Minnesota Recognizes Pet Trusts
It is hard to dispute that pets are unique and special. These sweet creatures are beloved and treated as important members of the family. In fact, two-thirds of pet owners consider their pets a part of the family, often attributing human-like qualities to them. They do have personalities after all! However, you might find it surprising that in the eyes of the law pets are categorized as “personal property,” no different than your household goods and furnishings. While this legal status may be hard to reconcile with your feelings for your pets, it is a fact that pets are not people, they are your property.
The Problem with Pets. For estate planning purposes, the law requires that when you die your personal property must be passed to your rightful heirs or beneficiaries (determined either by a well-drafted estate plan or by state law if you have not properly planned your estate at the time of your death). The problem with pets is that while legally they are personal property, if you die you certainly don’t want them treated just like the furniture they sit on. But, because they are property and not people, they cannot inherit from you as an heir of your estate.
The Pet Problem Solved! Minnesota is finally showing some love to your pets. Now you can ensure that your pets are properly cared for if you are unable to care for them. Minnesota was the last of the fifty states to address this predicament. In 2016, the Minnesota legislature adopted Minnesota Statutes Section 501C.0408, titled “Trust for Care of Animal.” The new law enables a pet owner to create a trust to provide for the pet’s care after the owner’s death or during a period of disability.
Pet Trust as a Part of Your Estate Plan. To fully appreciate the concept of a Pet Trust, it is important to understand the broader concept of estate planning. An estate plan is simply a set of documents that establishes your wishes for what happens to your property when you die, and for what happens to you if you become disabled. Generally, a core estate plan includes a Will or Revocable Trust, a Power of Attorney, and a Health Care Directive. Now, Minnesota residents can also include a Pet Trust as a part of their estate plan.
Pet Trusts – Really? Pet Trusts are often panned as a silly extravagance for eccentric wealthy people – think Leona Helmsley’s $12 million trust for her dog, Trouble. To the contrary, Pet Trusts can often mean the difference between the life and death of your pet. Of the approximately three million pets euthanized annually, more than one million of these result from the deaths of pet owners who have not arranged for their pets’ care. Now you can easily make provisions for your pet as a part of your estate plan. The beauty of a Pet Trust is that you get to direct who cares for your pet, who manages the funds set aside to care for your pet, what kind of daily care accommodations your pet should have, and what should happen to your pet’s remains when the pet dies.
How Do Pet Trusts Work? Because Pet Trusts must contain specific provisions under Minnesota law to be valid and enforceable, it is best to enlist the help of an estate planning attorney who has experience in this area. The first step is to prepare a Pet Trust instrument that 1) names a trusted person (the “Trustee”) to care for your pet and manage any funds placed into the Pet Trust, 2) establishes a predetermined “reasonable” amount of funds to be placed into the Pet Trust to cover the costs of caring for your pet, and 3) states your wishes and instructions for your pet’s care. You may also name a “Trust Enforcer” whose job is to “enforce” the Pet Trust by making sure the Trustee acts in the best interests of your pet and uses the Pet Trust funds properly. At the time of your disability or death, your Trustee is directed to establish an account at a bank or financial institution to hold the Pet Trust funds and to administer the Pet Trust according to your wishes as they are set forth in the Pet Trust instrument.
Under the new statute, the specific rules that must be followed for a Pet Trust to be valid are:
- The animal(s) that the Pet Trust is created for must be alive during your lifetime (e.g., the Pet Trust cannot benefit your dog’s puppies if the puppies are born after you die).
- The Pet Trust must terminate upon the death of your pet(s), and no later than 90 years from the date the Pet Trust was established.
- The funds placed in the Pet Trust must be used only for your pet’s care, and the funds must be a “reasonable” amount. You get to decide where any excess funds will go. When the Pet Trust terminates, or if a court determines that the amount in the Pet Trust account exceeds what is necessary to care for your pet, the Trustee must transfer the unused or excess funds according to the terms you have established in the Pet Trust instrument. If no terms are provided, the Pet Trust funds will pass to your heirs-at-law (i.e., your living relatives in an order of descent established by state law).
What is a reasonable amount? The new law does not set a limit on the amount of funds you can place in the Pet Trust, but keep in mind that the court has the final say if the amount is questioned or challenged by a family member or the Trust Enforcer. As a practical matter, you can determine a reasonable amount of funds based on the following factors:
- Your pet’s routine care needs and lifestyle (e.g., does your dog go to daycare every day and/or get regular grooming, etc.?);
- Your pet’s life expectancy;
- Your pet’s medical needs, factoring in emergencies;
- Compensation for your pet’s caregiver; and
- The cost for disposition of your pet’s remains.
Establish an annual amount based on these factors and then multiply the annual amount by your pet’s life expectancy. This should provide a good basis for establishing your reasonable amount.
Lifetime Pet Trust or Pet Trust in your Will? There is an important distinction between a lifetime “standalone” Pet Trust, which takes effect immediately, and a “testamentary” Pet Trust, which only takes effect upon your death. A testamentary Pet Trust, created in your Will or Revocable Trust, serves the important purpose of providing for your pet after your death, but because a testamentary Pet Trust does not take effect until you die, it will not provide any benefit in the event you become disabled and unable to care for your pet. A standalone Pet Trust takes effect immediately and will ensure that your pet is cared for not only in the event of your death, but also in the event of disability.
Be Prepared! Minnesotans now have a way to thoughtfully and strategically include a plan for our pets within our estate plans to ensure that our pets will receive loving care when we become unable to care for them. Because, while pets are not people, they are family!
About the Author
Mary Alice Fleming is an attorney practicing out of our Minneapolis office. She is a member of the Estate Planning practice group. Contact Alice by email or by phone at (612) 305-1413.
Share this Post
Share this post with your network on Facebook, Twitter, LinkedIn and more.