Estate Planning Blog Articles

Estate & Business Planning Law Firm Serving the Providence & Cranston, RI Areas

What Is the Purpose of a Pet Trust?

You don’t have to be a billionaire to want to protect your pets. However, you do need to plan for their well-being, if something happens to you. Since pets are considered property, they can’t inherit money to be used for their care. Instead, as explained in a recent article from Barron’s Penta “Future Returns: Why Fido Needs a Trust” titled owners can create pet trusts to protect them, if something happens to their humans. With close to 70% of American households having pets, pet trusts have now become mainstream.

Owners need to designate a reliable caregiver, just as they would designate a guardian for minor children. If you don’t have family members or friends who love animals, contact a local animal rescue group to learn if they have a life-long care program for animals. Many do, with programs incorporating Charitable Remainder Trusts to cover the cost of the pet’s care.

If you want a friend or relative to care for your pet, make sure they are willing and able to do so.  You should have another person as a back-up, in case something happens to them. Circumstances change, and someone who wants to take care of your pet now may not be able to in future years. How long you need to plan for depends upon the lifespan of your pet.

An experienced estate planning attorney can create a pet trust. Because state law enforces conditional distributions from the trust, the care of your pet can be enforced in court, if necessary. The pet owner names a beneficiary, the caregiver and funds the trust with enough assets to care for the pet.

The pet owner also names a trustee. They are a responsible person who will be in charge of distributing funds and making sure they are used for the pet’s well-being. The trustee also makes sure that the pet is healthy and being properly cared for, following the directions of the trust.

Your estate planning attorney will know what your state’s laws are regarding pet trusts, which varies from state to state. For instance, Pennsylvania requires a pet trust to end when the last pet in the trust dies, while other states may limit the trust’s length to 21 years. For dogs and cats, 21 years is a reasonable period of time. However, for other pets, like birds who can live to 100 years, this won’t be long enough.

You’ll need to fund the trust, making sure that there’s enough money to cover the pet’s needs throughout their lifetime. You may also consider the caregiver’s needs, depending on circumstances. How much is reasonable will depend upon the type of pet and the lifestyle of the caretaker. An apartment dweller caring for an elderly cat will need a different level of resources than a person tasked to care for a young horse.

Some states limit the amount of money in a pet trust and will penalize overfunding. Making sure your pet trust is appropriately funded may limit the likelihood of its being challenged.

Reference: Barron’s Penta (April 18, 2022) “Future Returns: Why Fido Needs a Trust”

No Will? What Happens Now Can Be a Horror Show

Families who have lived through settling an estate without an estate plan will agree that the title of this article, “Preventing the Horrors of Dying Without a Will,” from Next Avenue, is no exaggeration. When the family is grieving is no time to be fighting, yet the absence of a will and an estate plan leads to this exact situation.

Why do people procrastinate having their wills and estate plans done?

Limited understanding about wealth transfers. People may think they do not have enough assets to require an estate plan. Their home, retirement funds or savings account may not be in the mega-millions, but this is actually more of a reason to have an estate plan.

Fear of mortality. We do not like to talk or think about death. However, talking about what will happen when you die or what may happen if you become incapacitated is very important. Planning so your children or other trusted family member or friends will be able to make decisions on your behalf or care for you alleviates what could otherwise turn into an expensive and emotionally disastrous time.

Perceived lack of benefits. Working with an experienced estate planning attorney who will put your interests first means you will have one less thing to worry about while you are living and towards the end of your life.

Estate planning documents contain the wishes and directives for your legacy and finances after you pass. They answer questions like:

  • Who should look after your minor children, if both primary caregivers die before the children reach adulthood?
  • If you become incapacitated, who should handle your financial affairs, who should be in charge of your healthcare and what kind of end-of-life care do you want?
  • What do you want to happen to your assets after you die? Your estate refers to your financial accounts, personal possessions, retirement funds, pensions and real estate.

Your estate plan includes a will, trusts (if appropriate), a durable financial power of attorney, a health care power of attorney or advanced directive and a living will. The will distributes your property and also names an executor, who is in charge of making sure the directions in the will are carried out.

If you become incapacitated by illness or injury, the POA gives agency to someone else to carry out your wishes while you are living. The living will provides an opportunity to express your wishes regarding end-of-life care.

There are many different reasons to put off having an estate plan, but they all end up in the same place: the potential to create family disruption, unnecessary expenses and stress. Show your family how much you love them, by overcoming your fears and preparing for the next generation. Meet with an estate planning attorney and prepare for the future.

Reference: Next Avenue (March 21, 2022) “Preventing the Horrors of Dying Without a Will”

Do I Need to Update My Estate Plan?

Given a choice, most people will opt to do almost anything rather than talk about death and life for others after they are gone. However, estate planning is essential to ensure that your life and life’s work will be cared for correctly after you’ve passed, advises the article “Is Your Estate Plan Up to Date?” from NASDAQ.com. If you own any assets, have a family, loved ones, pets or belongings you’d like to give to certain people or organizations, you need an estate plan.

Estate planning is not a set-it-and-forget it process. Every few years, your estate plan needs to be reviewed to be sure the information is accurate. Big life changes, from birth and death to marriage and divorce—and everything in between—usually also indicate it’s time for an update. Changes in tax laws also require adjustments to an estate plan, and this is something your estate planning attorney will keep you apprised of.

Reviewing and updating an estate plan is a straightforward process, once your estate planning attorney has created an initial plan. Keeping it updated protects your wishes and your loved ones’ futures. Here are some things to keep in mind when reviewing your estate plan:

Have you moved? Changes in residence require an update, since estate laws vary by state. You also should keep your advisors, including estate planning attorney, financial advisor and tax professional, informed about any changes of residence. You’d be surprised how many people move and neglect to inform their professional advisors.

Changes in tax law. The last five years have seen big changes in tax laws. Estate plans created years ago may no longer work as originally intended.

Power of Attorney documents. A Power of Attorney authorizes a person to act on your behalf to make business, personal, legal and financial decisions. If this document is old, or no longer complies with your state’s laws, it may not be accepted by banks, investment companies, etc. If the person you designed as your POA decades ago can’t or won’t serve, you need to choose another person. If you need to revoke a power of attorney, speak with your estate planning attorney to do this effectively.

Health Care Power of Attorney and HIPAA Releases. Laws concerning who may speak with treating physicians and health care providers have become increasingly restrictive. Even spouses do not have automatic rights when it comes to health care. You’ll also want to put your wishes about being resuscitated or placed on artificial life support in writing.

Do you have an updated last will and testament? Review all the details, from executor to guardian named for minor children, the allocation of assets and your estate tax costs.

What about a trust? If you have minor children, you need to ensure their financial future with a trust. Your estate planning attorney will know which type of trust is best for your situation.

A regular check-up for your estate plan helps avoid unnecessary expenses, delays and costs for your loved ones. Don’t delay taking care of this very important matter. You can then return to selecting a color for the nursery or planning your next exciting adventure. However, do this first.

Reference: NASDAQ.com (July 28, 2021) “Is Your Estate Plan Up to Date?”

Suggested Key Terms: Estate Planning Attorney, Minor Children, Guardian, Last Will and Testament, Executor, Power of Attorney, Health Care, POA, Assets, Trust, HIPAA Release

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