Effective October 1, 2009, Pet Trusts are legal in Maryland.

Our office is ready to assist you in planning for the care of your pets in the event of your incapacitation or death.

Planning for Pets:

The Maryland Pet Trust

For many of us, pets are members of the family. But if something happens to us, what will happen to our beloved pet?  

Most pet owners do not want their pets killed if something should happen to them. However, without proper planning, the death of the pet is almost certain in some areas. For example, in some Nevada counties, if the owner does not provide for a pet by way ofa trust, when the owner dies Animal Control must take the pet to the local kill shelter if there is not a family member present who is willing to care for the pet. Some kill shelters euthanize animals 72 hours after they arrive at the facility, making it virtually impossible for anyone to adopt the pet. Thus, it is critically important that pet owners know how their state and county laws may impact their pets.

A good resource for pet owners is Providing for Your Pet's Future Without You by the Humane Society of the United States (order a free kit by calling 202-452-1100 or e-mailing petsinwills@hsus.org). It includes a door/window sign for emergency workers, an emergency contacts sticker for inside of the door, emergency pet care instruction forms for neighbors/friends/family, wallet alert cards, and a detailed instruction sheet for caregivers.

Providing for Pets Upon the Owner's Death:

Outright Gifts 

The law treats pets as property, and thus an individual cannot leave money outright to a pet, as property cannot own other property. An individual may leave an outright gift of money to a caretaker with the request that the caretaker care for theindividual's pet for the rest of the pet's life. However, because the caretaker received the gift outright, and not in trust, no one is responsible for ascertaining whether the pet is receiving the care requested by the pet owner.

Once the caretaker receives the gift and the pet's owner is gone or incompetent, there is nothing to stop the caretaker from having the pet euthanized, throwing it out on the street, taking it to a local kill shelter, or using the assets in ways unrelated to the careof the pet. In addition, once in the caregiver's hands, the assets are exposed to the caregiver's creditors and they may be transferred to a former spouse on the caregiver's divorce.

 Statutory Pet Trusts: Maryland Pet Trusts 

In April, 2009, Maryland enacted a statute permitting pet trusts for the first time.

This statute allows virtually any third party designated by the terms of the trust to use the trust funds for the benefit of pets.

The pet's current standard of care determines the endowment amount required to provide care for the pet. Factors include: the cost of daily care (food, treats, and daycare), veterinary care (yearly teeth cleaning, shots, nail trimming, and emergency care),grooming, boarding, travel expenses, and pet insurance. Additional factors may apply in particular cases. For example, horses are expensive to maintain and require exercise, training,and a large tract of land; some birds and reptiles have very long life expectancies; and care of some pets will require construction of a special habitat on the caregiver's property.

Pet trusts allow the pet owner to provide detailed requirements as to how the caregiver must care for the pets upon the pet owner's disability or death. Will planning is inadequate for pets because Wills do not address disability and because of the time lapse between the pet owner's death and the Will being admitted to probate. 

Funding Pet Care

Many pet owners do not have sufficient funds to properly care for their pets after their disability or death. Life insurance is one way to increase funds available to care for pets after the pet owner's death.

Pet owners should consider life insurance that names a pet trust or traditional trust as beneficiary to fund a pet's care. If the pet owner is concerned that funding of a pet or traditional trust will reduce the inheritance of children or other beneficiaries, he or sheshould consider life insurance that names both (1) the pet or traditional trust and (2) other beneficiaries (or a trust for their benefit). These assets can be invested like any other assets during the owner's lifetime, and those who currently manage the assets can continue to do so for the pet's lifetime.

Trust Terms

Here are several issues for pet owners' consideration:

Creating a pet panel to offer guidance to the trustee and caregiver/beneficiary, and to remove and replace the trustee and caregiver/beneficiary if necessary. Consider including a veterinarian to make the final decision regarding euthanization for medical reasons, to ensure that the pet is not euthanized prematurely by the caregiver/beneficiary.

Paying the caregiver/beneficiary a monthly fee for caring for the pet or allowing the caregiver/beneficiary to live in the pet owner's home, rent free.  

Awarding a bonus to the caregiver/beneficiary at the end of the pet's life as a "thank you" for taking care of the pet.

  Determining how the trustee is to distribute the remaining trust funds after the last pet dies.

If the pet owner decides against creation of a pet panel to determine who will be a successor caregiver/beneficiary, the trust should name multiple successor caregivers/beneficiaries (three or more) in case a caregiver/beneficiary is unwilling or unable to serve. As a final back-up, the pet owner should consider requiring the trustee to give the pet to a no-kill animal sanctuary if there are no caregivers/beneficiaries available. An alternative to naming individual caregivers is for the pet owner to name a local charitable organization that will ensure care in exchange for a contribution upon the owner's disability or death. A listing of such organizations nationally is available online at  www.professorbeyer.com/Articles/Animals_More_Information.htm.

Pet Identification

To prevent the caregiver/beneficiary from replacing a pet that dies in order to continue receiving trust benefits, the pet owner should  specify how the trustee can identify the pet. Micro-chipping the pet or having DNA samples preserved are two methods commonly used for verification.

Other

Some pet owners want their healthy pets euthanized when they pass away because "no one can care for my pets as well as I do." However, many courts have invalidated euthanasia provisions on the basis that destruction of estate property is against public policy. Instead, pet owners should consider no-kill organizations that have the pet's best interest in mind and will find the next best home for the pets.

Conclusion

Many individuals are unaware of the issues surrounding the care of their pets after their disability or death. By discussing these issues with their advisor team, pet owners can ensure that all of their loved ones are cared for, even when the owner is unable to care for them directly.

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.