By ADAM FAMULARY
When billionaire Leona Helmsley passed away in 2007 she left her dog, Trouble, $12 million, quickly making Trouble the wealthiest canine in the world. A court found the $12 million bequeath unconscionable, and whittled it down to a meager $2 million. The court determined that $2 million was more than enough to provide Trouble with $190,000 in yearly expenses for the rest of her life.
Although most of the United States’ 85 million pet owners don’t have enough money to provide $190,000 worth of annual care to their pets, the average pet owner values the companionship and well-being of their pet just as much as Ms. Helmsley. This fact begs the question: what will happen to your pet when you pass away?
In 2001, the Oregon Legislature passed trend-setting laws that provide Oregon residents’ with the peace of mind that their pets can be cared for through the use of “pet trusts.” In simple terms, a pet trust is where a pet owner sets aside an amount of money for the care of her pet, names a caretaker to care for the pet, and also names a trustee to manage the trust money. The pet trust agreement can describe the level of care that the caretaker must provide, such as what kind of medical care, and when to euthanize. When the pet owner passes away, the caretaker assumes ownership of the pet, and the trustee manages the money and makes disbursements to the caretaker. This arrangement continues until the pet dies, at which time any left over money in the pet trust will be distributed as the pet owner indicated (such as to the pet owner’s children, or a charity, etc.). The pet owner can also name a trust enforcer, which is a person that has the power to periodically observe the pet and view the pet’s veterinary reports. A trust enforcer is meant to dissuade neglect of the animal and fraud or haphazard spending of the trust funds. A trust enforcer has standing in court to enforce provisions of the pet trust.
To demonstrate, say Alice wants to make sure that her cat, Charlie is properly cared for after her death. Alice settles a pet trust with $15,000, naming her daughter, Betty as trustee, her neighbor Dora, as caretaker, and her son, Eric as trust enforcer. Upon Charlie’s death, the remainder of the trust funds will be distributed to Eric and Betty in equal shares. When Alice passes away, Dora takes care of Charlie. Betty distributes funds to Dora periodically for the benefit of Charlie. Eric, who lives close to where Charlie lives, can stop by once a month and check on Charlie. Several years later, Charlie passes away and Betty still has $5,000 under her management in the pet trust. Betty distributes $2,500 to Eric, and $2,500 to herself.
The pet trust can be arranged in a variety of ways. For example, the trust enforcer and trustee can be the same person. Or, the trust enforcer, caretaker, and trustee can be the same person (although this might not be the best option because there may be no third party to periodically check on the well-being of the pet).
Conclusion—Pets play an integral part in many people’s lives. Through the use of a pet trust, an Oregon pet owner can ensure that her pet is properly cared for after her death.
(Adam Famulary is an attorney who specializes in estate planning and asset protection needs. He can be reached at firstname.lastname@example.org.)