It was not too long ago that pet owners were faced with a challenging dilemma- what happens if they die and there is no one willing to take care of their pet? Far too often, the potential monetary burden of paying to take care of a deceased friend or relative’s pets was enough for most folks to say “no thanks.” Well, while the problem technically still exists, Wisconsin and Illinois have made it potentially easier to find a friend or family member willing to take on that role and give a deceased individual’s pets a loving home. That’s because both states permit the creation of “Pet Trusts” to hold funds specifically earmarked for care of those animals.
What is a Pet Trust?
There are plenty of resources on the blog, and around the internet about what a trust does and what’s involved in its creation, but the basics are these:
An individual called the Settlor transfers property to an individual called the Trustee which the Trustee then manages according to a specific set of instructions left by the Settlor for the Beneficiaries (naturally, the people who benefit from the trust). The Settlor can also be the trustee, so it’s not necessary to immediately give up control of the property being placed in the trust. When the settlor dies, a successor trustee, chosen by him, takes over in that role.
With a pet trust, the settlor would typically be the owner of the pets. The trustee would be a chosen friend or family member that will be taking care of the trust. The beneficiary of a pet trust is technically the individuals who will receive any left-over funds after the animals pass away. However; from a functional standpoint, the real beneficiary is the pet.
How Does a Pet Trust Work?
Well, typically a written trust agreement would be drafted setting forth the terms of the pet trust and naming the trustee. Specific directions would be written into the pet trust which the trustee would be under a legal obligation to obey. For example, the trust terms could specify when the animal will receive medical care, like regular vet visits, whether it should eat specific types of food or go to a certain pet daycare one day per week. The terms can be written so that the settlor is confident that, not only will the pet’s lifestyle be consistent with what it was when it lived with the settlor, but also that the trustee will have the ability to take care of the pet without paying anything out of his or her own pockets.
What Happens When the Pet Dies?
That depends on when the pet dies. If the pet dies before the Settlor, and the trust is never needed, then the trust terminates. A new trust can be written for any new pets the settlor acquires. If the Settlor has passed away and the Trustee has been caring for the pet, who subsequently dies, then any assets that were being held in the trust for the animal’s care are distributed according to the trust agreement. Typically, any leftover funds can go to the individual that was charged with caring for the pet as a sort of “thank you”, or they can be distributed to other friends or relatives.
A pet trust is an easy way to give yourself comfort knowing that your pets will definitely be taken care of should something happen to you. Incorporating one into any estate plan can be done with minimal additional work by your estate planning attorney.
Wis Stat. 701.0408 Trust for care of animal.
(1) A trust may be created to provide for the care of an animal alive during the settlor's lifetime. The trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime, upon the death of the last surviving animal.
(2) A trust authorized by this section may be enforced by a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court. A person having an interest in the welfare of the animal may request the court to appoint a person to enforce the trust or to remove a person appointed under this subsection.
(3) Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Property not required for the intended use must be distributed to the settlor, if then living, otherwise to the settlor's successors in interest.
760 ILCS 5/15.2 Trusts for domestic or pet animals.
(a) A trust for the care of one or more designated domestic or pet animals is valid. The trust terminates when no living animal is covered by the trust. A governing instrument shall be liberally construed to bring the transfer within this Section, to presume against a merely precatory or honorary nature of its disposition, and to carry out the general intent of the transferor. Extrinsic evidence is admissible in determining the transferor's intent.
(b) A trust for the care of one or more designated domestic or pet animals is subject to the following provisions:
(1) Except as expressly provided otherwise in the instrument creating the trust, no portion of the principal or income of the trust may be converted to the use of the trustee or to a use other than for the trust's purposes or for the benefit of a covered animal.
(2) Upon termination, the trustee shall transfer the unexpended trust property in the following order:
(A) as directed in the trust instrument;
(B) if there is no such direction in the trust instrument and if the trust was created in a non-residuary clause in the transferor's will, then under the residuary clause in the transferor's will; or
(C) if no taker is produced by the application of subparagraph (A) or (B), then to the transferor's heirs, determined according to Section 2-1 of the Probate Act of 1975.
(3) The intended use of the principal or income may be enforced by an individual designated for that purpose in the trust instrument or, if none, by an individual appointed by a court having jurisdiction of the matter and parties, upon petition to it by an individual.
(4) Except as ordered by the court or required by the trust instrument, no filing, report, registration, periodic accounting, separate maintenance of funds, appointment, or fee is required by reason of the existence of the fiduciary relationship of the trustee.
(5) The court may reduce the amount of the property transferred if it determines that the amount substantially exceeds the amount required for the intended use. The amount of the reduction, if any, passes as unexpended trust property under paragraph (2).
(6) If a trustee is not designated or no designated trustee is willing and able to serve, the court shall name a trustee. The court may order the transfer of the property to another trustee if the transfer is necessary to ensure that the intended use is carried out, and if a successor trustee is not designated in the trust instrument or if no designated successor trustee agrees to serve and is able to serve. The court may also make other orders and determinations as are advisable to carry out the intent of the transferor and the purpose of this Section.
(7) The trust is exempt from the operation of the common law rule against perpetuities.
Michael F. Brennan is an attorney at the Virtual Attorney™ a virtual law office helping clients in Illinois, Wisconsin, and Minnesota with estate planning and small business legal needs. He can be reached at firstname.lastname@example.org with questions or comments, or check out his website at www.thevirtualattorney.com.
The information contained herein is intended for informational purposes only and is not legal advice, nor is it intended to create an attorney-client relationship. For specific legal advice regarding a specific legal issue please contact me or another attorney for assistance.
By Michael Brennan
Photo courtesy of FreeDigitalPhotos.Net