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Protecting pets in perpetuity

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Indiana Lawyer Focus

The non-profit American Pet Products Association estimates that this year, Americans will spend $50.84 billion on their pets – not surprising, considering the ever-increasing variety of treats, toys, and services for animals. But what happens to these pampered pets after their owners die? Are they consigned to a life of off-brand food? Forced to take up residence in a cramped kennel?

Since 2005, Indiana residents have had the option of creating a trust for the benefit of their pets to ensure that their animals will continue to enjoy the quality of care to which they have become accustomed. But estate-planning attorneys say that despite some of the obvious advantages trusts have over wills, they haven’t yet seen many people creating these legal protections for pets.

A niche practice

In 2007, Jeffery Stinson, managing partner for Severns & Stinson, wrote an article about pet trusts.

“One of my reasons for writing that article when I did was that I had about three clients in six months interested in doing something for their pets,” he said. Thus far, however, he has had no requests to set up a pet trust. And Stinson admitted he has not created a pet trust for his own dog, either.

“They say the shoemaker is always the last one to have shoes,” he said.

Former State Representative Trent Van Haaften, an attorney with Evansville’s Bamberger Foreman Oswald & Hahn, said that several years ago, one of the firm’s clients had inquired about how to provide for horses through an estate plan. Van Haaften learned that many states already recognized pet trusts, so he decided to introduce the pet trust bill in 2005.

“I think this probably holds true with most firms, that when you’re talking about estate planning, you’re essentially trying to advise your clients of all the available options out there,” he said. “I don’t know how much it’s been used across the state, but it’s just another option for people.”

Hall Koehler attorney Shawn Scott said she has a pet trust for her two Boston terriers. “And that is how I became the pet trust lawyer in this office,” she said. “Probably more than half of lawyers think they’re really stupid, but some people see the merit.”

Scott said one reason lawyers may snicker at the idea of pet trusts is because of the associated taxes.

“From a practical standpoint, in Indiana, we have inheritance tax, so it’s going to be a larger taxable gift than if you gave it to your kid,” she said. “This trust is taxed at the highest rate, so people think … why would you pay this tax?” And then I think beyond that, it’s just people’s opinions of animals. They think: What’s it really matter?”

Nevertheless, for some people, money is no concern when it comes to making sure their pets have a comfortable life.

“I would find that most people that are inclined to do this don’t care, they put significant financial resources into their pets,” Scott said. “And I haven’t done a lot of these. It doesn’t have a huge market, because it does take extra lawyer time – it’s kind of complicated; it’s more complicated than drafting for kids.”
 

dible-jeffrey-mug.jpg Dible

The American Society for the Prevention of Cruelty to Animals advises pet owners that they will spend a minimum of about $1,218 per year on basic care for a large dog. That includes food, toys, and regular veterinary care, but not boarding or unexpected medical treatments. With the rising costs of goods and services – and no minimum required for funding a pet trust – it’s not just aging socialites who are planning to provide for their pets.

“I have a pet trust in my will, and I’m not old or rich,” Scott said. “But we have two dogs that we care about … we really love our dogs.”

Untested waters

Jeffrey Dible, of Frost Brown Todd, led a continuing legal education program on pet trusts for the Indiana Continuing Legal Education Forum last year. He said he is unaware of any pet trusts being challenged in court. But because Indiana’s pet trust statute is so new, it may be several years before any of those trusts become active.

“If you’re careful enough in designing and drafting them … I think it would be pretty hard to break them or to be found invalid,” Dible said. Someone would have to prove that a decedent was not of sound mind or was tricked when setting up the pet trust, he explained, adding that the fact that there’s now a statute makes them harder to set aside.

A pet trust terminates with the death of the animal, or when multiple animals are named in a trust, with the death of the last surviving animal. Because a pet may die before the trust is defunded, a remainder beneficiary must be named. Choosing that remain-

der beneficiary wisely may be the key to avoiding court challenges, Dible said.

If, for example, the decedent’s grandchildren are named as remainder beneficiaries, they could argue that they are entitled to a bigger piece of the pie.

“The grandkids would be in a position to go into court and say: We think too much money is being reserved or set aside for these animals, and we want to change things,” Dible said.

In materials Dible prepared for his CLE presentation, he wrote: “If the settlor or testator who creates a ‘pet trust’ wants to deter human family members from challenging the level of funding of the trust, nothing in Indiana‘s Trust Code would prohibit the settlor or testator from including a provision that would automatically allocate all court-determined ‘excess’ assets to some other taker-in-default (such as a charitable organization) who would not have a strong incentive to object to the level of the trust’s funding.”

Indiana law regards pets as personal property, meaning someone can’t bequeath money to a pet any more than he can bequeath money to his favorite chair. And even when a person’s will sets aside funds for pet care, there is no guarantee that the decedent’s last wishes will be honored.


scott-shawn-mug.jpg Scott

“There’s no enforceability,” Scott said. “It’s just like when you give someone a diamond ring – you could sell it the next day.”

In a hypothetical worst-case scenario, an unscrupulous executor could pocket your pet’s funds and dump your animal at the nearest animal shelter. Setting up a trust makes that scenario less likely, although it never hurts to add some extra provisions to thwart thieves.

Scott said that some pet owners include provisions in their trusts requiring the named caretaker to have a veterinarian perform annual DNA analysis on the pet.

“They have some requirements to make sure that this is Fluffy,” Scott said, adding that people charged with care of the pets could find a lookalike replacement for a pet after it dies and continue milking the trust.

Scott said that if she and her husband were to die unexpectedly, she is confident their friends would look after their dogs. But in the unlikely event that some tragedy should befall her friends too, she wants her pets to be protected.

“They just become a part of your family. It’s hard to imagine them not having a good standard of care if you’re not around to do that,” she said. “People like my husband and I, we probably care for our pets – not better – but differently.”•

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  • ok but consider the needs of humans too
    Hmm I love pets, I have my own, and they are cared for lovingly. However this makes me uneasy: property set up for property's benefit; wow. How far we have come from the days when the Founding fathers like jefferson debated abolishing rights of inheritance altogether.

    Maybe people should benefit from property? What happens if you have needy natural heirs and the deceased is a dastardly kind who leaves his millions to a poodle? Sign me up for that one!
  • Great story!
    I agree and love Ms. Scott's rational and commentary on pet trusts. She is right, what will happen to our pets if we pass and then our friends who are to care for them, pass? Always best to prepare for the unknown, she definitely has her clients interests in mind. I never even considered the possibility that my trustee could/would replace my cats in order to reap funds! It's sad we have to prepare for this, but it's so true that we must! Great article, thank you!

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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