Estate Planning Tools for Owners of Pets and Companion or Service Animals

By Marsha A. Goetting, Ph.D., CFP®, Professor and MSU Extension Family Economics Specialist, and Gerry W. Beyer, Governor Preston E. Smith Regents Professor of Law, Texas Tech University School of Law-Lubbock

This MontGuide outlines legal options for owners who plan to name a caregiver for their companion animals, service animals and/or pets in case of the owner’s death or incapacitation. Montana law allowing for a trust to be created to provide for the care of an animal during the settlor’s lifetime is also discussed.

WHETHER REFERRED TO AS DOMESTICATED PETS, companion animals, specialty pets, service animals or as simply pets, they play an extremely significant role in the lives of many Montanans. By planning and obtaining the proper legal documents, owners can ensure their pets (dogs, cats, horses, birds, etc.) will continue to receive proper care if the owner becomes incapacitated and when the owner dies.

Planning provides pet owners with peace of mind because they know their pet will be cared for as intended. Family and friends are relieved of the responsibility of making decisions about the care of the pet after the death or incapacity of the owner. Pets also benefit from the owner’s planning as they are more likely to experience a smooth transition to a new home and pet caregiver.

Who gets your pet when you die?

In Montana, a pet is defined as “any domesticated animal normally maintained in or near the household of its owner.” A pet is legally considered as tangible personal property, just like dishes, furniture, or jewelry. When a pet owner dies, pets pass to beneficiaries:

• by provisions in an owner’s Will 
• by directives in an owner’s trust document, or
• by a priority list of heirs contained in the Montana Uniform Probate Code (UPC) 

The UPC applies only if an owner does not have a Will or trust. If there are multiple heirs, each of whom legally owns a fraction of the pet, they may end up in court arguing about who gets to keep the pet or who has to take on the many tasks of caring for the pet. All heirs may refuse to accept these responsibilities. If so, the district judge in the county where the deceased pet owner lived makes the final decision about what happens to a beloved pet. If no heirs are willing to care for the pet, the pet may be placed in a local animal shelter, or in a worst-case scenario may be euthanized.

What would make a suitable pet caregiver?

The choice of a caregiver for a pet is extremely important.Key considerations include:

• the willingness to assume the responsibilities associated with caring for the pet,
• the ability to provide a stable home and proper veterinary care, and
• the harmonious relationship between the pet caregiver and their family members.

If more than one pet is left to care for after the death of an owner, another consideration is whether the potential pet caregiver is willing to keep all the pets together in the same household.

These matters should be discussed with the proposed pet caregiver as early as possible so there is no confusion later. The name of the selected pet caregiver should be documented in writing. The document should be placed in a location easily found in case of an emergency or the disability or death of the pet owner.

What types of instructions should be provided?

The pet owner should consult a local veterinarian to suggest ideas specific to the type of pet the owner has. Pet owners can be as detailed as they want about the care of a pet. Examples of the types of concerns about which pet owners may wish to provide instructions include:

• food and diet
• toys
• daily routines
• grooming
• kennels
• socialization and behavior
• vaccination and health checkup schedule, (including rabies vaccination, tag and preferred veterinarian)
• compensation for the pet caretaker
• whether a pet trust will pay for liability insurance in case the animal bites or otherwise injures someone, including the pet caregiver
• how the trustee is to monitor caretaker’s services
• disposition of the pet’s remains (burial, cremation, memorial).

How could a Will help assure the care of a pet?

A pet owner can provide instructions in a Will giving broad discretion to the personal representative (PR) for making decisions about the pet and for using funds from the estate on behalf of the pet. A personal representative is the person named in a Will to settle the estate

A pet owner may include a provision for a bequest to the PR for expenses for finding and transporting a pet to the new home. The owner may direct the PR to provide veterinary care needed for keeping good health and for alleviating suffering of the pet. A bequest in a Will for the benefit of a pet could be for:

1. a specific amount (such as $5,000);
2. a percentage of the owner’s estate (such as 10%).
3. a set percentage of the owner’s estate not to exceed a certain dollar amount (such as up to 10% or a maximum of $10,000).
4. an item of property (such as shares of stock.)

The bequest for a pet can also be what remains in an owner’s estate after expenses are paid and after bequests to other heirs are distributed. This is termed as the residue of the estate. Attorneys often recommend percentages or fractions with minimums and maximums instead of a set dollar amount or the entire residue. This makes the funding provision flexible, depending on the amount of money left in the owner’s estate, yet an appropriate amount to meet the needs of the pets and the desires of the owner.

Bequests can come from a variety of the pet owner’s assets, such as checking/savings accounts, certificates of deposits, U.S. savings bonds, stocks, bonds, mutual funds, and real estate. An owner could also create a bequest from the amount from the sale of personal property, such as a vehicle, coin collection, art, or jewelry.

However, there are drawbacks to having a Will as the only legal document for the protection of a pet. A Will is effective only upon death of the owner, so it does not address pet care during periods of the owner’s disability or incapacity. Because a Will takes effect only upon the owner’s death, it may not be probated and formally recognized by a Montana district court until months or more than a year after the death of the owner. During this time, the pet may be neglected or even euthanized because there are no funds to provide for its care.

Another drawback of a Will being the only document for a pet’s protection is that after the estate is closed, the PR no longer has legal authority over the deceased person’s estate. This means the PR cannot assure the selected pet caregiver is following the owner’s wishes for care of the pet. Because of these limitations, attorneys normally recommend the creation of a pet trust.

The Montana Uniform Trust Code (MUTC) allows a trust to be created to provide for the care of an animal during the settlor’s (owner’s) lifetime. The trust ends upon the death of the animal. However, if the trust was created to provide for the care of more than one animal during the settlor’s lifetime, it does not end until the death of the last surviving animal.

Pet owners may create and fund a pet trust either while they are alive (called a revocable trust) or upon death by including trust provisions in a Will (called a testamentary trust). A trust is a legal arrangement by which an individual shifts ownership of property from personal ownership into the legal ownership of the trust. The pet owner names a trustee to manage the funds for the benefit of the pet. The trustee may not use any part of the principal or income in the trust for any use other than for those specified by the trust instrument for the pet.

REVOCABLE TRUST

A revocable trust takes effect when signed by the settlor. Thus, it is already functioning when the pet owner dies or if the pet owner becomes incapacitated. This avoids a delay between the pet owner’s death or incapacity and the funds being available for the pet’s care. If the trust assets are managed by a financial institution or a trustee other than the pet owner, the revocable trust may have start-up costs and yearly administration fees.

When a pet owner creates a revocable trust, the pet, along with money or other property, is placed in the trust at the time it is created. Additional funds can be added to the trust later or upon the death of a pet owner by the owner’s Will.

A pet owner or the trustee should document all transfers and follow the correct steps based on the type of property placed in the trust. If the pet owner is transferring money to a trust, a checking account should be set up. A check can be written showing the payee as, “[name of trustee], trustee of the [name of pet trust], in trust.” On the memo line, indicate the check is for “contribution to [name of pet trust].”

TESTAMENTARY TRUST

A testamentary trust is a less expensive choice because the trust does not take effect until the owner dies and the Will is declared valid by the district court. A disadvantage of a testamentary trust is that there are no funds available to care for the pet during the gap between when the pet owner dies and when the Will is declared valid, the estate is closed, and the testamentary trust is set up. Additionally, a testamentary trust does not provide protection for the pet if the owner becomes incapacitated and is unable to care for it.

If the pet owner creates a trust in a Will, a provision should be included in the property distribution section transferring to the trust both the pet and the assets to use when caring for the pet.

Example: “I leave [description or name of pet] and [amount of money and/or description of property] to the trustee, in trust, under the terms of the [name of the pet trust] created under Article [number] of this Will.”

A trust document provides the pet owner with the ability to provide detailed directions to the caregiver for the pet’s care. A pet owner may specify who manages the property (the trustee); name the pet’s caregiver (the beneficiary); list what type of expenses relating to the pet the trustee will pay; the type of care the animal will receive; what happens if the beneficiary can no longer care for the animal; and the disposition of the pet’s remains after death. The pet owner may direct the trustee to provide funding for the person who provides care for the pet after the owner dies.

An owner may also want to give a trustee the power to remove the pet from the caregiver if, in the opinion of the trustee, the caregiver is not providing the level of care outlined in the trust document. The trustee could contact a veterinarian to assess the health condition of the pet.

MONTANA STATUTORY PET TRUST

Another method a pet owner may use is to establish a Montana Statutory Pet Trust, which is valid for a maximum of 21 years, even if an owner writes a longer term in the trust document. The trust ends at the earlier of 21 years or when the pet dies. The trustee may not use any part of the principal or income from the trust for any other use than for the care of the pet.

A Montana district judge may reduce the amount of the owner’s property transferred to a pet trust if the judge decides the amount exceeds what is needed for the care of the pet. Unless ordered by a district judge or required by the trust document, no filing, reporting, registration, periodic accounting, or separate maintenance of funds is needed from the trustee for a pet trust.

If the pet owner did not name a trustee in a trust document, or if no named trustee is willing or able to serve, the district judge may name a trustee. The judge may also order a transfer of the trust property to another trustee under the following conditions:

• If such action is required to ensure the funds are used to care for the pet.
• If the pet owner did not name a successor trustee in the trust agreement, and if the originally named trustee is unable or unwilling to serve.
• If no designated successor trustee agrees to serve or can serve.

Upon the death of the pet and termination of the trust, Montana law directs the trustee to transfer the remaining trust property not used for the care of the pet as directed:

• In the pet owner’s trust document.
• Under the residuary clause of the Will (if the pet owner had a written Will).
• Under Montana intestate succession statutes to the pet owner’s heirs (if the pet owner did not have a Will).

POTENTIAL SOURCES OF FUNDING FOR A PET TRUST

Funds for the care of a pet after the death of the owner could come from pay-on-death (POD) designations on financial accounts to the trust or transfer-on-death (TOD) registrations with the trust as beneficiary for stocks, bonds, mutual funds, and annuities. The owner could also direct the trustee in the trust document to sell property assets such as a vehicle, a house, or a boat and place those funds in the trust for the care of the pet.

Another source of funding for a pet trust is life insurance. A pet owner may fund a revocable or testamentary pet trust by naming the trustee of the trust as the beneficiary of a life insurance policy. Or the pet owner may list a percentage of a certain part of an existing policy payable to the pet trust. This technique is often used if the pet owner does not have or expect to have sufficient property to transfer for the pet’s care. See the MontGuide, Testamentary Trusts in Montana (MT202113HR) online, or request a copy from the local MSU Extension office.

In Montana, pets are not considered a “person,” so they cannot be named as a beneficiary of a life insurance policy. Pet owners should consult with an attorney and/or life insurance agent about the correct way of naming the trustee of a pet trust as a beneficiary of a life insurance policy. See the MontGuide, Life Insurance: An Estate Planning Tool (MT199211HR) online, or request a copy from the local MSU Extension office.

Also, a pet cannot be named as a payable on death (POD) beneficiary on accounts at financial institutions or on a transfer on death registration (TOD) beneficiary on stocks, bonds, or mutual funds or a transfer on death deed (TODD) for real property. Instead, the trustee would be named as beneficiary. See the MontGuide, Nonprobate Transfers (Contractual Arrangements, Multiple Party Accounts POD Designations, TOD Registrations) (MT199509HR) and Transfer on Death Deeds in Montana (MT202010HR) online, or request a copy from the local MSU Extension office.

AMOUNT OF MONEY IN A TRUST

The amount of money needed to provide adequately for pet care after the owner dies depends on many factors, such as:

• type of animal
• animal life expectancy (especially important in the case of long-lived pets such as a macaw parrot, which can live over 80 years, or a tortoise)
• standard of living the owner wishes to provide for the animal
• need for potentially expensive medical treatment
• whether the person caring for the pet is to be paid for services.

The pet owner also needs to decide if funds are to be available to provide the pet with proper care when the caregiver is on vacation, away on business, receiving treatment in a hospital, or is otherwise temporarily unable to provide for the pet.

The size of the pet owner’s estate must also be considered. If the estate is large, a pet owner could transfer sufficient property to the trust so the trustee could make payments primarily from income and use the principal only for emergencies for the pet. On the other hand, if the estate is small, the pet owner may wish to transfer a lesser amount and direct the trustee to supplement trust income with withdrawals from the principal as needed.

NAMING A TRUSTEE

The trustee for a pet trust can be an individual or corporation. A trustee should have the confidence to manage the property in the trust prudently and make sure the caregiver is taking sufficient care of the pet. A family member or friend may be willing to take on trustee responsibilities at little or no cost. Another possibility is naming a professional trustee or corporation with experience in managing trusts, although an annual trustee fee will need to be paid.

Serving as a trustee can be a potentially burdensome position with many responsibilities. A pet owner should visit with the potential trustee to be sure the person is willing to do the job when the time comes. A pet owner should consider naming at least one – preferably two – successor trustees in case the first choice is unable or unwilling to serve. If the potential trustee does not want to serve as the caregiver for the pet, a local veterinarian could be consulted to suggest an alternative. To avoid having a pet without a home, an animal protection organization such as the Humane Society or a no-kill animal shelter could be named trustee as a last resort.

How could a durable financial power of attorney help assure the care of a pet?

Durable powers of attorney (POA), in which a person authorizes someone else to conduct certain acts on their behalf, are a standard financial planning tool. The document can be written to be effective upon a pet owner’s physical or mental incapacity. Provisions can be included in the durable financial POA document authorizing the agent, also called an attorney-in-fact (the person designated to manage the owner’s affairs), to use funds or other property as necessary to provide for the health, care, and welfare of the pet.

A pet owner can also authorize payment to the pet caregiver in the POA document. Many of the same details for care of the pet outlined in a trust could be applied to a financial POA. The financial POA could reference and incorporate the terms of a revocable or testamentary trust.

Because a durable financial POA ceases at the death of the pet owner, an individual may want to consider a pet trust to provide for the continuing care of a pet after the owner dies. For more information about a financial POA, read the MSU Extension MontGuide, Power of Attorney (financial) (MT199001HR) online, or request a copy from the local MSU Extension office.

How to prove my pet's identity?

To prevent fraud, pet owners should clearly name pets to receive care under a Will, trust, or POA. There are a variety of methods for preventing fraud. A detailed description should include any unique characteristics, such as blotches of fur color and scars. Veterinarian records and pictures of the animal may also be helpful. A veterinarian or breeder may also implant a microchip in the pet or obtain a DNA sample for identification purposes.

Summary

In the transition occurring when a pet owner becomes incapacitated or dies, pets are sometimes forgotten, sent to a boarding kennel, given to a friend or relative who really does not want another pet, or brought anonymously to a shelter. Planning ahead offers the assurance a beloved pet is cared for after the incapacitation or death of the pet owner. By using a pet trust, a Will, and a durable financial power of attorney, a pet owner has practical and legal assurances that their pet will be protected if they are no longer able to provide care.

Additional Resources and References

American Society for the Prevention of Cruelty to Animals (ASPCA)

Pet Trust Primer: https://www.aspca.org/pet-care/pet-planning/pet-trust-primer

Planning for the Pet’s Future: https://www.aspca.org/pet-care/pet-planning

Animal Legal and Historical Center

The Michigan State University College of Law maintains a website that is designed to provide pet owners with legal information. Also provided are related links and research papers: https://www.animallaw.info/intro/wills-and-trusts

Committee on Animal Law, New York City Bar

Providing for Your Pets in the Event of Your Death or Hospitalization. http://www2.nycbar.org/pdf/report/uploads/8_20072453-ProvidingforYourPetintheEventofDeathHospitalization.pdf

Humane Society of the United States

Providing for your Pet’s Future contains a six-page fact sheet, wallet alert cards, emergency decals for windows and doors and caregiver information forms: www.humanesociety.org/assets/pdfs/pets/pets_in_wills_factsheet.pdf

Montana Code Annotated

§ 72-38-408; § 72-31-302 – 340; § 72-2-1017; § 80-9-101

Second Chance for Pets

Offers free online pet owner instruction forms. 

www.2ndchance4pets.org

State Bar of Montana

Norcott, Garrett. What to do with Lassie when Timmy dies from falling down the well? Montana Lawyer, December 2013 Vol. 39 No. 3. https://cdn.ymaws.com/www.montanabar.org/resource/collection/EAA30F23-4767-49DA-BBE7-152CF93C8535/December2013January2014MTLawyer.pdf

Texas Tech University School of Law

Beyer, Gerry W. Estate Planning for Non-Human Family Members. 2016. www.professorbeyer.com/Articles/Animals.html

Disclaimer

This MontGuide is not a substitute for legal advice. It is designed to inform people about estate planning for their companion/service animals and pets. Future changes in Montana laws cannot be predicted, and statements in this fact sheet are based solely on the statutes in force on the date of publication.

Acknowledgement

Representatives from the Business, Estates, Trusts, Tax and Real Property Section – State Bar of Montana reviewed this publication and recommend its reading by Montana residents who are developing an estate plan for their pets. The authors appreciate the suggestions provided by veterinarians and owners of pets, companion and service animals. With appreciation for contributions from previous author Jona McNamee, former MSU Extension agent in Cascade County.

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