The Pet Trust: Protecting your animal after you're gone

The widowed aunt had written in her Will: "I give $5,000 to [nephew] if he takes care of my cat." 

The nephew put the cat to sleep.  He then demanded the five grand from his aunt’s estate. His reason: "I took care of the cat.” 

They ended up in court.  And the judge wisely decided that what the aunt had meant by taking care of the cat was markedly different from what the nephew claimed she meant. 

Now before you groan, it would only be fair to tell you the other side of the case. A witness testified how much the aunt had loved her cat.

But there was also evidence that the aunt knew that her nephew didn’t like her cat at all. So the aunt was picking a fight by putting this provision in her will.

We all can wince at incidents like these. They can be avoided:  Rule #1: Don’t entrust your pet’s care to someone who hates your pet.  Rule #2: Don’t leave your pet to someone who’s allergic to your pet. You get the idea. 

A much better route: create a Pet Trust.  A new statute now allows for them.  And a court can be used to oversee what you provide in the Trust.

Here’s the big picture:

You can choose the right person to receive a bequest to provide for your animal if you are dead or disabled. You can even provide for a succession of persons.

Or you can provide for one person to provide a home and care for your animal, using funds which you’ve entrusted to another person to hold, invest, etc. (“My pet is to live with X, and my trustee shall give X the  funds to pay for all the expenses of caring for my pet.”)

And yes, the Georgia Code allows for a trust to provide for the care of more than one animal. 

Now in “human” trusts, the beneficiary can go to court if the trustee is not abiding by the trust’s terms.  Or the trustee can seek a judge’s help if the beneficiary is missing,  or the trustee is concerned about distributions to a beneficiary being squandered on drugs. 

And if alive, a trust’s creator (i.e., the “grantor” or “trustor”) can ask for a court’s help if this person thinks that the trust isn’t being administered according to his or her wishes.

It’s not this easy in a Pet Trust.   Your pet is never, ever going to file a suit for a protective order, or to ask for a change in guardian. This isn’t some courtroom scene out of a cartoon, the Honorable Scooby-Doo presiding.

But Georgia law does provide that any person who’s interested in an animal’s welfare can go into court on the animal’s behalf.

This caring soul could ask the court to change the trustee because the trustee isn’t doing what the trust specifies.  Or if someone named in the Pet Trust needs to be replaced for any other good reason.

Here’s one big caution, though. The Pet Trust terms need to be done correctly and will need to be integrated with your other legal documents.  This doesn’t happen in a fill-in-the-blank form

And no form language covers the situation if your pet is a horse, coatimundi, or spider.

Bottom line: if you want the law to help protect your pet if you’re gone, or if you’re totally disabled and not able to care for your pet, now you have a way.

Who gets the assets if your spouse dies without a will? You might be surprised.

The financial planner thought he knew everything.  And with that confidence, he downloaded a form will. It wasn’t a bad will, actually. But he made one enormous mistake: he didn’t sign it right.

So when he died, his wife went to an attorney to find out how she would collect everything. She got a shock: she wasn’t going to. The will was useless. Void. Non-existent. Consequently, the law says that she and the child had to split the assets. The scorecard: Child: 50%. Mother 50%. Game, set, match.

Would it matter if it was his child, and not their child? Not a whit. Could they fudge the distribution? Nope.

What if parent and child didn’t get along? Doesn’t matter. They were chained legally to 50% each. They may not have spoken in years . . . but now they sure were going to.

The key: if the once-good will is not good now, or if there’s no will, then the spouse and the children divide the estate assets equally. Example: Remarried mother has two children from her first marriage. She dies with a faux will. We have three people, right? Two kids plus spouse. Since the will is garbage, each child inherits one-third of the dead mother’s assets. The surviving husband gets the final one-third.

There’s a small legal protection for the surviving spouse: he or she can’t get less than one-third.

What this means: imagine that Snow White married the prince, they adopted the seven dwarfs, and then he died sans will. Snow White gets one-third of the prince’s assets, and the seven dwarfs split the other two-thirds.Not too bad, right? Well, it is pretty bad: Doc-through-Dopey together get twice as much as Snow White. She certainly won’t live happily ever after.

The situation gets more complicated if a minor child is getting a piece. The surviving parent may not be appointed the legal guardian for the receiving child; being mother or father isn’t decisive. Periodic inventories can be required. And the child gets his or her share as a much-too-young age.

So do you really want to share ownership of your house equally with two teenage kids? It can (and would) happen.

What else can trigger this besides the financial planner’s defective signing? If particular events happen with a lawyer-drawn will. And of course, if there’s no will.

Consider the parent who recently remarried, who didn't do a new will in the midst of planning the wedding and honeymoon.

How about the parents who did the right documents for their children, but later decided to have or adopt one more . . . and the old will didn’t contemplate more kids.

Or the person who typed up an old will, or copied a neighbor’s will. The document may have had the title "Will" at the top, but it wasn’t any good.

In each of these examples, the surviving spouse took it in the ear: take a half, take a third. Do not take all, do not pass "Go," do not collect even an extra $200.

The bottom line: having a document-gone-bad, or no document, can mean you'll be looking to your kids (or your dead spouse’s kids) for spending money, instead of the other way around.

Getting .53% in Interest Beats Paying 55% in Taxes.

Get assets to loved ones, or move them from loved ones?  Forget “$13,000 per year” gift limits. A strategy lets you discount the asset value and then move them by sale. And I.R.S. says that if your sale is during August, your interest rate can be as low as 0.53%. That’s Zero-point-Five-Three-percent.

Think this doesn’t apply to you? If Congress doesn’t act, the estate tax comes back on 1/1/11.  So anything a dead person owns over $1 million will be taxed at 55%. 

Want more information? Call fast; no telling what the 0.53% will become in September. 

Our article on how assets get discounted with IRS approval:  http://tinyurl.com/3xajfhz.

Siblings and the aging parents' assets

On the magazine cover, the cute but worried dog was staring at a man’s hand.  The hand was holding a gun to the dog’s head. The cover caption: “If You Don’t Buy This Magazine, We’ll Kill This Dog.”

This is not exactly a case of undue influence. Nobody has you in a chokehold, nobody is threatening to lop off your fingers one at a time, saying “Sign this or else!”  That’s what undue influence is usually about.  

Aging adults, however, sometimes face the pressures of a different undue influence: being manipulated when they have diminished mental capacity. Who’s doing it? People – often relatives -- who seek influence and financial control over the aged adult as well as financial benefit for themselves.

The typical strategy plays on the fear of isolation, the aura that others cannot be trusted, and the threat that “If I don’t act to protect you, you’ll be penniless, uncared for, and out in the cold.”  

 Because of the pressure, the aging adult signs documents at the behest of the person being put in charge – documents which never should have been signed in the first place, and which need to be undone.

Consider this recent case about Mrs. Fox (no relation), a widow.  She had six children, five sons and a daughter.

One of the sons, William, had developmental disability issues, and always lived with his parents in their house. Mrs. Fox repeatedly said that when she died, she wanted William to continue to live in the house for as long as he lived.  She also wanted all her other assets to go into a trust for William.  

But Mrs. Fox’s daughter Elaine, and Elaine’s son Harry, had other ideas.

As Mrs. Fox’s health declined, Elaine gave her mother a very hard time. According to the Court of Appeals, Elaine dominated and belittled her mother. Elaine told her mother that she was the only child who could be trusted to take care of William after Mrs. Fox died.

And Elaine’s coup de gras: she told her mother that if she put all her assets in Elaine’s name, then Elaine could prevent her brothers from putting Mrs. Fox in a nursing home, selling everything, and putting William out on the street.

So Mrs. Fox signed a Will prepared by grandson (and Elaine’s son) Harry. On the surface, it did provide for a trust for William.   

But then Elaine and Harry gutted it.

How? Nine days later, Harry showed up with a Quitclaim Deed, which he had his grandmother sign. It conveyed her rental house to – guess who? – Elaine and Harry. As a result, the rental house wasn’t going to pass under Mrs. Fox’s Will. It was gone from her assets and would never, ever be in her estate.

Then Mrs. Fox had surgery. She had terminal lung cancer. She went on strong pain medicine.  She wasn’t in good physical or mental shape.

But two days before she was to start chemotherapy, Harry showed up with another deed for his grandmother to sign.

This deed moved the house where she and her late husband and son William had always lived, plus the surrounding 14 acres, to -- surprise! -- Elaine and Harry.

Then to get the rest, Elaine thoughtfully changed her mother’s savings accounts to joint name. So when Mrs. Fox died, her daughter got all of them.

Even after her mother’s death, Elaine couldn’t leave well enough alone. She found a $27,000 money market account in the name of Mrs. Fox, son William, and Elaine.   Elaine changed the name on the account to just herself and her son Harry.

Nice, huh?

The five Fox brothers filed suit. They wanted to set aside the two deeds, claiming that Elaine and her son had used undue influence to have Mrs. Fox sign them. It was a nasty interfamily fight.

A jury decided that the brothers were right: Elaine and Harry had used undue influence over Mrs. Fox. So the deeds were put aside. And the Court of Appeals affirmed the jury’s decision.

I wish I could tell you this is an isolated incident. It’s not. It happens all the time in families.

So how do you prevent it?

If you have aging parents: meet with them and all the sibs and step-sibs. If somebody balks, let everyone else meet to find out your parents’ wishes. Everyone hearing the same thing, everyone hearing the answers to questions, works wonders.

If you are an aging parent (aren’t we all?), take your children through your documents. This way, there will be no surprises afterward. It’s why we encourage our clients, after their documents are signed, to bring in all their children for a free meeting to do this.

You knew that already, right? It’s time to act on it.

It's critical to discuss your will with your children - even if it's uncomfortable

Certain superstitions are silly: "Handling a toad gives you warts." "Step on a crack, break your mother’s back." "It’s good luck to find a horseshoe." (Unless, of course, it’s still attached to the horse).

Other superstitions have intellectual issues: When Punxsutawney Pete looks for his shadow on Groundhog Day, how does he know what he's looking for? Or do the shadow know?

Other superstitions come with directions: "Pull off the petals of a daisy one by one, naming a boy (or a girl as the case may be) at each one, thus: Jenny, Fanny, Jenny, Fanny, etc. The one named with the last petal is your sweetheart."

Life and death have their superstitions. If you’re having thirteen for dinner in Brookline, MA, "the last one who sits down will not die." In nearby Somerville, "the one who rises first from a table of thirteen will not live through the year." So if you’re invited to dinner in New England, take your time showing up and chew your food really, really well.

Here’s a superstition which is both worthless and dangerous: "If you discuss your Will with your children, you die really soon."

Now of course, you can avoid making your parents uncomfortable. But you’ll pay for it in other ways.

The problem: where is the Will hidden? Or even, was a Will ever signed?

Consider the first couple I ever did Wills for. Really nice people. They moved out-of-state with the admonition to get their documents checked in their new state. "Instead," said the wife, "Whenever we talked about it, we decided we liked what you did and never did get it checked."

How do I know? She called us 25 years later, after her husband died while jogging. She didn’t know where he had stored the original Will. She never did find it.

Or how about the daughter who had no idea where her mother stored her Will and refused to discuss it. After she died, her daughter couldn’t find the document.

As a result, daughter had to start an "Administration" in Probate Court. That costs an unnecessary bundle, takes too much time, and requires filing inventories with the court. And more.

Then it got worse. While cleaning out the attic of her parents’ house, she found her mother’s Will.

So she had to go back to court, stop the Administration, and then start Probate proceedings.

All because the mother refused to give any information about her Will.

The problem with all this: what you don’t know will hurt you. What you can’t find will hurt you. And in turn, will cost you.

Isn't a safe deposit box the answer? Well, it could be. But at which branch? Who’s on the signature card? And where’s the key?

So you still need to know. You still need to ask. And you need to get answers.

What if your parents still won’t tell you? Well, leave ‘em a copy of this article. Or bring them a horseshoe and a daisy, which you can explain as a prelude to the "Let’s not talk about it" superstition.

And if they’re still not convinced? Find that toad. So if this superstition works and they get warts, they’ll definitely need to tell you where their healthcare documents are. Hopefully the Wills will be nearby.