Trusts for pets.

• Author: Zenov, Darin I.

It took months, but your clients are ready to sign their basic estate planning documents. Included is a revocable trust which, if properly funded, will avoid probate and guardianship proceedings. A credit shelter trust was structured to take advantage of the exemption against the estate tax. Any amount in excess of the exemption against the estate tax will go into a qualified terminable interest trust just in case the surviving spouse has some pending creditors. The client's documents provide for distributions to their children at varying ages, thereby increasing the likelihood that your client's life long efforts to accumulate assets will not be dissipated all at once. A guardian has been named for the clients in the event of their incapacity, along with a guardian for any minor or incapacitated children. You also have prepared durable powers of attorney, a health care surrogate, and a living will. Their documents provide for some charitable gifts and ensure that the family heirlooms will pass to specifically named individuals least likely to sell them two days after the funeral. There is even a provision for a colorful disposition of the client's last remains. The basics are covered. Your clients can rest assured that when they pass away, their assets will be distributed to their family in a tax-efficient and timely manner with some minor asset protection planning.

The clients are just about to sign their documents, when they suddenly ask you about Max and Louie. Max and Louie? Who are Max and Louie? You frantically look at your client intake sheet and note there are no beneficiaries named Max or Louie. Are Max and Louie estranged cousins who will act as default beneficiaries? No, Max and Louie are their beloved golden retriever and African gray parrot, respectively.

Pets are an important part of the lives of many individuals. A recent study found that 73 percent of dog owners and 65 percent of cat owners consider their companion animals to be akin to a child or other close family member, (1) and many treat their pets as a member of their immediate family. (2) Considering the close bond between pet owners and their pets, it is not surprising that a substantial number of clients want to make provisions for the care of their pets should they be unable to do so themselves. Until recently, the lack of a statutory mechanism made it difficult for clients to provide for their pets after their death. F.S. [section]737.116, (2004), however, provides for the creation of an enforceable trust with a pet as a primary beneficiary.

Historically, bequests in favor of animals were frustrated. Even when testators conscientiously made a specific bequest for their pets, disingenuous beneficiaries often diverted the bequest for their own benefit. Although prior to January 1, 2003, Florida persons could set aside money for the care of their pets, these trust arrangements were honorary, meaning that Florida courts could not enforce the provisions of the trusts if the pet's caretakers decided to use the money for their own purposes rather than for the care of the animal. Courts reasoned that an animal was not considered a beneficiary that could be identified in definite and certain terms; thus, the trusts became known as "honorary trusts." (3)

Moreover, courts routinely held that the bequests in favor of the pets violated the rule against perpetuities, which generally provides that an interest in property must vest, if at all, no later than 21 years after the death of a measuring life. (4) Since the life of the pet is what would affect the vesting of an interest in a pet trust, such trusts violated the rule against perpetuities. (5) Louie the African gray parrot, for example, might live 50 years after his benefactor's passing.

In 1990, the National Conference of Commissioners on Uniform State Laws changed the Uniform Probate Code (UPC) to allow for pet trusts. (6) Some states have adopted the UPC, or a modified version, and have made the trusts valid for the lifetime of the pet. In addition, a growing number of jurisdictions, including New Jersey, Delaware, Alaska, South Dakota, Wisconsin, and Idaho have abolished the rule against perpetuities. The UPC does not eliminate the rule against perpetuities; it simply creates an exception to the rule.

Florida recently joined the ranks of those states (7) permitting the establishment of trusts for pets. Under F.S. [section] 737.116 (2004), a trust may now be established for the pet's lifetime to...