New York, like most states, permits pet owners to establish trust funds for their pets. A pet owner can create a pet trust during the owner’s life or plan for the establishment of the trust after his or her death. Under New York’s Estates, Powers and Trusts Law, a trust can be created for a “domestic or pet animal” but the term is not defined. Therefore it is not entirely clear what animals are covered. Generally, pet trusts are not limited to dogs and cats, but include companion animals such as birds, horses, reptiles and fish.
Until May of 2010, the law required that pet trusts terminate at the end of 21 years, even if the animal for which the trust was intended to provide is still alive. In May of 2010, New York changed the law on pet trusts to remove the 21-year limitation. Now, a pet trust terminates when the animal beneficiary or beneficiaries are no longer alive.
A court may reduce the amount of property transferred to the trust if it determines that too much is left for the care of the animals. The trustee should be given the power to use the income and to invade the principal for necessary expenses. Excess funds, if any, after the termination of the trust, are distributed according to the terms of the trust. If the trust does not so indicate, the excess passes to the estate of the pet owner who created the trust.
While a pet owner may only have one animal at a time, the owner may have several animals by the time of his/her death. It is therefore better not to mention pet names in particular so that the trust does not have to be amended every time a pet joins the family. The trust may indicate that it covers “any animals owned by me at the time of my death.” Since it is impermissible for the trust to be overfunded, the creator of the trust should only provide for enough in funds to cover the anticipated needs of the animals in question.
There are a few options as to what type of trust to establish. A pet trust may be established in the will. This is called a “testamentary trust.”A testamentary trust is not funded until the Last Will & Testament is probated. The testator should therefore informally appoint someone who is going to care for the pet and lay out funds for such care until the probate process is completed.
A trust can be established during the lifetime of the pet owner, with or without funds being deposited. If funds are not deposited, the creator of the trust, the grantor, can designate the trust as beneficiary of a bank or brokerage account so the trust can be immediately funded by the account upon death.
If a trust is established during the lifetime of the pet owner, the will can also designate that some assets “pour over” into the trust upon the owner’s death.
Finally, naming the right people as caretaker of the animal(s), alternative caretakers, trustee, and alternative trustees is an important decision for the owner. The trustee and caretaker can be the same person, which makes it easier to expend funds for the care of the animal. However, pet owners should consider having separate individuals for each role as this can be a mechanism for the trustee and caretaker to provide checks and balances on each other, ensuring trust assets are spent appropriately and the animal is taken care of as the pet owner intended. A pet owner may also consider providing very specific care instructions for the animal as the pet owner knows the intimate care needs of his pet.
Ronald Fatoullah is a leading expert in the fields of elder law & estate planning. He is the founder and managing attorney of Ronald Fatoullah & Associates, a law firm concentrating in elder law, estate planning, Medicaid eligibility, special needs, trusts, guardianships, & probate. He is certified as an elder law attorney by the National Elder Law Foundation, and he is the current Legal Committee Chair of the Long Island Alzheimer’s Association. The firm’s offices are conveniently located in: Long Island, Queens, Manhattan & Brooklyn and can be reached at: 1-877-Elder Law 1-877-Estates. This article was written with the assistance of Lian Kuang, Esq., an elder law attorney with the firm. Kuang speaks Mandarin and Cantonese and also assists with Ronald Fatoullah & Associate’s Chinese speaking clients.