by Michael Kling | September 15, 2018
It is not unusual for pet lovers to ask about providing for their beloved animal(s) as part of creating a complete estate plan. As with our non-furry loved ones, there is often a strong sense of responsibility to ensure the ongoing comfort and care of one’s animals. The way to accomplish this goal is to establish a pet trust. Yes, there really is such a thing, and pet trusts are now recognized in all 50 states.
Nevada enacted its pet trust law in 2001, allowing a pet owner to create a trust for the care of one or more animals that are alive during the settlor’s lifetime and terminating when no living animal is covered by the trust. Nevada’s law requires that assets left in a pet trust actually be used as directed by the settlor. The named trustee is a fiduciary, charged with the same duties and level of care as the trustee of any other trust. However, any person who demonstrates an interest in the animal-beneficiary’s welfare can petition the court to be appointed as trustee, or to remove a current trustee. The court must give preference for appointment to a person who demonstrates this interest.
There are some limitations on funding a pet trust in Nevada, as in many other states. If a court determines the assets left in trust exceed the amount required to care for the animal-beneficiary (one or more of them) our state law mandates, “the excess amount must be distributed to the person who would have taken the trust property if the trust had terminated on the date of the distribution.” NRS 163.0075. Courts in other states have upheld this provision, reducing multi-million-dollar pet trusts to amounts that reflect the actual anticipated cost of care for the animal(s). Likewise, it is important to name remainder beneficiaries under the pet trust so any funds that remain after the pet passes away can be distributed as you desire without further court involvement.
While the idea of pet trusts may seem frivolous to some, beloved pets are family members to many. As with more traditional forms of estate planning, the goal in creating a pet trust is to give the pet owner peace of mind. For seniors, this can be especially important since having unresolved questions about a pet’s care prevents some people from making important health-care and life decisions. Although funding a pet trust is optional, this too is recommended. As novel as it may seem, pet trusts are often funded by receiving a fixed percentage of an insurance policy, bank account, retirement account, or even the sale of other assets.
Making plans for your pet’s care can provide assurance that your beloved Fluffy, Fido, or Penny the Hedgehog will be well cared for in the event of your incapacity or passing. If you would like to discuss establishing a pet trust as part of your estate plan, please call Kling Law Offices for your complimentary consultation.