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Estate Planning Problems With Pets

Posted on: December 21st, 2015
north carolina pet trustsNot all states offer the legal opportunity to create a pet trust. Even when these tools are permitted by state law, various issues may complicate the creation and administration of pet trusts. North Carolina is a state with specific statutes that govern the administration of trusts created for pet care. Pet trusts in North Carolina, when administered correctly, help to direct and cover the cost of care for one or more pets. Assets held in trust can be used to cover the cost of pets’ food, medical care, housing, and other essential needs. We review a few potential problems that may surface with pet trusts and how individuals can prevent or solve them:
  • Trustee breach of duty. In North Carolina, as in other states that permit pet trusts, the trustee might not be the individual responsible for paying the costs of the pet’s care. Rather, a trustee might instead be directed to make distributions to a named care provider, who cares for the pet and pays for appropriate expenses. If the trustee notices the care provider neglecting their responsibilities in providing care for the pet per instructions provided in the trust, the trustee is responsible for following the trust rules and coordinating an alternative care provider for the pet. However, there are some instances when the trustee fails to follow through with their duties. When this happens, distributions from the trust may not be made properly and used for alternative purposes not provided in trust documents. Pet care could be compromised as a result. 
    If the trustee abuses their powers, the process to remove the trustee could be lengthy and costly. Fortunately, in addition to offering pet trusts, North Carolina law also provides for trust protectors. A trust protector is an appointed party who can be given the authority to add, remove, or replace a trustee without the time and cost requirements of a court-ordered removal. Including trust protector provisions in a pet trust might prevent the need for court involvement if a change of trustee is required.
  • Life insurance. Just as pets are not lawfully permitted to receive trust distributions, pets cannot receive life insurance policy proceeds. If one intends for a pet trust to be funded with life insurance benefits, one should ensure that policy beneficiary designations name the pet trust directly, rather than the pet or the care provider. Leaving a life insurance policy to the estate can create complications, such as a risk of proceeds being tapped by creditors, which could jeopardize assets that otherwise would have been used for continued pet maintenance.
  • Legislation changes. As with any area of estate planning, strategies should be reviewed and amended whenever laws change. An individual should regularly review with an attorney the laws affecting trust administration. Where will pets reside in the event the pet owner becomes incapacitated or dies? Is there a possibility that the pets will relocate? Consider how trust administration in another jurisdiction could affect pet care. Depending on the pet owner’s goals, an attorney can advise if relocation restrictions or other provisions should be included in trust documents.
Pets could face a number of outcomes if an owner has not planned properly or at all. Without a pet trust, if surviving family members decline care for the pets, the pets could be surrendered to shelters or other organizations that might not provide the level of care nor the type of living environment the pet owner would have wanted.

Pet trusts not only offer peace of mind for pet owners and financial support for beloved pets, but they also provide pet owners with control. Trusts offer tremendous flexibility for individuals to dictate the standard of pet care, from how often and what type food will be provided to where the pet will be buried.

Each of the problems above can be solved with advance planning by making a pet trust part of a comprehensive estate plan. Have you planned for your pet’s long-term care? Tell our North Carolina pet trust attorneys on Twitter @estateplansnc and use #pettrust4me.

By Attorney Samantha Reichle

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