Heir is the Dog

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New Jersey heiress Doris Duke’s reputation for eccentricity was only strengthened upon her death in 1993 with news that her will included the creation of lavish measures to provide continuing care for her beloved pets, including a $100,000 trust fund for a dog.

How times have changed. Today, the idea of naming a pet as a trust beneficiary is no longer seen as the activity of the idle rich. More and more pet owners are creating trusts and setting aside often sizeable chunks of money to ensure that Fido, the beneficiary, will live comfortably.

As several New York trusts and estates lawyers point out, the increase in pet trusts is largely due to the fact that they now are fully sanctioned by law in much of the country, including New York. When Ms. Duke’s lawyers were writing the trust clause for her dog, Minnie, they were limited to creating an “honorary trust,” because laws of the time recognized only humans as trust beneficiaries. But since her death, the Uniform Probate Code, used by many states as a guide to development of probate law, has been amended to validate actual pet trusts that courts can enforce. New York passed such a law in 1996.

Jayne M. Kurzman, a partner in the New York office of the law firm DLA Piper Rudnick Gray Cary, has perceived, over the years, the importance that many elderly clients place on their pets when planning their wills. “It’s often a topic they bring up early in the conversation,” she says. “They’ll say, ‘The thing I’m most concerned about is my pet.’”

Kurzman then will talk with the client about options, including the possibility of a trust. Usually, though, clients opt for more informal arrangements with a family member or friend, perhaps including a bequest in their will to help pay for the animal’s care.

John J. Barnosky, a partner in the Uniondale, N.Y., law firm Farrell Fritz, says that most of his pet-owning clients, too, entrust future animal care informally to someone they know, but a few seek greater assurances. “The people who are doing this are very often elderly spinsters who are extremely attached to their animals,” he says. “Many of them don’t have children, so the animal has become the substitute for the children they never had.”

In creating a pet trust, an owner must name a trustee and a caretaker – they can be two different people or one person – who are responsible for taking care of the animal. In addition, pet trusts can designate an enforcer whose job is to make sure that the trustee and caretaker comply with the trust.

Courts can decide if money put into pet trusts is excessive as a safeguard against people who “might be a bit misfocused and take their entire $5-million estate and say they want it to be a trust for Snowball,” Barnosky says.

’Many of them don’t have children, so teh animal has become the substitute for the children they never had.’

Pet-trust statutes stipulate that the money being used by the trustee must be limited to the needs of the animal unless the will makes other provisions. They also place a 21-year limit on the life of the trust, which means that long-living pets such as parrots and turtles may run out of legal protection before they die.

People who might be considering creation of a pet trust should be aware of certain tax considerations that are peculiar to trusts involving animals, says Edward S. Schlesinger, a partner in the New York City firm of Hofheimer, Gartlir & Gross. With traditional trusts, human beneficiaries are taxed on the income that is distributed. “But it doesn’t work that way with an animal-care trust,” Schlesinger says, “because there’s no human equivalent that can be taxed on the income. So that means it’s taxed to the trust.”

Furthermore, Schlesinger says, the tax hit is significant. “If you set up a trust for an animal and the trust produces $10,000 in taxable income, your federal income tax is going to be more than $2,500,” he says. “But there’s a way to beat that: You vest the trust with municipal bonds. Then you don’t pay any tax.”

With animal lovers now willing and able to shell out money to ensure their pets’ safety and comfort when the owner dies, it is no surprise that a small cottage industry of pet-beneficiary providers is emerging. Pet Estates, in rural upstate New York near Albany, for instance, started as a traditional boarding kennel in 1991, but has branched into provision of lifetime care for pet-trust animals. Owner Mary Lynn Gagnon says that Pet Estates provides various levels of service ranging from “one- and two-bedroom apartments, which we call our townhouses,” to “condo units that have a little porch overlooking the pond.”

If owners so desire, she said, Pet Estates will provide massage from a certified pet-massage therapist. Living units include TVs and VCRs to play videos that the animals find enjoyable, as well as stereos to play music that the animals like as they relax on their heated beds.


Copyright 2005. ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.

Dick Dahl is a freelance writer in Massachusetts.

Heir is the Dog