Florida Pet Trusts: The Pros and Cons
It is often said that pets bring us true joy in this world. We love them, and they love us unconditionally. They are part of our everyday life. We see pets as part of our family and always want the best for them. It makes sense that we also want to provide for them after we are gone. A pet trust is one way to ensure that our pets are taken care of in the event of disability and after we are deceased.
A Florida Pet Trust is an estate planning instrument that allows you to provide financial care for your beloved pet during your disability and after you have died. However, there are several factors that must be considered before setting up a trust for your pet. It can be a complex process, which is precisely why you need an experienced estate planning attorney who is familiar with Florida Pet Trusts. The Law Offices of Hoyt & Bryan, a Florida estate planning law firm, offers experienced estate planning attorneys that can help you take care of your pet.
The Pros and Cons of a Florida Pet Trust
Until recently, it was not possible to legally provide for your pet in Florida. You could draft a will that made provisions for your pet, but Florida law did not provide a mechanism to ensure that the directions regarding your pet were followed. However, in 2001 a change in Florida law allowed for a legally enforceable pet trust in the State. On January 1, 2003, Florida law section 737.116 went into effect and created the estate planning tool: the Pet Trust. Today, all fifty states and the District of Columbia recognize trusts for the benefit of a loved pet.
Florida Law Section 737.116: Pet Trusts
Florida Title XLII Chapter 737 Section 116 states the following:
(1) A trust may be created to provide for the care of an animal alive during the settlor’s lifetime. The trust terminates upon the death of the animal or if the trust was created to provide for the care of more than one animal alive during the settlor’s lifetime upon the death of the last surviving animal.
(2) Except as provided in this section, this state’s law regarding the creation and administration of express trusts applies to a trust for the care of an animal.
(3) A trust authorized by this section may be enforced by a person appointed in terms of the trust. When there is not anyone in such a position, the court will appoint someone. A person interested in the animal’s welfare may request the court to appoint a person to enforce the trust or remove a person appointed. The appointed person shall have the rights of a trust beneficiary for the purpose of enforcing the trust, including receiving accountings, notices, and other information from the trustee and providing consent.
(4) Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Property not required for the intended use, including the trust property remaining upon its termination, shall be distributed in the following order of priority:
(a) As directed by the terms of the trust;
(b) To the settlor, if then living;
(c) Pursuant to the residuary clause of the settlor’s will if the trust for the animal was created in a pre-residuary clause in the settlor’s will;
(d) If the settlor is deceased, according to the residuary provisions of the inter vivos trust, if the trust for the animal was created in a pre-residuary clause in the trust instrument; or
(e) To the settlor’s heirs.
This law provides for the care of an animal that is alive during the settlor’s lifetime. This is a crucial point. This statute cannot provide for the care of animals acquired after the settlor’s death. However, the law does allow for the care of multiple animals.
While this law is a welcome development for those who love our pets, it creates some potentially complicated legal issues.
Drafting a Florida Pet Trust
Historically, a will or pet trust needed to comport with the Rule Against Perpetuities (RAP). In order to comply with the RAP, the interest in the property must be granted to a beneficiary no later than 21 years after the death of a measuring life. Courts could not use a pet as the measuring life, so any trust that attempted to do so would violate the RAP and be unenforceable. Therefore, a person had to be used as the measuring life. Some states have now abolished or significantly amended the RAP; therefore, this restriction is no longer a hindrance in setting up your pet trust in your state. Florida has adopted the Uniform Probate Code that creates an exception to the RAP and allows for the trust to be valid for the life of the animal.
Pet Trust Tax Issues
Despite Florida statutorily recognizing pet trusts, the IRS is not as friendly to pets and their families. Under IRS Ruling 78-109, any monies passing to the pet trust after the settlor’s death will be included in the gross taxable estate. The Internal Revenue Code (IRC) s. 643 defines a ‘beneficiary’ to include ‘heirs, legatees, devisees.’ These designations are all defined as ‘persons’ by the IRS. Thus, a pet does not qualify as a ‘person’ under the Code and, therefore, cannot be taxed. Despite the above definitions, under IRC s. 641 states that pet trusts should be recognized as a trust for tax purposes. Any pet trust income is taxable. Under Revenue Ruling 76-4876, the trust is taxed as a complex trust that has not made any distributions.
The creation of Florida pet trusts can be a trap for the unwary. It is definitely not a “Do It Yourself” (DIY) project. Besides the issues listed above, other critical decisions must be made regarding your trust. For example, you must decide who you will name to care for your pet; the Pet Caregiver or Pet Guardian. You will have to determine how much money should be used to fund the trust and what assets will be used for this purpose. You’ll want to choose a qualified Trustee to oversee the trust assets, and distributions and make sure your pets are being cared for properly. As a result, you will also want to include detailed instructions on your pets’ lifetime care. The decisions are plentiful and should be undertaken thoughtfully with the guidance of an experienced pet trust attorney.
Attorney Peggy Hoyt is one of the most experienced pet trust attorneys in the United States. Her groundbreaking book, “All My Children Wear Fur Coats – How to Leave a Legacy for Your Pet” is now in its third edition. Peggy also hosts a weekly Pawcast called “All My Children Wear Fur Coats.”
Located in Oviedo, Florida, Hoyt & Bryan, LLC, has decades of experience dealing with estate planning matters. Two of their attorneys are certified specialists in Elder Law and Wills, Trusts, and Estates. Partner Peggy Hoyt is the founder and CEO of the non-profit Animal Care Trust USA, Inc., an organization dedicated to keeping loved pets in loving homes using pet trusts and providing pet trustee services.
If you are a pet owner, your estate planning is not complete until you have made provisions for your furry family. Call the Florida estate planning attorneys at Hoyt & Bryan, LLC, today and let them help you provide for your precious pets.