Estate Planning for Non-Human Family Members

Pet animals play an extremely significant role in the lives of many individuals. People own pets for a variety of reasons - they love animals, they enjoy engaging in physical activity with the animal such as playing ball or going for walks, and they enjoy the giving and receiving of attention and unconditional love. Research indicates that pet ownership positively impacts the owner's life by lowering blood pressure, reducing stress and depression, lowering the risk of heart disease, shortening the recovery time after a hospitalization, and improving concentration and mental attitude.1

Over two-thirds of pet owners treat their animals as members of their families.2 Twenty percent of Americans have even altered their romantic relationships over pet disputes.3 Pet owners are extremely devoted to their animal companions with 80% bragging about their pets to others, 79% allowing their pets to sleep in bed with them, 37% carrying pictures of their pets in their wallets, and 31% taking off of work to be with their sick pets.4 During the December 1999 holiday season, the average pet owner spent $95 on gifts for pets.5

The number of individuals who own animals is staggering. As many as 33.9 million households in the United States own dogs and 28.3 million own cats.6 In addition to these traditional pets, Americans also own a wide variety of other animals. For example, there are 11 million households with fish, six million with birds, five million with small animals such as hamsters and rabbits, and three million with reptiles.7

The love owners have for their pets transcend death as documented by studies revealing that between 12% and 27% of pet owners include their pets in their wills. The popular media frequently reports cases which involve pet owners who have a strong desire to care for their beloved companions.8 Singer Dusty Springfield's will made extensive provisions for her cat, Nicholas. The will instructed that Nicholas' bed be lined with Dusty's nightgown, Dusty's recordings be played each night at Nicholas' bedtime, and that Nicholas be fed imported baby food.9 Doris Duke, the sole heir to Baron Buck Duke who built Duke University and started the American Tobacco Company, left $100,000 in trust for the benefit of her dog.10 Natalie Schafer, the actress who portrayed Lovey on the television program Gilligan's Island, provided that her fortune be used for the benefit of her dog.11 The wills of well-known individuals who are still alive may also contain pet provisions. For example, actress Betty White is reported as having written a will which leaves her estate estimated at $5 million for the benefit of her pets.12 Likewise, Oprah Winfrey's will purportedly mandates that her dog live out his life in luxury.13

Will the legal system permit animal owners to accomplish their goal of providing after-death care for their pets? The common law courts of England looked favorably on gifts to support specific animals.14 This approach, however, did not cross the Atlantic. "Historically, the approach of most American courts towards bequests for the care of specific animals has not been calculated to gladden the hearts of animal lovers," says Barbara W. Schwartz, in Estate Planning for Animals, 113 Tr. & Est. 376, 376 (1974). Attempted gifts in favor of specific animals usually failed for a variety of reasons such as for being in violation of the rule against perpetuities because the measuring life was not human or for being an unenforceable honorary trust because it lacked a human or legal entity as a beneficiary who would have standing to enforce the trust.

The persuasiveness of these two traditional legal grounds for prohibiting gifts in favor of pet animals is waning under modern law. Courts and legislatures have been increasingly likely to permit such arrangements by applying a variety of techniques and policies. In 1990, the National Conference of Commissioners on Uniform State Laws added a section to the Uniform Probate Code to validate "a trust for the care of a designated domestic or pet animal and the animal's offspring." Unif. Prob. Code § 2-907, cmt. (1990). Some states have already adopted this section or other legislation with a similar purpose. In addition, a growing number of jurisdictions are abolishing the rule against perpetuities.

The primary goal of the pet owner's attorney is to carry out the pet owner's intent to the fullest extent allowed under applicable law. Accordingly, the attorney should select a method which has the highest likelihood of working successfully to provide for the pet after its owner's death. (The pet owner should also determine if any special arrangements need to be made to care for the pet if the owner becomes disabled. These instructions may be included in a durable power of attorney.) This article discusses the variety of techniques currently available and comments on the advisability of each.

I.  Prepare "Animal Card," "Animal Document," and Dwelling SignsThe owner should take three important steps to assure that the animal will receive proper care immediately upon the owner being unable to look after the animal. The owner should carry an "animal card" in the owner's wallet or purse. This card should contain information about the pet such as its name, type of animal, location where housed, and special care instructions, along with the information necessary to contact someone who can obtain access to the pet. If the owner is injured or killed, emergency personnel will recognize that an animal is relying on the owner's return for care and may notify the named person or take other steps to locate and provide for the animal. The animal card will help assure that the animal survives to the time when the owner's plans for the pet's long-term care take effect.

Next, the owner should prepare an "animal document." The document should contain the same information as on the animal card and perhaps additional details as well. The owner should keep the animal document in the same location where the pet owner keeps his or her estate planning documents. The benefit of this technique is basically the same as for carrying the animal card, that is, an enhanced likelihood that the owner's desires regarding the pet will be made known to the appropriate person in a timely manner.

Finally, the owner should provide signs regarding the pets on entrances to the owner's dwelling. These notices will alert individuals entering the house or apartment that pets are inside. The signage is also important during the owner's life to warn others who may enter the dwelling (e.g., police, fire fighters, inspectors, meter readers, friends) about the pets.15

II.  Make Conditional Gift to Pet's Caretaker, in TrustThe most predictable and reliable method to provide for a pet animal is for the owner to create an enforceable inter vivos or testamentary trust in favor of a human beneficiary and then require the trustee to make distributions to the beneficiary to cover the pet's expenses provided the beneficiary is taking proper care of the pet. This technique avoids the two traditional problems with gifts to benefit pet animals. The actual beneficiary is a human and thus there is a beneficiary with standing to enforce the trust and there is a human measuring life for rule against perpetuities purposes. Even if the owner lives in a state which enforces animal trusts, the conditional gift in trust may provide for more flexibility and a greater likelihood of the owner's intent being carried out. For example, some states limit the duration of an animal trust to 21 years. If a long-lived animal is involved, the trust may end before the animal dies.

A wide variety of factors and considerations come into play in drafting a trust to carry out the pet owner's desires. This section discusses the issues which the pet owner should address.

A. Determine Whether to Create Inter Vivos or Testamentary Trust

The pet owner must initially determine whether to create an inter vivos trust or a testamentary trust. An inter vivos trust takes effect immediately and thus will be in operation when the owner dies thereby avoiding the delay between the owner's death and the probating of the will and subsequent functioning of the trust. Funds may not be available to provide the pet with proper care during this delay period. The pet owner can also make changes to the inter vivos trust more easily than to a testamentary trust which requires the execution of a new will or codicil.

On the other hand, the inter vivos trust may have additional start-up costs and administration expenses. A separate trust document would be needed and the owner would have to part with property to fund the trust. The inter vivos trust, could, however, be nominally funded and revocable. Additional funding could be tied to a nonprobate asset, such as a bank account naming the trustee (in trust) as the pay on death payee or a life insurance policy naming the trustee (in trust) as the beneficiary, to provide the trust with immediate funds after the owner's death. If appropriate, the pet owner could provide additional property by using a pour over provision in the owner's will.

B. Designate Trust Beneficiary/Animal Caretaker

The pet owner must thoughtfully select a caretaker for the animal. This person becomes the actual beneficiary of the trust who has standing to enforce the trust if the trustee fails to carry out its terms. Thus, the caretaker should be sufficiently savvy to understand the basic functioning of a trust and his or her enforcement rights.

It is of utmost importance for the pet owner to locate a beneficiary/caretaker who is willing and able to care for the animal in a manner that the owner would find acceptable. The prospective caretaker should be questioned before being named to make certain the caretaker will assume the potentially burdensome obligation of caring for the pet, especially when the pet is in need of medical care or requires special attention as it ages. The pet and the prospective caretaker should meet and spend quality time together to make sure they, and the caretaker's family, get along harmoniously with each other.

The pet owner should name several alternate caretakers should the owner's first choice be unable to serve for the duration of the pet's life. To prevent the pet from ending up homeless, the owner may authorize the trustee to select a good home for the pet should none of the named individuals be willing or able to accept the animal. The trustee should not, however, have the authority to appoint him- or herself as the caretaker as such an appointment would eliminate the checks and balances aspect of separating the caregiver from the money provider.

C. Nominate Trustee

As with the designation of the caretaker, the pet owner needs to select the trustee with care and check with the trustee before making a nomination. The trustee, whether individual or corporate, must be willing to administer the property for the benefit of the animal and to expend the time and effort necessary to deal with trust administration matters. If the pet owner has sufficient funds, a stipend for the trustee may be appropriate. The pet owner should name alternate trustees should the named trustee be unable to serve until the trust terminates. In addition, an alternate trustee may have standing to remove the original trustee from office should the original trustee cease to administer the trust for the benefit of the pet.

D. Bequeath Animal to Trustee, in Trust

The pet owner should bequeath the animal to the trustee, in trust, with directions to deliver custody of the pet to the beneficiary/caretaker. If the owner has left animal instructions in an animal card or document, the animal may actually already be in the possession of the caretaker.

E. Determine Amount of Other Property to Transfer to Trust

The pet owner should carefully compute the amount of property necessary to care for the animal and to provide additional payments, if any, for the caretaker and the trustee. Many factors will go into this decision such as the type of animal, the animal's life expectancy, the standard of living the owner wishes to provide for the animal, and the need for potentially expensive medical treatment. Adequate funds should also be included to provide the animal with proper care, be it an animal-sitter or a professional boarding business, when the caretaker is on vacation, out-of-town on business, receiving care in a hospital, or is otherwise temporarily unable to personally provide for the animal.

The size of the owner's estate must also be considered. If the owner's estate is relatively large, the owner could transfer sufficient property so the trustee could make payments primarily from the income and use the principal only for emergencies. On the other hand, if the owner's estate is small, the owner may wish to transfer a lesser amount and anticipate that the trustee will supplement income with principal invasions as necessary.

The pet owner must avoid transferring an unreasonably large amount of money or other property to the trust because such a gift is likely to encourage heirs and remainder beneficiaries of the owner's will to contest the arrangement. The pet owner should determine the amount which is reasonable for the care of the animals and fund the trust accordingly. Even if the owner has no desire to benefit family members, friends, or charities until the demise of the animal, the owner should not leave his or her entire estate for the animal's benefit. If the amount of property left to the trust is unreasonably large, the court may reduce the amount to what it considers to be a reasonable amount.16

F. Describe Desired Standard of Living

The owner should specify the type of care the beneficiary is to give the animal and the expenses for which the caretaker can expect reimbursement from the trust. Typical expenses would include food, housing, grooming, medical care, and burial or cremation fees. The pet owner may also want to include more detailed instructions. Alternatively, the owner may leave the specifics of the type of care to the discretion of the trustee. If the pet owner elects to do so, the pet owner should seriously consider providing the caretaker with general guidelines to both (1) avoid claims that the caretaker is expending an unreasonable amount on the animal and (2) prevent the caretaker from expending excessive funds. For example, in the case of In re Rogers, 412 P. 2d 710, 710-11 (Ariz. 1966), the court determined that the caretaker was acting in an unreasonable manner when he purchased an automobile to transport the dog while stating that it was a matter of opinion whether the purchase of a washing machine to launder the dog's bed clothing was reasonable.

G. Specify Distribution Method

The owner should specify how the trustee is to make disbursements from the trust. The simplest method is for the owner to direct the trustee to pay the caretaker a fixed sum each month regardless of the actual care expenses. If the care expenses are less than the distribution, the caretaker enjoys a windfall for his or her efforts. If the care expenses are greater than the distribution, the caretaker absorbs the cost. The caretaker may, however, be unable or unwilling to make expenditures in excess of the fixed distribution that are necessary for the animal. Thus, the owner should permit the trustee to reimburse the caretaker for out-of-pocket expenses exceeding the normal distribution.

Alternatively, the owner could provide only for reimbursement of expenses. The caretaker would submit receipts for expenses associated with the animal on a periodic basis. The trustee would review the expenses in light of the level of care the pet owner specified and reimburse the caretaker if the expenses are appropriate. Although this method may be in line with the owner's intent, the pet owner must realize that there will be additional administrative costs and an increased burden on the caretaker to retain and submit receipts.

H. Establish Additional Distributions for Caretaker

The owner should determine whether the trustee should make distributions to the caretaker above and beyond the amount established for the animal's care. An owner may believe that the addition of the animal to the caretaker's family is sufficient, especially if the trustee will reimburse the caretaker for all reasonable care expenses. On the other hand, the animal may impose a burden on the caretaker and thus additional distributions may be appropriate to encourage the caretaker to continue as the trust's beneficiary. In addition, the caretaker may feel more duty bound to provide good care if the caretaker is receiving additional distributions contingent on providing the animal with appropriate care.

I. Limit Duration of Trust

The duration of the trust should not be linked to the life of the pet. The measuring life of a trust must be a human being unless state law has enacted specific statutes for animal trusts or has modified or abolished the rule against perpetuities. For example, the pet owner could establish the trust's duration as 21 years beyond the life of the named caretakers and trustees with the possibility of the trust ending sooner if the pet dies within the 21 year period.

J. Designate Remainder Beneficiary

The pet owner should clearly designate a remainder beneficiary to take any remaining trust property upon the death of the pet. Otherwise, court involvement will be necessary with the most likely result being a resulting trust for the benefit of the owner's successor's in interest.17(Noticing that the pet owner neglected to provide for the distribution of the remaining trust property upon the pet's death and thus the property would pass through intestate succession.) The pet owner must be cautioned not to leave the remaining trust property to the caretaker because the caretaker would then lack a financial motive to care for the animal and thus might accelerate its death to gain immediate access to the trust corpus. The pet owner may also want to authorize the trustee to terminate the trust before the pet's death "if the remaining principal is small and suitable arrangements have been made for the care of the animals," according to Frances Carlisle & Paul Franken, Drafting Trusts for Animals, N.Y. L.J., Nov. 13, 1997.18

The pet owner may wish to consider naming a charity which benefits animals as the remainder beneficiary. "Hopefully the charity would want to assure the well-being of the animals and an added advantage is that the Attorney General would be involved to investigate if any misappropriation of funds by the trustee occurred." Id. The pet owner must precisely state the legal name and location of the intended charitable beneficiary so the trustee will not have difficulty ascertaining the appropriate recipient of the remainder gift.

K. Identify Animal to Prevent Fraud

The pet owner should clearly identify the animal which is to receive care under the trust. If this step is not taken, an unscrupulous caretaker could replace a deceased, lost, or stolen animal with a replacement so that the caretaker may continue to receive benefits. For example, there is a report that "[a] trust was established for a black cat to be cared for by its deceased owner's maid. Inconsistencies in the reported age of the pet tipped off authorities to fact that the maid was on her third black cat, the original long since having died."19

The pet owner may use a variety of methods to identify the animal. A relatively simple and inexpensive method is for the trust to contain a detailed description of the animal including any unique characteristics such blotches of colored fur and scars. Veterinarian records and pictures of the animal would also be helpful. A professional could tattoo the pet with an alpha-numeric identifier. A tattoo, however, could later cause problems for the pet because a pet thief could mutilate the pet to remove the tattoo, such as cutting off an ear or leg, if the pet's primary function is breeding. A more sophisticated procedure is for the pet owner to have a microchip implanted in the animal. The trustee can then have the animal scanned to verify that the animal the caretaker is minding is the same animal. Of course, an enterprising caretaker could surgically remove the microchip and have it implanted in another physically similar animal. The best, albeit expensive, method to assure identification is for the trustee to retain a sample of the animal's DNA before turning the animal over to the caretaker and then to run periodic comparisons between the retained sample and new samples from the animal.

A pet owner, however, may be less concerned with providing for the animals owned at the time of will execution, but rather wants to arrange for the care of the animals actually owned at time of death. "It would be onerous for [the owner] to execute a new trust instrument or will whenever a new animal joins the family."20 In this situation, the owner may wish to describe the animals as a class instead of by individual name or specific description.

L. Require Trustee to Inspect Animal on Regular Basis

The owner should require the trustee to make regular inspections of the animal to determine its physical and psychological condition. The inspections should be at random times so the caretaker does not provide the animal with extra food, medical care, or attention merely because the caretaker knows the trustee is coming. The inspections should take place in the caretaker's home so the trustee may observe first-hand the environment in which the animal is being kept.

M. Provide Instructions for Final Disposition of Animal

The pet owner should include instructions for the final disposition of the animal when the animal dies. The will of one pet owner is reported as containing the following provision: "[U]pon the death of my pets they are to be embalmed and their caskets to be placed in a Wilbert Vault at Pine Ridge Cemetery."21 The owner may want the animal to be buried in a pet cemetery or cremated with the ashes either distributed or placed in an urn. The cost for a pet burial ranges from $250 to $1,000 while pet cremations are significantly less expensive. A memorial for the pet may also be created for viewing on a variety of Internet sites.22

N. Sample Provisions

Trust provisions can be included in the arrangements for the pet animal's benefit. Please refer to Provisions for Estate Planning

III.  Consider Outright Conditional Gift

An outright gift of the animal coupled with a reasonable sum to care for the animal which is conditioned on the beneficiary taking proper care of the animal is a simpler but less predictable method. Both drafting and administrative costs may be reduced if the owner does not create a trust. Only if the pet owner's estate is relatively modest, should this technique be considered because there is a reduced likelihood of the owner's intent being fulfilled because there is no person directly charged with ascertaining that the animal is receiving proper care. Although the owner may designate a person to receive the property if the pet is not receiving proper care, such person might not police the caretaker sufficiently, especially if the potential gift-over amount is small or the alternate taker does not live close enough to the caretaker to make first-hand observations of the animal.

If the owner elects this method, the owner needs to decide if the condition of taking care of the pet is a condition precedent or a condition subsequent. If the owner elects a condition precedent, the caretaker receives the property only if the caretaker actually cares for the animal. Thus, if the animal were to predecease the owner, the caretaker would not benefit from the gift. On the other hand, the owner could create a condition subsequent so that the gift vests in the caretaker and is only divested if the caretaker fails to provide proper care. The owner should expressly state what happens to the gift if the pet predeceases its owner. In the absence of express language, the caretaker would still receive a condition subsequent gift but not one based on a condition precedent.23 (Holding that the beneficiary received the legacy even though the pet died before the testator because the condition was subsequent.)

IV.  Follow Applicable Statute, If Any

Texas does not have a statute which expressly addresses trusts for pet animals. However, if the pet owner is domiciled in a state with a statute authorizing the creation of enforceable trusts for animals, as compared to states whose statutes merely authorize such arrangements, the owner may desire to create an enforceable trust under the statute rather than using the conditional gift technique. Although the exact concerns will depend on the particular statute involved, many considerations will be the same as those for the conditional gift method. The effectiveness of this technique may be compromised if after executing the will, the pet owner moves and then dies domiciled in another state which does not have a similar statute.

V.  Consider Outright Gift to Veterinarian or Animal Shelter

A simple option available to the pet owner is to leave the pet and sufficient property for its care to a veterinarian or animal shelter. This alternative will not, however, appeal to most pet owners who do not like the idea of the pet living out its life in a clinic or shelter setting. The animal would no longer be part of a family and is not likely to receive the amount and quality of special attention that the pet would receive in a traditional home. Nonetheless, this option may be desirable if the owner is unable to locate an appropriate caretaker for the animal.

VI.  Consider Gift to Life Care Center

In exchange for an inter vivos or testamentary gift, various organizations promise to provide care for an animal for the remainder of the animal's life. The amount of the payment often depends on the type of animal, age of animal, and age of pet owner. One of the nation's most notable life care centers is the Stevenson Companion Animal Life-Care Center located at Texas A & M University. For additional information on life care centers in Texas, see M. Keith Branyon, What Do You Do With Four-Legged Beneficiaries, State Bar of Texas, Legal Assistants Division, LAU Seminar (2001).

VII.  Avoid Honorary Trusts

Pet owners should avoid honorary trusts and related techniques be they judicially or statutorily authorized. If state law validates trusts for specific animals by using the honorary trust doctrine, the trustee will be permitted to carry out the owner's intent and provide care for the pet. The owner's heirs and beneficiaries would probably be unable to successfully contest the trustee's use of the property for the pet. However, the trustee cannot be forced to use the property for the pet because honorary trusts are unenforceable. If the trustee refuses to carry out the pet owner's intent, the trust property simply passes to the remainder beneficiaries or the owner's successors in interest. The owner's desire to care for the animal may go unsatisfied. In addition, the income tax ramifications of honorary trusts may not be as favorable as other arrangements.24

VIII.  Conclusion

Estate planning provides a method to provide for those whom we want to comfort after we die and to those who have comforted us. Family members and friends can be a source of tremendous support but they may also let you down in a variety of ways ranging from minor betrayals to orchestrating your own death. Pet animals, however, have a much better track record in providing unconditional love and steadfast loyalty. It is not surprising that a pet owner often wants to assure that his or her trusted companion is well-cared for after the owner's death.

The American legal system, which should respect a person's desires and accommodate them as long as they are not harmful to others or against public policy, has a mediocre record when it comes to permitting pet owners to arrange after-death care of their pets. Over the past decade, the law has made admirable steps forward. State legislatures are increasingly enacting § 2-907 of the Uniform Probate Code or a functional equivalent thereof. However, this trend needs to continue so that every state has legislation authorizing pet owners to create enforceable long-term care trusts for their pets. Regardless of the existence of enabling legislation, pet owners may carefully prepare enforceable trusts under traditional trust law which assure proper care for their animals. Attorneys who prepare wills and other estate planning documents must be alert to the important role pets frequently play in their clients' lives and take the appropriate steps to help clients provide short- and long-term quality care for their "other" loved ones.

In publishing this article, the author is not engaged in rendering legal, accounting, or other professional service. If legal advice is required, the service of a competent professional should be sought.

By Gerry W. Beyer

Professor of Law, Author