We have two dogs, Moose and Ruby. I’m only a little embarrassed to say that we fall into the “pets are a part of the family” category of animal owner . . . our dogs pretty much go where we go, to the point where they may be the determining factor as to whether we go on a vacation or take a weekend trip. We even have a home security camera for pets to keep an eye on them when we go out for the day! For those who know us, this is probably not surprising. We have been active with local animal rescues and at the local municipal animal care and control center. Our animals are a big part of our lives; it probably also isn’t surprising that making sure they are cared for if something happened to us is a pretty big deal.

Yep, that's us.  Philip and Mary Ruce, pictured with Moose Ruce (L) and Ruby Ruce.  Photo via Cara Lemmage Photographs.

Philip and Mary Ruce, pictured with Moose Ruce (L) and Ruby Ruce. Photo via Cara Lemmage Photographs.

Some states make it very easy to provide for your pet in your estate plan, usually by creating a pet trust. Sadly, Minnesota is not one of these states. A pet trust is a legal entity consisting of a trustee and some trust assets (usually some money you leave to the trustee in your will). The trustee manages the trust assets for a human beneficiary who has agreed to care for the animal, and to use those trust funds for the animal’s care. This arrangement is perfectly allowable in Minnesota too, except in the pet trust states, the agreement is an enforceable obligation.

The problem lies in the status of pets as personal property. This makes sense, of course; dogs, cats, parrots, and ferrets are not people. They can’t make contracts, they can’t consent to legal agreements, and they certainly can’t hire a lawyer and sue when they are having a problem. Pets, in the eyes of our legal system, are property on the same level as your couch or dining room table (though certain states are becoming enlightened ). Sometimes that doesn’t feel right because of the personal nature of our relationship with our animals . . . surely a living, breathing thing that depends on me for food and shelter isn’t on the same footing as my refrigerator. But it’s the reality, and it’s something we need to work around when we are planning our estate.

Your Pet’s Care

You can still set money aside for your pet’s care. I mentioned that you can create a trust for your pet, but it is not enforceable in the same way as it is in states that have pet trust laws. But if there is someone you know of who you trust to care for your pet if something happens to you, make sure you leave instructions in your will indicating that this person has agreed to accept the animal and to provide care. You could then leave this person some money outright, or you could create a small trust for the benefit of this person. The trust could be written to reimburse that person for all animal-related expenses, such as vet bills and pet food.

If you do not have someone who can care for your pet, that is okay. There are organizations with whom you can make arrangements; contact pet rescues in your area. Oftentimes, in exchange for a donation in your will, they will commit to caring for your pet when you are gone and they will work towards finding a new home for your animal. Make sure you have an arrangement with the pet rescue in writing before assuming your pet will have care. Here is a downloadable .PDF with more information from the Animal Humane Society.

Changes Coming?

Minnesota is considering changing its trust code to conform to the Uniform Trust Code, a set of model rules that many states are adopting as their own. The Code does allow for pet trusts, but it is up to the Minnesota legislature as to whether the pet trust provisions will be included. As an animal advocate and pet owner, I would love to see pet trusts become part of the estate planning landscape in Minnesota. Until then, let’s make sure we remember our furry friends, and let’s not forget the commitment we have made to care for them.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Keywords: trusts and estates, Minnesota wills, revocable trusts, estate attorney, probate, estate planning, will

You need to consider many things when creating your estate plan . . . .  Who would get your favorite family heirloom?  What would be the best way to transfer your house to your spouse? How would your retirement accounts be taxed? And if you have young children, who would care for them?  Most people plan on leaving an inheritance to their children, but many fail to consider how they will give it to them. Giving it outright is not always a great idea . . . have you ever seen an eighteen-year-old with a $100,000 check?  I have. The result of this type of windfall is about what you’d expect.

Business advisory meetingNot everyone realizes that you have a choice about when your kids will receive your money. The money can be doled out over a period of years, or for specific things like college, a down payment on a home, funds for starting a business, or for emergency medical care. You can accomplish this in a very straightforward way by creating a testamentary trust in your will document.

Keeping Control

Testamentary trust provisions allow you to control your money even after you are gone.  The provisions create a trust entity that will be managed by the trustee, who is an individual (or sometimes a professional trust company) that you choose.  The trustee works with your child or the child’s guardian to pay for certain expenses which you specify in the trust document.  Eventually, at a time you’ve determined, the trust pays out its remaining balance; this could be when the beneficiary is twenty-five, thirty-five, fifty, ninety, or any age in between.  Funds could also be left in the trust for the child’s whole life, and then paid out to the next generation (or held in trust for them too).  You can also attach conditions to the money, such as a bonus distribution upon the completion of a college degree, or instructions to keep funds out of the hands of a child who is struggling with substance abuse.  Provisions can be drafted that will prevent the trustee from distributing the money if the child is going through a divorce or a bankruptcy, thereby protecting the child’s inheritance from these proceedings.

Expensive Mistakes

If you leave money to a minor child outright — either through your will or by listing the child as a beneficiary of you financial accounts or life insurance policies, you could be making a very expensive mistake.  Rules vary by state, but funds left outright to minors are held by the probate court and administered by a conservator.  This isn’t cheap, and the court will give the child the funds outright when he or she turns eighteen (sometimes twenty-one, depending on the circumstances).  I have watched eighteen-year-olds spend their entire inheritance within a year on cars, electronics, and misplaced generosity to their friends.

I don’t mean to generalize the behavior of an entire group of people based solely on their age, but I look at myself at eighteen and I look at myself now, and I can tell you unequivocally that a windfall of cash would be handled much differently today than it would have been handled when I was a teenager.

A word of caution: these provisions must be drafted in a very specific way if they are to qualify with the IRS to receive retirement plan funds, and the other provisions in the will have to be very specific as to how the trust will be created and how it will be managed.  This is not a do-it-yourself project.  Drafted properly, these provisions can ensure that your children will be set to succeed and will have access to these funds for a lifetime.  Set up improperly, and you can disinherit them altogether.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Keywords: trusts and estates, Minnesota wills, revocable trusts, estate attorney, probate, estate planning, will