Estate Planning for Families with Pets

Posted in Living trusts, Planning at 11:21 pm

One frequently misunderstood or underappreciated area of estate planning concerns estate planning for pets.

No, this does not mean writing a will to designate who will inherit the bones your dog has buried in the sofa cushions. Nor does it mean leaving your house (or your Cadillac) to your cat.

From a legal perspective, pets are considered personal property, just like jewelry or clothing or other personal effects – so it doesn’t make any sense to think about leaving one item of property to another item of property, any more than we would say “Upon my death, I leave my house to my car.”

And, from a practical point of view, the idea goes nowhere quickly – animals are obviously incapable of managing property, and domestic animals are subject to capture by animal control authorities if they’re conspicuously uncontrolled by human beings.

So – if estate planning for pets isn’t concerned with those two red herrings – what is it all about?

In simple terms, estate planning for pets (and pet owners) consists of three basic steps:

  1. identifying the current strategy for pet care considered appropriate by the owner and recording that strategy in an understandable fashion;
  2. identifying one or more people, or one or more classes of people, who would be appropriate substitute trustees or caregivers in the event of the pet owner’s incapacity or death;
  3. identifying a sum of money which is likely to be sufficient to fund the care identified in step 1, and sufficient to compensate (as needed) the people identified in step 2 as they provide that care.

The desired care can be as elaborate or as simple as the owner/trustor desires – from providing for food, veterinary care, grooming, recreation, alternative therapies, prescription medications for chronic conditions, to providing funds for the animal’s eventual cremation or burial.

I typically suggest that an estate plan for pet care be implemented as a trust with a human beneficiary; California law allows for honorary pet trusts, but I believe those trusts are inferior because no person then has standing to object to mismanagement on the part of the trustee. Trust-based plans are also superior to outright gifts of cash because, managed correctly, they prevent the funds from being dissipated or lost due to the animal caretaker’s own financial distress, divorce, bankruptcy, or death.


The Duties of a Trustee

Posted in Trust administration at 5:39 pm

One frequent topic of interest to people serving as trustees – and to people whose inheritances are being (mis?) managed by trustees – is exactly what the trustee is obligated to do. The following is a description of the main duties of a trustee of an irrevocable trust in California:

Read the rest of this entry »


California tweaks state Health Care Directive Registry

Posted in Incapacity planning, Legislation at 2:48 pm

AB 1676, passed during the 2005 Legislative session, makes further changes to California’s little-known Healthcare Directive Registry. California law allows registration of an Advance Health Care Directive with the Secretary of State; the new legislation directs the Secretary of State to work with the Attorney General and the Department of Health Services to develop written information about Advance Health Care Directives, and to make that information available on the websites of the Secretary of State, the Department of Health Services, the Attorney General, the Department of Managed Health Care, the Department of Insurance, the Board of Registered Nursing, and the Medical Board of California.

First steps towards Ladybird/Beneficiary Deeds in California

Posted in Legislation, Nonprobate transfers at 2:17 pm

Last year, the California Legislature passed – and Governor Schwarzenegger signed – legislation (AB 12) directing the California Law Review Commission to study California’s current methods for transferring property at death, the methods used in other states for transferring property at death, and to consider whether or not California should allow the use of “Ladybird” or “beneficiary deeds”. What is a Ladybird deed, and why should you care?
Read the rest of this entry »