Many people consider their animals as more than just a pet. They are part of the family. As with other dependent family members, you may wish to plan for and ensure their comfort and care when you are no longer able to do so. One way to do this is by creating a pet trust.
When you set up a traditional trust, you direct how you want the assets in trust to be handled on behalf of yourself and your beneficiary. A pet trust is no different. A pet trust is a legally recognized agreement that appoints a trustee to use the assets within the trust to provide for your family pets. In New Jersey, N.J.S.A. 3B:11-38 is the statute that governs Pet Trusts. It states:
3B:11-38. Trust funds for pets recognized as valid
1. a. A trust for the care of a domesticated animal is valid. The intended use of the principal or income may be enforced by a person designated for that purpose in the trust instrument, a person appointed by the court, or a trustee. The trust shall terminate when no living animal is covered by the trust, or at the end of 21 years, whichever occurs earlier.
b. Except as expressly provided otherwise in the trust instrument, no portion of the trust's principal or income may be converted to the use of the trustee or to any use other than for the benefit of the animal designated in the trust.
c. Upon termination of the trust, the trustee shall transfer the unexpended trust property as directed in the trust instrument. If no directions for such transfer exist, the property shall pass to the estate of the creator of the trust.
d. The court may reduce the amount of the property transferred if it determines that the amount substantially exceeds the amount required for the intended use. The amount of any reduction shall be transferred as directed in the trust instrument or, if no such directions are contained in the trust instrument, to the estate of the creator of the trust.
e .If no trustee is designated or if no designated trustee is willing or able to serve, a court shall appoint a trustee and may make such other orders and determinations as are advisable to carry out the intent of the creator of the trust and the purpose of this act.
What should be included in a Pet Trust?
Some things you may want to include in your Pet Trust may include an appointment of a caregiver for your pet, a determination of how much money should be placed in the trust, and who should oversee those assets. Your trust may generally provide for care and comfort, or include more specific provisions, such as the types of food, how often to visit the vet, set a standard of living, and arrange for review and enforcement of your specific provisions. Also, you will want to consider what will happen to the assets when your pet dies, as the trust will terminate upon the earlier of either when there is no longer any living pet(s) or at the end of 21 years.
Your Pet Trust can be a testamentary trust. A testamentary trust is one established at death. In that case, the trust is subject to Federal Estate Tax and New Jersey Inheritance Tax, which as a Class D beneficiary is currently taxed at 15% - 16%.
A Pet Trust can also be established during life. In that case, the income of the assets of the trust (ie, interest on the money) will be taxed. While alive, you, the Grantor, will pay the taxes, and after death, the trust itself will pay the taxes. In this case, Federal Estate and New Jersey Inheritance Tax is avoided.
Contact Hartmann Law
If you would like more information, contact Hartmann Law today. Whether there is a life event that brings you to this page, or you have simply decided it is time, Hartmann Law is here to help. Each individual, couple, and family is different, and we offer dedicated and individualized attention to every Client. An Estate Plan will be discussed, created and tailored to your needs. Click HERE to contact Hartmann Law today, so we can determine how to best achieve your desired result.