There is great news for pet owners wishing to protect their companion animals during periods when they (the owners) are disabled and after they die. Effective January 1st, 2009, new law gives much greater protection and flexibility for animal owners to provide for the well-being of their companion animals when the owner is either disabled or dies. Such pet trusts are to prevent the neglect and abandonment of companion animals.
Until January 1, 2009, pet trusts are ‘honorary’, ‘discretionary’ and unenforceable trusts for the care of pets. Come January, pet trusts will become enforceable by anyone interested in the welfare of the animal or by any non profit organization that has as its principal activity the care of animals.
How does it work? A pet trust allows you to transfer some or all of your assets to a trustee who is responsible to manage and distribute the money for the benefit of your companion animals pursuant to the terms of your pet trust. The trustee cannot utilize the assets for anyone other than the companion animals unless authorize in the trust itself. They also supervise and compensate any care giver who looks-after the animals. The trustee and care giver can be the same person. If the two are the same then you may wish to have a “trust protector” who is authorized to enforce the terms of the trust at court should the trustee fail to perform his/her duties appropriately. Instructions about the health, care and routine of the pets should also be left with the trust to guide the care-taker.
The pet trust terminates when the last companion animal dies, unless otherwise provided. At termination the trust assets are distributed according to the terms of the trust to other designated beneficiaries. If none are designated the assets go to the owner’s heirs at law. It is not advisable to name the trustee as the remainder beneficiary of what is left after the last companion animal dies; this creates a real conflict of interest.
A pet trust is often an addition to your revocable trust. That way when you are disabled the same trustee who takes care of you also uses your assets to care for your companion animals as authorized in the pet trust provisions. When you pass-on, the pet trust would be formally established as its own separate trust. Those assets you wish transferred into it will be retitled in the name of the trustee of the pet trust.
In conclusion, pet owners desiring pet trusts should consider amending their living trust to include a pet trust, and also redo their power of attorney for finances to allow their financial agent to spend money on the care of their companion animals.
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Editor’s Note: Dennis A. Fordham is an attorney licensed to practice law in California and New York. He concentrates his practice in the areas of estate planning and aspects of elder law. His office is at 55 1st Street, Lakeport, California. He can be reached by e-mail at email@example.com or by phone at 707-263-3235.
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