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Pet Trusts: Not Just for Leona

The real estate magnate Leona Helmsley was famously maligned when word got out after her death in 2007 that she had named her Maltese dog Trouble as the beneficiary of a $12 million trust fund. After a court battle, Trouble was forced to scrape by on trust principal reduced to $2 million. It seemed silly at the time, but legislatures across the country took note, codifying the means by which pet owners can ensure the continued care of beloved animals who survive them.

Maryland is among the majority of jurisdictions, joined most recently this year by the District of Columbia, to enact a pet trust statute. Maryland’s law took effect in 2009 as part of the general trust statute and survived without substantive change in the revision of the overall statute last year. Although pet trusts were permitted previously under Maryland case law, the Maryland statute provides standards by which such trusts might better survive challenges from rival human heirs such as those who challenged the Trouble trust.

Under the Maryland statute, a trust must be created for an animal alive during the settlor’s lifetime and must terminate upon the death of the animal or the last to die of all the animals if the trust is created for more than one. An authorized trust may be enforced by a person appointed in the terms of the trust, or if no one was appointed, then by a person appointed by the court. Anyone with an interest in the welfare of the animal may request the appointment of a person to enforce the trust or to remove an appointed person. Finally, the trust property may only be applied to its intended use, except to the extent a court may determine that the value of the trust property exceeds the amount intended for the intended use, as was the case with Trouble Helmsley. 

Do you need a pet trust? First, know that trusts can be used for any legal purpose. More traditional examples of these purposes are bypassing the probate process, minimizing estate and other property transfer taxes, and providing for control over insurance policies and businesses. 

On the cusp of Triple Crown season, know that creating a pet trust is different from caring for Seabiscuit, Secretariat or Seattle Slew. First, think of the trust document as a means of protection for your pet. Consider your pet’s daily routines, and how much it will cost to replicate even the most mundane details. Make a precise list of what you are doing, what your pet’s favorite activities are, who cares for them, the food they will eat, and the general standard of care you want to provide. Is it the sort of thing that requires a large investment? (The more detail you provide in the trust instrument, the less vulnerable the trust expenditures will be to challenge.) Go through your black book of potential pet guardians and consider what that person might need to care for your pet and whether the extra incentive provided by a trust might guarantee that your pet is cared in accordance with your wishes.

If you find that you must earmark a significant amount of funds for a pet trust, either because you have a pack of St. Bernards, or just Fido and you want him to have the best orthodontic work, then a traditional inter vivos trust drafted by an experienced attorney and funded today is appropriate.  

If a relatively small sum is involved and there are no unusual or extravagant concerns present for the care of your animal, then a simple testamentary statutory trust created under your last will and testament may be appropriate. This approach will avoid the cost during your lifetime for the preparation of a separate trust instrument and your loss of the use of some assets that would otherwise be used to fund an inter vivos trust.

For more information please contact Gary Almeter at 410-583-2400 or almeter@bowie-jensen.com.

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