As the owner of two dogs and one cat and a lifelong animal advocate, I know that people often form bonds with pets that are as strong as those with family. The best way to protect your pets if they should outlive you is to either incorporate a pet trust into your own trust, or create a separate pet trust. People often assume that whomever they leave their pets to will take on the responsibilities of caring for their animals when they die, but what if this doesn’t happen?
Since pets are still considered property, they cannot be the direct beneficiaries of your estate or take title to your property. Michigan’s pet trust statute M.C.L.A. §700.2722 allows you to create a trust for the care of a designated domestic or pet animal for up to 21 years. While there may be people willing to take care of your animals, setting up a pet trust relieves them of the financial burden of doing so. Your pet trust can hold the money you set aside for your pets, with your appointed trustee managing the money for the benefit of your pets. You may also choose a different person to manage the money from the one taking care of your pet. This provides some oversight and protects your pet if their new caretaker is a poor money manager.
You may also decide to give any money remaining in your pet trust to charity upon the death of your pets. This removes the temptation and conflict created if the caregiver of your pets will receive the money remaining in your pet trust upon your pet’s death.
The statute also sets additional limitations such as limits on the amount of money you can set aside for your pets, the length of time the pet trust can be in existence, and the duty of the trustee to use trust assets only for the benefit of your pets. The funding limitation means a court can reduce the amount of money in your pet trust if it determines that the amount substantially exceeds the amount required for the care of your pets. You may recall the 2007 case of the New York real estate investor called the “Queen of Mean” who left $12 million for the care of her dog. A court reduced this to $2 million to cover the dog’s anticipated needs, and gave the remaining $10 million to charity. Had the Queen of Mean properly drafted her pet trust, she could have directed where the extra $10 million would go (such as to a Humane Society or other pet charity) instead of having the courts make this choice.
The statute also puts a 21 year limit on the pet trust. While this time period is sufficient for dogs and cats, it may not be for horses, parrots and turtles which can live significantly longer.
Additionally, a trustee’s duty to act as a fiduciary and not in his or her own self-interest is explicitly contained in section (3)(a) of the statute: “…no portion of the principal or income may be converted to the use of the trustee or to a use other than for the trust’s purpose or for the benefit of a covered animal.” The law also allows a person interested in the welfare of the animal to ask a probate court to appoint a person to enforce the trust or to remove a trustee who is not performing his or her duties under the trust. This gives your pet much better protection than giving a sum of money outright to someone, and hoping they use it for the care of your pet.
The most important part of creating a pet trust is having a conversation with the intended caretaker of your pets. Surprising someone with the gift of your dog or cat is not the best way to assure a smooth transition for your pet. By talking to the intended caretakers beforehand, you can make sure they really want to accept your pets and are willing and able to care for them properly. If you discover they are not the right choice, you still have time to look for alternatives.