthanasia. Such people basically have three options: identify particular friends who are willing to care for the pet and put such instructions in writing; establish a contract for pet care effective at the pet owner's death; or establish a trust for the benefit of the pet to be funded on the pet owner's death.

Instructions for pet care

Often, pet owners will identify particular friends who would be willing to provide care for pets in the event the owner is deceased. It is important that these arrangements be put into writing in the form of a will or written instructions. To ensure the enforceability of the instructions, it is appropriate that they be included in a will or similar formal instrument. Basically such an arrangement transfers ownership of the pet to another individual who is legally free to deal with the pet as their own.

Perpetual care contract

This option involves a binding legal contract for the care of the pet in the event of the owner's death. The contract may be with an individual or organization. The arrangement usually calls for payment from the deceased pet owner's assets to compensate for the continuing care.

Keep in mind that such arrangements are a contract and there may be practical difficulties in enforcing the contract after the pet owner is deceased. Even with the best intentions, persons may agree to provide perpetual care for pets, but will be unwilling or unable to do so when the time comes. In addition, pets cannot bring legal action to enforce claims or even complain about their care. An informal way to handle this would be to have a trusted friend supervise the care and situation.

Formal pet trusts

Pets cannot own property and thus a direct bequest in your will to a pet would probably be voidable. To deal with this issue, Alaska is one of several states which now legally recognize trusts for the benefits of pets.

This change in the law occurred effective Jan. 1, 1997. The law provides that a trust for the care of a designated domestic or pet animal is valid and enforceable. Such trusts are limited to a term of 21 years. The trust instrument may designate an individual to enforce trust provisions or the court may appoint such an individual trust enforcer. The court has the right to reduce the amount of property transferred to the trust if the court determines that the amount substantially exceeds the amount reasonably required.

Under prior law, trusts for the benefit of pets were considered honorary and generally viewed as unenforceable. To get around this, some people provided that the dog should pass to a specific care taker and then provided a trust for the benefit of the care taker limited to the expenses of maintaining the pet.

In some circumstances, those trusts were attacked as void against the ancient rule against perpetuities (a trust may not extend beyond a period of 21 years plus human lives in being). It was argued that in the absence of human beneficiary, a trust is merely an unenforceable honorary trust.

The expense and uncertainty of such legal proceedings demonstrate the importance of statutory changes specifically allowing pet trusts.

There are a number of options available for pet owners who are concerned about the care of their pet in the event the pet survives them. A trust to provide for your pet's care is now an available option under Alaska law and may be appropriate in some circumstances. Other less formal options are also available. In any event, every responsible pet owner should address such issues and deal with them in a timely fashion.

Robert L. Manley is an attorney with Hughes Thorsness Powell Huddleston & Bauman LLC in Anchorage. He can be reached via e-mail at RLM@htlaw.com. This article is copyright Robert L. Manley and is used by permission.

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