For many people, few things can bring them quite as much joy on a daily basis as their pets. Pets have become increasingly enshrined as beloved companions — and even members of the family — in American culture.
Naturally, anyone who feels this strongly about their pet will want to ensure that they can be cared for in the event of their death. In the past, arranging for a posthumous caretaker was handled through informal “handshake” agreements.
These were legally unenforceable, meaning that the pet could end up in a bad situation without any way to protect them. Worse, money set aside for pet care could be remanded to the estate and given to other beneficiaries, stripping the pet of funds originally designated for their care.
From the 1990s onward, states have passed laws in line with major revisions to the Uniform Probate Code, making pet trusts viable for the very first time. These special legal arrangements can not only designate funds and a caretaker for a pet, but they also furnish instructions to ensure the pets can enjoy a high quality of life.
Reach out to New Mexico Financial & Family Law to discuss creating plans for your pet’s care in the event that they outlive you. You can schedule a confidential appointment with no obligation at any time when you call us at 505-503-1637 or contact us online.
Pet trusts can only be created for a specific purpose and applied only to specific pets (and, potentially, their offspring). You will need the wording of the trust document to be highly specific, and you want to ensure that any designated funds are clearly assigned for specific pet care or recreation needs.
In addition, you will want to be highly specific about the qualifications of the caretaker you designate. You don’t have to name a specific person, but you should be explicit about how they are expected to care for the animal and how they will accommodate the pet’s living situation to provide it with the desired level of comfort.
When you meet with a New Mexico pet trust lawyer, they can help you consider all of these factors and begin planning for the future of your pet.
Questions to consider before your meeting include:
A New Mexico pet trust attorney will review your answers to these pertinent questions along with many others, helping you formulate the most specific and reliable plans possible for the future of your pet. They will also help you identify areas where your pet trust could affect your other estate plans, including the possibility of a beneficiary decrying the pet trust’s funding amount as “excessive.”
Taking the time to carefully consider your plans and the arrangements of your pet trust will maximize the chances that your pet will continue to be happy and thrive, even after you are no longer there to care for them.
A pet trust works a little differently than most trusts.
Normally, a trust is created by a grantor, who transfers assets into the trust that are overseen by a trustee. Beneficiaries will eventually receive distributions of these assets from the trust.
With a pet trust, the most important provision is the set of instructions provided to guide the pet’s care. Funding the trust is, technically, optional (another unique quality of pet trusts).
A trustee is still assigned, and their primary job becomes overseeing the care of the pet to ensure that the instructions are met. The trustee is also tasked with verifying that any funds placed into the trust are being used for their designated purpose.
A pet trust can name a caretaker, or it can set criteria for the selection of an appropriate caretaker. Ideally, multiple caretakers will be named if one is unable or unwilling to perform their expected duties.
The pet trust can be set to the term of the pet’s life — and, potentially, the lives of any offspring.
After the pet eventually passes on, the remainder of the balance of the trust will be distributed to another beneficiary. This beneficiary can be a family member, a charitable organization, or another trust.
Another key development in the timeline of pet trusts is that courts — and also trustees — determined that they may not be qualified to assess whether or not a pet is receiving the level of care requested in the trust document.
For example, the trust may say that “the pet should receive enough exercise each day to feel healthy and relaxed.” The average person may not be able to interpret this statement into a meaningful standard.
What if the pet is getting plenty of exercise but still seems stressed? Should they be exercised more? Should other solutions be sought instead?
To resolve this issue and ensure that pets are cared for properly in the spirit of the trust document, agencies have emerged that can help evaluate the well-being of the pet. They will provide oversight to determine if the instructions of the trust are being followed.
Qualitative assessments may be conducted in the pet’s new home setting and compared to information provided by the pet’s caretaker and veterinarian.
In the event that a caretaker is not providing the pet with the needed level of care, the oversight agency can request a new caretaker and even help select one based on their own expertise and guiding criteria.
These oversight services fill in a critical gap for enforcing pet trusts and making sure animals remain healthy and happy — especially given that these arrangements can be subject to fraud or abuse without proper oversight and verification.
To make these services available, pet owners should set aside funds to pay for supervision of the pet’s care and also designate a pet care oversight agency or a set of criteria that would allow the court to select an adequate agency for them.
When planning for your pet trust, you have two main options: creating and funding a trust now or leaving instructions in your will for a new pet trust to be created at the time of your death (a testamentary trust).
One unique quality of testamentary pet trusts is that they may be able to bypass probate, including the funds contained within them. They also may be exempt from public declarations of the estate’s contents.
Even still, there are potential advantages to going ahead and creating a pet trust during your lifetime. One of the biggest is that a pet trust can arrange for pet care when you are medically incapable of caring for the pet fully yourself.
Usually, these types of provisions would only activate when you are medically incapacitated. However, “incapacitated” has a very specific and strict definition, meaning that you do not have the mental presence to make decisions and carry them out.
With pet care, it may be possible that you are perfectly competent mentally but physically unable to keep up with the demands of your pet.
With a living (inter vivos) pet trust, you can designate non-incapacitating conditions that could prevent you from caring for the pet to the standard you feel is appropriate. For example, if you are unable to walk a dog regularly because of a physically limiting condition, then the pet trust could partially activate to ensure that you have funds and a caretaker in place to legally carry out the terms of the trust.
As another example, if you are seriously injured in an accident and require an extended hospital stay, a pet trust provision could activate to automatically ensure that care is provided to your pet while you are away from home.
Your trustee should be aware of these provisions so that they can be sure to contact a designated (or otherwise appropriate) caretaker.
A living pet trust could even incentivize a care facility to allow the pet to stay with you, such as by promising extra compensation for their services if they follow the terms of the trust.
A pet trust should contain enough funds to completely pay for all necessary and reasonably likely care for the entire duration of the animal’s predicted life span.
Calculating this amount can help keep track of monthly costs for the pet over an extended period. You can then use an average monthly figure and multiply it over the expected lifespan of the pet.
It is advisable to assume that the pet could even outlive this lifespan by a year or two, as well.
In addition, build in funds for unexpected care. You can use past surprise vet and emergency bills to provide a basis for this amount or consult with care professionals to obtain a reasonable estimate.
Funds should be included for the caretaker and trustee as well as the oversight agency if one is designated. You may also want to build in excess funds for any incidental expenses that could arise, such as if the animal requires special transport in order to be transferred to a caretaker’s address.
A famous test of pet trust laws arose in 2007 when a billionaire named Leona Helmsley left a $12 million pet trust for the care of her precious Maltese named “Trouble.” The will instructing the creation of the trust also inexplicably left out two of her grandchildren.
Naturally, the grandchildren objected, saying that this arrangement was unreasonable. They alleged that since the decision to leave them out of the will was unexplained, the discrepancy had to be the product of a mentally unfit mind.
A New York judge agreed, returning $10 million of the pet trust to the estate, awarding the two excluded grandchildren $3 million each from this amount.
While the $2 million that remained was more than enough money to care for the tiny dog for the rest of its pampered life, the situation illustrates how all pet trusts could be subjected to a reasonableness test in light of their funding levels.
Those creating a pet trust should keep this possibility in mind, especially since New Mexico’s pet trust law explicitly states that if “the court determines that the value of the trust property exceeds the amount required for the intended use,” then the remainder must be distributed to the grantor’s “successors in interest.”
Sadly, many pets are surrendered to animal shelters or inadequate care situations when their owners pass on. The only way to avoid this, with any level of legal assurance, is to create a pet trust with binding rules and enough funds to adequately cover the pet’s care.
Pet trusts can be an important part of estate planning, including for times when you are still alive and enjoying the company of your pet but are medically unable to provide them with all the care they need.
Learn more about how to look after your pet’s best interests well into the future when you call an experienced New Mexico trust lawyer at 505-503-1637 or contact us online for a no-obligation consultation.
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