Designating Gifts or Guardianship for Pets
Do you have a cherished pet, a dog, cat or other animal who has been a faithful and true companion? You may not realize it, but you can (and should) include your four-legged family members in your estate planning. If you don’t specifically name them and identify a plan for their care, they may unfortunately be euthanized in the event of your untimely death.
If you live in New Jersey, you can take advantage of a 2001 law that allows pet owners to create a trust for the care of domestic animals. Such a trust is typically administered in a manner similar to a trust for the benefit of humans:
- The trust names an administrator or trustee who must follow the specific instructions of the trust
- The administrator or trustee may not use the trust funds for any purpose not stated in the trust
- When the trust terminates, any remaining assets must be distributed as set forth in the trust
If the trust does not identify a termination date, it ends after 21 years or upon the death of all the animals named in the trust, whichever comes first. If the person creating the trust (grantor) has not identified where trust assets go upon the termination of the trust, they will go to the grantor’s estate.
The law permitting the establishment of a pet trust also has provisions to ensure that such a trust cannot be used primarily as a means of diverting assets from legitimate heirs. Under the statute, if the court determines that the amount in trust “substantially” exceeds what is necessary to care for the animal, the court has the discretion and power to reduce the amount in the trust. Those assets are then distributed as if the trust had been terminated.
You can create the pet trust during your lifetime (inter vivos) or through your will (testamentary). An advantage of creating an inter vivos pet trust—you will potentially avoid New Jersey inheritance taxes.
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