Estate Planning, including wills, ,living wills, health care proxy, power of attorney, Pet Trusts, Medicaid Planning, nursing home coverage and more
**IMPORTANT: CONTRARY TO POPULAR BELIEF, THE LAW IN NEW YORK DOES NOT ALLOW YOUR SPOUSE OR OTHER LOVED ONE TO MAKE ALL MEDICAL OR FINANCIAL DECISIONS FOR YOU UNLESS THE PERSON IS NAMED IN DOCUMENTS YOU EXECUTED WHEN YOU WERE OF SOUND MIND. WITHOUT THESE DOCUMENTS (DISCUSSED BELOW-LIVING WILL, HEALTH CARE PROXY, POWER OF ATTORNEY (AND WILL FOR YOUR WISHES AFTER DEATH), YOUR LOVED ONES MAY HAVE TO BRING SOME SORT OF ACTION, SUCH AS A GUARDIANSHIP PROCEEDING IN COURT, IN ORDER TO BE PERMITTED TO MAKE DECISIONS FOR YOU. THINK OF AVOIDANCE OF THE HEARTBREAK INVOLVED IN THE TERRY SCHIAVO CASE AS MOTIVATION TO CALL AN ATTORNEY FOR AN APPOINTMENT. We welcome helping you in such a difficult time, and/or in the very important but difficult to comprehend period of planning for the future. Please call (631) 848-1204 and we can arrange for a free consultation over the phone and/or in our Garden City or Suffolk office.
ESTATE PLANNING BASICS
Many people erroneously believe that proper estate planning is important for, and its costs only feasible for, only the “rich”. Some believe just a will is enough. However, a proper estate plan (“EP”) is important for everyone (the pets too), not just in terms of money but one's own life, the costs of it tend to be in-line with the size of the estate, and can save a great deal of heartbreak, pain, suffering for the everyone involved, plus money for one’s estate, even modest "estates". Moreover, there are always proposed changes to the estate tax exemption, including scenarios where the IRS will again define “rich” as those with relatively low-valued estates. For example, a 30 year old house on Long Island and an underfunded retirement account can easily exceed $1 million and no one would ever consider that person "rich". In addition, New York State has a low estate tax exemption and most other states have either an estate tax and/or an inheritance tax. Thus a good EP can save even a relatively small estate a significant amount of money far outstripping the cost of setting up the estate plan.
A key part of estate planning is "Medicaid Planning", to plan for something that is increasingly a situation people living longer face-long-term care. The average cost of a nursing home on Long Island is $14K a month, and home care is $5,500, and contrary to what most people know, Medicare does not cover this (maybe the first 100 days in certain situations). Long-term care insurance is wildly expensive. Medicaid is only for those considered "impoverished" but proper planning can allow someone to receive long-term care, in-home or in a facility, without truly impoverishing oneself.
A will can be written a certain way to avoid family squabbles later. For those with some assets, such as a house, 401Ks, IRAs, some investments, etc., proper EP is especially important so as to ensure that you won't "outlive your money" and always have it available, yet pass along as much as possible to one's heirs. Assets can be transferred now into financial vehicles (various trusts) that bypass probate. Additionally, filing a will for probate may be unnecessary when there are no probate assets, which makes things easier for your loved ones, who may already be having a hard time after losing you, comforting and caring for kids and pets, etc. Plus, probate is public information and you may prefer that what you do with your assets be kept private.
Regardless of one’s assets, a proper EP does not just involve what to do with any assets a person leaves behind but also, what to do should a person become incapacitated (defined as unable to make your own decisions because of accident or illness); essentially, a "live" set of documents and a "passed away" set.. A good EP sets out your wishes should you become incapacitated and who should carry out those wishes. For example, a Power of Attorney (“POA”) and a POA gift rider (should be included) set up how your finances are to be handled, and by whom, including what powers that person should have, in the event of your incapacity. A Living Will and a Health Care Proxy determine how your medical care is to be handled, including end-of-life decisions. It is incredibly important that these be done and kept updated. For example, Thus, a good EP should, at the bare minimum, include these five documents: a will, POA, POA rider for gift-giving (for POAs drawn after 9/1/09), Living Will, and Health Care Proxy.
Even the above five documents are not enough because if you have a pet(s), you should have a sixth document, a Pet Trust (see this website’s info on Pet Trusts, which some attorneys such as me will write pro bono as an addition to the rest of your estate plan documents). Many, many animals end up killed in shelters, after suffering enormously, because of either a lack of estate planning or an EP that did not include provisions for the pet(s). Many pet owners are unaware of the Pet Trust option, which is even set by law in NY’s estate laws (Estate, Powers and Trusts Laws (“EPTL”)). This Pet Trust can be set up to accommodate the changing composition of what is/are one’s pet(s), as new pets are adopted, old pets pass away, etc. by simply naming "Terry Testator's pets" rather than "Lucy, Monkey and Molly". However, again, someone who is not a pet lover might write the Pet Trust the wrong way, causing a debacle.
Avoidance of Probate
A good estate plan also has, as its emphasis, avoidance of probate (or, avoidance of probate as much as possible). Probate can be an expensive, time-consuming (averages months to over a year), and heartbreaking process for one’s loved ones. Probate involves a number of steps where the estate is “administered”, which may include a bond, paying off any debts owned by the decedent and distributing assets while under the supervision of the probate court. The easiest way to comprehend what a good EP can do is to consider how probate can be avoided by use of a good EP and an attorney telling you what you need to go out and do now, yourself, such as re-titling property and bank accounts, which is what we do.
-Below are some (non-exclusive list) examples of how probate can be avoided, at least under current laws, but remember there are always threats, as you see on the news, to change estate tax laws, even retroactively, an issue underscoring out the need to have an attorney with financial knowledge do your estate plan, There is so much involved here, it pays to pay for a member of a highly experienced law firm to do your EP.
a. the decedent did not own real property, such as a house, and the assets the decedent held have a value of less than $100,000., or the assets are held in a trust (see “Trust” section)
b. the decedent is the first partner in a married couple to die, unless the decedent owned significant separate assets
c. the decedent only had assets held in joint tenancy with the right of survivorship, such as a house in the decedent and spouse's name. Even here, however, there is a major tax issue to cover: in order to get the full marital tax exemption from capital gains of sale of the home ($250K each spouse), the house must be appraised within six months of death but since the laws change I recommend that widows/widowers, as soon as feasible, get an appraisal done. He/she may also wish to consider the value of the house in spring and summer months when houses tend to appraise higher because of how they appear and because some people are trying to buy and be settled in between school years. There are also multiple issues with second homes, how long the residence has been the primary residence, and so much more.
d. the decedent’s only significant assets are distributed via beneficiary designations (such as a 401K, IRA, investment account(s), bank account(s), and life insurance policy(ies))
-Probate IS required where:
a. The decedent had a will (known as dying “testate”), where the distribution of the decedent’s assets, whether normally subject to probate or not, and the naming of an executor for the will, are determined in the body of the will itself. [See “Wills” section]
b. The decedent does not have a will (known as dying “intestate”). Here, the choice of an administrator of the estate and the distribution of assets to one’s “heirs” are determined by the state’s intestacy laws, instead of how the decedent would have chosen to distribute her/his assets. [See “Wills” section, just below]
While ideally, a good EP avoids probate altogether, wills are still a critical component of a good EP even IF the person has all the other elements of a good EP, because the will catches anything that might slip through any cracks of the EP.
Problems abound where you don't have a will or don't keep it updated, even if you believe you have structured your assets to be "probate proof". These include, among other things, problems where the EP is not revisited after significant changes in the testator's and/or the beneficiary's life and/or there are changes to the inheritance tax and other laws, especially if, as threatened by lawmakers, made retroactively . A good EP is written in such a way as to “breathe and grow” with the testator’s needs and wishes but even the best EP needs to be fully formed in the first place and then revisited periodically to fix the "cracks" that develop over time. These cracks occur after major changes in the testator's life, such as divorce, having a new child(ren), inheritance, lawsuits*, moving out of state, parents pass away leaving a testator responsible for caring for her mentally challenged siblings etc. Note that a poorly written will can prevent your heirs from receiving Medicaid they need to go to a facility, such as a nursing home.
*For example, the person is killed and held responsible in a lawsuit for personal injury, wrongful death, medical malpractice, among other causes of action, and the jury awards money. Not only is the will important if the proceeds are actually received (collecting judgments is another debacle), the choice of who the plaintiff(s) should be in the suit can become a big issue for the attorney handling these personal-injury-type causes of action. For example, some of the causes of action, such as pain and suffering, "belong" to the decedent and are distributed one way but some causes of action such as wrongful death, "belong" to parties such as children and spouses.
Most people know what a will entails but many people don't know about ways to properly plan for one's passing away so that the maximum amount of assets can be passed along to those you love, and in the easiest way possible. For those who are guardians of someone, there need to be contingency plans, especially alternate guardians, in one's EP.
Many people know the importance of having, at the very least, a valid will, yet fifty percent of Americans do not have one for a myriad of reasons. Many folks cite fear of the “end”, some mistakenly believe a will benefits only the wealthy, some mistakenly believe that intestacy laws will properly dispose of what little they have, some folks believe that will-writing reduces the “value” of their love for others down to dollars and cents and find that concept unacceptable, and some people think Medicare will take care of them if they need long-term care, etc.
A will states how the person’s (known as the testator’s) estate is to be handled after the testator’s death and includes three main parts:
1. The designation of who will be the executor (who is in charge) of overseeing the settling of the testator’s estate and the executor’s powers
2. How any bills, estate taxes and inheritance taxes are to be paid
3. The designation of who will receive the balance of the testator’s estate (after the debts (above) will be paid)
New York's Will formalities*:
a. Some folks know the importance of a will but end up not executing it properly, thus rendering it null and void. For example, NY’s Estate Powers and Trusts Law ("EPTL") has will formalities for validly executing a will, which are well-known to most NY attorneys, even those who don’t specifically practice in EP, to be among the most complex in the country. We make the EP signings a strict formality handled the same way each time: we explain what each document essentially does, have the testator initial each page and sign, then a lawyer and a paralegal, or two staff lawyers, sign off as witnesses to that signature, AND the attorney notarizes it. We immediately scan the documents into a computer with off-site back-ups, and then take further steps to ensure the safety of the EP documents and a streamlined probate process.
b. The EPTL has signature, witness, and date requirements in addition to valid state of mind requirements. The EPTL may allow for the probate of an improperly executed will but that can require a probate battle that can often be costly and gut-wrenching. For example, where one of the witnesses is someone named in the will (an “interested witness”-“IW”), the IW’s share may be limited to what the IW would have inherited if the person died intestate. This means that if the IW is a friend, or cousin, when other relatives closer in bloodline (degree of consanguinity) are alive, the IW may inherit nothing.
c. The EPTL has additional rules on, for example, the state in which the testator died, personal property and real property locale, multi-page wills, and so many more will formalities that do-it-yourselfers may not be aware of.
d. Basic rules:
i. Age of Testator to be 18 years or older. and of "sound mind" and memory
ii. Uninterested witnesses
iii. Oral Wills (known as noncupative wills) Valid only if made by members of armed forces while in actual military or naval service during a war or other armed conflict, a person who serves with or accompanies an armed force engaged in such activity, or mariner at sea
iv. Holographic Wills: same provisions as for nuncupative wills and has to be written entirely in the testator's handwriting.
e. On the other hand, the mental state required to execute a will is less stringent than what people may surmise. Even someone with, for example, dementia or Alzheimers can validly execute a will on the back of a menu (as long as the person has the required witness requirements) if the witness happens to have a "good day" where she understands the nature and extent of her bounty.
* Estates, Powers & Trusts §§3-1.1, et seq
Dying intestate (without a properly executed will) is a poor choice for many reasons:
- For example, under NY’s intestacy laws, the laws only distribute assets according to a fixed list of relatives given priority by the law (known as degrees of consanguinity), not by what the decedent would have wanted. For example, according to the EPTL, if the decedent had no kids (“issue”), spouse, or parents alive, had a tight relationship with Cousin Cliff, but despised Sister Sledgehammer, who the decedent had not spoken to for decades, is alive, Sis would inherit all and not Cousin Cliff. Another example is that the intestacy laws don’t care about friends, unmarried couples, regardless if same-sex or opposite-sex, favorite charities, etc. Even if we know that if Debbie just had properly executed a will she would have disinherited all her relatives, and instead bequeathed half to Debbie’s best friend Bonnie and the other half to the ASPCA, something she talked about to everyone, it does not matter. Instead, the relative(s) in the category(ies) closest to Debbie in degrees of consanguinity would inherit all.
-Another example of why no one should refrain from executing a valid will: A person might think she has no (or very few) assets to warrant drafting a will. However, what if the person is killed by a party with enormous legal liability and deep pockets? And the decedent has plenty of people and/or charities she would have loved to seen in better financial health?
-Example: Debbie spends her last $25 traveling to Manhattan and died after the negligently installed gold façade on Trump Tower falls over on her, where Trump was warned this was a problem years ago and did nothing. The pain and suffering of the victim “belongs” to the victim, just as her hoopty of a car belongs to her, and since she died, the car and the pain and suffering award pass through the victim’s will to Debbie’s beloved NY PAW-New Yorkers Protecting Animal Welfare and best-friend Bonnie, if she executed a will. However, if there is no will, Debbie’s assets, including the pain and suffering award, pass via the EPTL intestacy rules. So, again, despised Sister Sledgehammer gets an enormous windfall and NY PAW and best-friend Bonnie inherit nothing. Similarly, what if Debbie is left in a vegetative state? Without a HCP and LW, best-friend Bonnie cannot make decisions for Debbie that Debbie specifically indicated in conversations with Bonnie she wanted.
-For example, Bonnie cannot decide which hospital to move Debbie to, when to stop life-saving treatments such as feeding tube, etc. On the other hand, Sister can choose to end life-support sooner than Bonnie would have, which, of course, hastens Sis’ collection of Debbie’s assets.
HEALTH CARE PROXY:
The New York Health Care Proxy Law allows you to appoint someone you trust — for example, a family member or close friend – to make health care decisions for you if you lose the ability to make decisions yourself. By appointing a health care agent, you can make sure that health care providers follow your wishes. Your agent can also decide how your wishes apply as your medical condition changes. Hospitals, doctors and other health care providers must follow your agent’s decisions as if they were your own. You may give the person you select as your health care agent as little or as much authority as you want. You may allow your agent to make all health care decisions or only certain ones. You may also give your agent instructions that he or she has to follow. This form can also be used to document your wishes or instructions with regard to organ and/or tissue donation.
-For Pet Trusts, see [Pet Trusts] button
-A trust is a legal instrument with many purposes and forms. While it is true that some are used more often by the wealthy than folks with modest means, almost anyone, even those with relatively modest assets, can benefit from a trust to eliminate, or vastly simplify, probate. Other trust forms (such as the QTIP) can be used for benefits such as minimizing estate taxes, to allow a living spouse to have the right to live in a property in the grantor’s family for generations for the spouse’s life without concerns a subsequent spouse could somehow end up with ownership or force a sale.
-Another major benefit of a trust is that it is private versus probate, which is a public record. This benefits not just the wealthy but anyone who wants his/her affairs kept private, such as those fearing a battle of the relatives.
-The simplest form is the revocable living trust. It may not carry tax benefits but it can be drafted to allow someone to pass along assets (sort of "slide") such as a home, outside of probate to the beneficiary, and in the case of a home, without usurping the grantor’s right to live there for the grantor’s lifetime. Because it is revocable, although certain tax benefits are lost as well and Medicaid issues are created should she need home health care and/or a facility, BUT the grantor has the right to take back the house and do whatever she feels.
For instance, let us say Lillian Hammer transfers her Nassau County house to the Lillian Hammer Revocable Trust, naming her daughter as beneficiary of the trust (because she hates her son because he does not obey her). Lillian later decides she wants to live in Florida to be near her beloved alligators and other reptiles, and needs the sale of the Nassau house to buy Florida property. Or, she reconciles with her son and realizes she wants her son to have some of what his father would have wanted him to have. Because the trust is revocable, she can easily do so. If, before selling and moving to Florida, she passes away, the Nassau County house bypasses probate and “slides” from the trust directly to her daughter. Her son won’t know anything (unless he checked the Nassau County property records after the house’s ownership was transferred to the trust and again after the house already passed from the trust over to his sibling). Thus, a legal squabble is avoided, although we recommend being cautious about not properly dividing assets because it causes a family squabble that can last decades and never be resolved.
Guardianships are usually expensive, intrusive, and time-consuming processes required for those in need of supervision (e.g. minor children, Alzheimer sufferers, etc.) The court orders an investigation into your life/lives and personal affairs, and many people would be horrified to know it could happen to them and/or their minor children. Additionally, people in need of guardianship may be horrified as it is happening. Then, the Guardian is required to report back to the Court every year, which is intrusive and often costly. And who says the Guardian is going to do what you would have wanted anyway? Who knows you (and/or your minor children) better than YOU? YOU know what is best for all of you, YOU should make those decisions, and YOU can and should do so in a properly executed set of documents-living will, health care proxy, power of attorney, gift rider to the power of attorney (if applicable), a will and a pet trust (if you have pets).
If a person has minor children and/or anyone dependent on the person (e.g. mentally challenged siblings), a proper EP should include your wishes for who should be guardian for your dependents because although guardianship is determined by the court, a great deal of weight is given to the choice(s) made in the will. Additionally, the time for writing down, in a legal document, who to name in one’s will spurs parents/guardians to truly consider who should be named as guardian and alternate guardians. For example, the parent/guardian may want to choose someone who would be good now but stands a good chance of being incapacitated by age and/or poor health by the time the kids are in junior high. So determining who would be best in the long-run includes a careful consideration of the age, health, finances, and fitness of the proposed guardians and a back-up plan should that guardian(s) become unable to care for someone else in the future. The process of naming guardians also spurs people to speak with those they plan on naming as primary guardians and alternates to see how these people feel about becoming guardians. Often, the people someone might believe is best as a guardian actually does not wish to undertake this enormous responsibility, and/or has health and other issues precluding becoming a guardian.
Similarly, a similar process is undertaken when deciding on who to name in a Pet Trust (separate from the will) to care for one’s four-legged family members and for other dependants, such as a mentally challenged (but over 21) sibling you are currently guardian for.
A Living Will, written while you are of sound mind, allows you to decide now when you wish to decline certain treatment(s). A living will can help avoid needless suffering for you and your family, needless cost, and even legal squabbles (such as in the Terry Schiavo case).
Example of part of a living will: "I direct my attending physician and other medical personnel to withhold or withdraw treatment that serves only to prolong the process of my dying, if I should be in an incurable or irreversible mental or physical condition with no reasonable expectation of recovery. These instructions apply if I am: a) in a terminal condition; b) permanently unconscious; or c) if I am conscious but have irreversible brain damage and will never regain the ability to make decisions and express my wishes. I direct that treatment be limited to measures to keep me comfortable and to relieve pain, including any pain that might occur by withholding or withdrawing treatment. While I understand that I am not legally required to be specific about future treatments, if I am in the condition(s) described above, I feel especially strong about the following forms of treatment.I do not want cardiac resuscitation. I do not want mechanical respiration. I do not want tube feeding. I do not want antibiotics. I do want maximum pain relief."
POWER OF ATTORNEY
A power of attorney allows someone else to manage certain of your affairs (such as maintain your checking and other financial accounts, mortgage payments, etc.). It can be effective immediately or "spring" into effect should a situation arise; for example, if you become mentally incapable of managing your affairs. Effective September 1, 2009, a new law was passed so that a separate power of attorney has to be drafted for gift giving for powers of attorney signed after 9/1/09. The POAs drafted before 9/1/09 are still valid BUT we recommend you re-do yours because the new POAs provide much more protection for you.
GIFT TAX EXEMPTION
A consideration of the gift tax exemption is a key part of any EP because there are numerous benefits to the gift tax exemption during life (financial and emotional benefits) and the benefits continue after the gift giver's life. A person can give away $14K per person (usually changes yearly) without triggering a tax. Gifts over that amount trigger a gift tax to the gift giver and a gift in any amount does not trigger a tax to the receiver, as an income tax would. Moreover, a gift under $14K per person does not count towards the estate taxes. Since estate taxes can potentially reach 55% if passed by Congress, it makes sense for people to seriously consider proper gift-giving as part of a comprehensive EP. For instance, the gift tax exemption can make sense for many people. For example, parents with four children can give away a total of $104,000 to the children without it triggering a gift tax ($14K from Mom and $14K from Dad to Kid #1 for a total of $28K to each child, times four, is $104,000 tax-free to all involved. Add in spouses and it doubles...add in grandkids..
Almost all states have enacted pet trust statutes authorizing the creation of trusts for pets. The New York Legislature passed its pet trust statute in 1996 to permit people to create enforceable trusts for the care of domestic or pet animals (Estates, Powers and Trust Law Article 7). Additionally, the Uniform Probate Code and the Uniform Trust Code each have sections authorizing pet trusts.
It is important that you have an attorney who is not only knowledgeable about the law but also loves animals. If you have pets, your estate plan is not done without a plan for your pets, even though you might already have an otherwise-proper estate plan (will, Living Will, Health Care Proxy, Power of Attorney, and Power of Attorney gift rider). Remember that estate planning wishes should be unambiguously expressed in the will and/or trust, without other documents contradicting such wishes, such as a "Mission Statement". Additionally, all proper steps must be taken to validate the Estate Plan, so that someone cannot later come along and say the documents are invalid due to witness signature issues, the person not being of sound mind, and all the other arguments even non-attorneys have heard of , yet they still come up without careful planning.
We know this and how to take care of your pet(s) properly. There are ways to give your pets the best life possible after you are gone (well, the best life possible without you there). Every person with a pet, or planning to adopt a pet(s), should have a pet trust. They are not pricey; in fact, I draft them pro bono when drafting a complete estate plan because I think this is so important. I have seen MANY MANY dogs and cats brought to the shelter after their owner(s) died, and these poor furbabies were already heartbroken to begin with. Going from a warm, loving, clean, quiet home, regular walks and/or a yard, a deck to sun on, etc. to a smelly, dirty, noisy shelter and being stuck in a cage 24/7 is torture for them, and looking into their eyes, you cannot help but cry. Often, they are put to sleep, and not the way your trusted vet would (gassing is still legal, and some shelters cut corners...without being too blunt, think "using the freezer to finish".).
Please don't let this happen to your beloved pets.
For more information, call and/or see http://www.animallaw.info/statutes/stusnyest_pow_trst7_8_1.htm
FUNDING A PET TRUST
You can fund the trust during your lifetime (inter vivos) or after you pass (in your will). However, if you provide for your pet(s) only in the will, there is usually a gap between your passing away and settling your affairs, whether or not the estate needs to be probated. I usually recommend to my clients not just the intervivos Pet Trust but also interim provisions, such as a joint account with the person caring for the pet.
The attorney and accountant must keep taxes in mind when drafting any estate plan. The executors of Helmsley's estate had to petition the Surrogate's Court for permission to reduce the amount passing to the pet trust to $2 million in order to substantially reduce estate taxes. The executors petitioned the court under New York's pet trust statute [NY EST POW & TRST § 7-8.1 (d)], which provides that the court can reduce the amount passing to a pet trust if it determines that the amount substantially exceeds the amount required for the intended use. The excess passes to the remainderperson of the trust. Thus, the court ordered the decrease to $2 million.
In general, when providing for the care of an animal, a pet owner should leave only a reasonable amount for that care. In most cases, $2 million would be substantially more than is needed to care for one dog. But special circumstances existed for Trouble, related to the media blitz about the $12 million pet trust. After the publicity, it was reported that more than 40 death and dognapping threats were received, and that the dog was in such danger that she was taken out of her Connecticut home and flown under an assumed name to a secret location. Round-the-clock security was needed for the dog, which costs between $100,000 and $200,000 a year, and that amount is much more than any other expense for the care of the dog. Since security costs are so high, $2 million was considered to be a "reasonable" amount to fund the trust for Trouble.
More commonly, a large amount may be needed to fund a pet trust if the pet owner has many animals and wants the animals to live together in the family home with a caretaker. Leaving the house to the trust (or the executor/trustee/caretaker) solves the difficult problem of finding homes where all of the animals would live. The residence is placed into the trust, along with enough liquid assets to maintain the residence, including Long Island’s high taxes, and to pay a caretaker, as well as the costs of animal care, such as food and veterinary bills. Some pet owners direct that the residence be sold and a less expensive residence be purchased or leased by the trustee where the animals and a caretaker could live together.
Putting the testator's residence in the trust in some cases may be the best way to properly care for the animals if it is the testator/pet owner's intent that the animals remain together in familiar surroundings. Similarly, with large animals, such as horses and farm animals, a pet owner may want to put a farm into the trust, and hire a caretaker to live on the property. This may be the best way to assure the proper care of these animals during their lives. There are no cases to date on whether putting a residence or farm into a pet trust would be considered "excess" funding but if such a case should arise, we would find out quickly and update this website.
PLACE PET IN THE TRUST
In her will, Helmsley bequeathed Trouble to her brother, but he did not want the dog. A person who is bequeathed something under a will does not have to accept such a bequest, but if he/she does, she/he becomes the new owner of that animal and has all the rights of ownership, including the right to take the animal to a town shelter or veterinarian to be euthanized, or dumps the pet(s). This happens when the testator also leaves money intending it to be used for the pet(s) and the person just wants to pocket the money. Because these risks exist, it is wise for a pet owner to bequeath the animal to the pet trust because there, the trustee has a fiduciary duty to safeguard “property” in the trust. Animals are property under the law (and most of NY’s Animal Abuse Laws are in the Agriculture and Markets Law) and so they can be part of a trust, along with other forms of property.
TYPES OF TRUSTS
A pet trust can be an inter vivos trust, created during the life of the pet owner. Or it can be a testamentary trust under a will, effective after death. Intervivos is far better if you have pets.
An inter vivos trust has the advantage of being immediately available for the care of an animal if the pet owner becomes incapacitated or passes away. However, the inter vivos trust has the disadvantages of being more expensive to create, and in some cases, if not properly set up, of not being adequately funded (or not funded at all) at the time of incapacity of the pet owner. This can happen if the person's assets are tied up, such as in the home, obviously the life insurance policy, if any, takes a while before the insurance company will release funds, and she/he was using Social Security and/or pension payments, which terminate at death, to care for herself and the pet(s). If the pet owner wants an inter vivos trust, it is wise to have some method of back-up funding (e.g. pay on death checking account and life insurance) to avoid the risk of having an unfunded, and thus useless, trust at the time of death.
A testamentary pet trust is funded under the will. The disadvantage of a testamentary trust is that it will not be in effect during periods of disability, so pet owners should have their attorney execute a power of attorney appointing an attorney-in-fact to handle the owner’s financial and personal matters (including a specific provision authorizing the payment of the costs of care of the pet owner's animals) to be used if the pet owner becomes incapacitated. We recommend a power of attorney anyway as one of the five essential documents everybody should have (will, living will, health care proxy, and power of attorney gift rider, with a sixth, the Pet Trust, for pet owners ). As discussed above, the attorney should also draft a plan for the care of the pet during the period from death to the settlement of the will during probate.
As with many situations, such as guardianships for mentally challenged humans, plans for one's minor children, etc., there should be several alternates (back-ups).
If you do not know anyone suitable, there are many animal rescue groups that can take your pet into a foster home and let the pet live out his/her life span. Of course, you want to leave them $10K, $15K or more. If you think so highly of the organization, you want to leave them sufficient funds to care for your pet(s) and help others but you want to avoid situations with there being too much, and some parties being motivated to argue against it. *
You may wish to prepay a high-coverage veterinary insurance policy for the pet, and I often recommend this to older clients and/or clients with serious medical issues, even if normally I would not recommend these to most people and for all pets (I have pet insurance for some dogs of mine, but not others). This is especially true if your pet(s) has a medical condition(s), and you are the type of person who would not balk at $2,700 for knee surgery for the pet. Some trustees may decide surgery is too expensive and neglect to give the pet care while she suffers, let’s say, from a torn ligament or just euthanize the beloved pet even when surgery readily would have fixed the pet's medical condition(s), and this is exactly in tune with the testator's wishes.
* One of the websites that tracks charities: http://www.charitynavigator.org/
CONCLUSION of Pet Trust Information:
What matters is that you choose an attorney who not only knows the law but is an animal lover with experience in animal rescue work. These types of attorneys have seen the ramifications of lack of proper estate planning for a decedent's pet(s) and can readily spot issues. Pets should always be included in one's estate plan, and the attorney you choose must subscribe to that ideal.
These four pups (yes-there are 4 in this photo) were rescued from a gassing shelter, brought here by a southern rescue group, then to a well-meaning but disturbed hoarder. The cutie on the far right is my Monkey, and now is a joyful member, along with his big sister, Lucy, of the family.
The above is a vastly simplified summary of some of the issues that arise in estate planning but it still underscores the need for everybody, regardless of one’s assets, to have, at the very least, a basic estate plan. Even if you do have a modest estate, or do not have anyone to leave your assets to, an EP protects youpersonally regardless of where your assets go once you pass away. Should you wish to schedule an appointment to get your affairs in proper order, please e-mail Carol.Ryder@ymail.com or call (631) 848-1204