Planning for Pets
| For many pet owners, pets are members of the family. These individuals often say that if something happens to them, they are more concerned with what will happen to their pets than to their children or spouse.
This issue of The Wealth Advisor examines the issues surrounding caring for pets after the disability or death of the pet’s owner. Given the feelings of many individuals towards their pets, and the costs of care and longevity of some types of pets, planning in this area can be of critical importance. This is particularly true given our mobile society and that the laws of a different county or state may impact you and your pets or the pets of parents and other loved ones. What Will Happen to the Pets When the Owner Becomes Disabled or Passes Away?
Providing for Pets Upon the Owner’s Death Outright Gifts 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 care of 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 Some state statutes specifically limit the terms of a pet trust. For example, some states limit the amount of money an individual can leave in trust for his or her pet to the amount required to care for the animal over the term of the trust. The trust must distribute any excess funds to the beneficiary(ies) who would have taken them had the pet trust terminated. 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. Unfortunately, at this time Louisiana does not allow pet trusts. Traditional Trusts
Funding Pet Care
Trust Terms
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 Other 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. |
5 Myths about Living Trusts in Louisiana
There are numerous myths floating out there about the use of revocable living trusts as estate planning tools in Louisiana. Due to being oversold in the 80s and 90s, these types of trusts have gotten a bad name.
- Myth #1 - If I transfer my property to a living trust I will lose my homestead exemption. This is incorrect. Louisiana law was amended to specifically allow settlors of living trusts to claim a homestead exemption on their home.
- Myth #2 - If I own real estate, a probate proceeding will be required to legally transfer the property to my heirs. There is no authority for this in any Louisiana statute. Typically, the most a title examiner would require is an affidavit of death and heirship for the settlor to make sure no forced heirs were disinherited by the living trust. As long as everything you own is transferred to the trust, there is no need for a probate proceeding.
- Myth #3 - I have to record the trust in the public records of any parish where the trust owns property. This is incorrect. What you do have to record is an extract of the trust, which is a one-page document that describes the name of the trust, the immovable property owned by it, and the names of the trustees and beneficiaries. The terms of the trust do not have to be made public.
- Myth #4 - It will be difficult to administer a living trust during my life. This is not correct. Your living trust will use your social security number as its tax identification number, and you are not required to file any additional tax returns. The only change to how you administer your property is that you will sign your documents as the John Doe, Trustee of the Doe Revocable Living Trust. If you acquire new assets, they must be acquired in the name of the trust. If you sell assets, you sell them as trustee of the trust. Administration of these trusts is really quite simple.
- Myth #5 - I can do everything a living trust can do with a will. Not really. Yes, you can use testamentary trust planning as part of your will to achieve many estate planning goals. But, a will does not allow for privacy, probate avoidance, or comprehensive management of your assets in the event of a disability.
Living Trusts are a valuable and legitimate estate planning tool and offer some benefits that should not be discounted. They are not for everyone. But if you are concerned about avoiding red tape upon your death and maintaining family privacy, a properly written (compliant with Louisiana law) and funded living trust can help you achieve those goals. A valid and properly funded living trust can:
- Provide more privacy for your family - a living trust does not have to be filed in a public court record the way a will does.
- Provide seamless management of your affairs if you become disabled - Upon incapacity, you can allow your successor trustee to take over your affairs without having to rely on a bank or financial institution’s acceptance of a power of attorney.
- Avoid the costs involved in probate proceedings after death. Although there will be some legal fees involved in administering a living trust, they are likely to be substantially less than those involved in a probate proceeding.
- Avoiding delays in distribution of assets after death. Generally, a trust administration will be quicker and more streamlined than a probate proceeding, and is handled privately as opposed to in court.