Taxation & Estate Planning

Illinois Pet Trusts: An Introduction

By Joel A. Schoenmeyer

A line in my baby book reads: "Joel is afraid of animals, clowns, and men with beards." That's still pretty much true; in other words, I'm not an animal lover (although I'm not as bad as this guy). But, obviously, I'm in the minority -- lots of Americans have pets that are a big part of their lives.

What happens to a deceased person's pets? Usually a family member or friend takes them in. But how are the pets provided for? For a long time, you couldn't create a trust for your pets because a trust must have a human beneficiary. How to get around that?

Enter the pet trust, and pet trust laws -- the Illinois law is here. What do you need to know/consider in setting up a pet trust? Two main things, really:

1. There are two people who are carrying out your wishes with respect to pets: a caretaker and a trustee. The division of labor is similar to guardianships for minors (where there's a guardian of the person and a guardian of the estate). The caretaker has physical possession of the pets, and the trustee invests the trust money and uses it for the benefit of the pets. You will of course want to name caretakers and trustees who can work together, since the caretaker may be requesting money from the trustee.

2. You have to name a clear contingent beneficiary, to inherit the trust property if (a) you die without owning pets, (b) your pets survive you but subsequently die, or (c) a court reduces the amount of the trust due to a determination that it "substantially exceeds the amount required for the intended use." (Note re. (c) -- this would probably happen if, for instance, you left $10 million for Dickens Thor Meow-Meow Face*, your cat.)

*This is the actual name my wife would give our cat if we owned one. Luckily, she's allergic to cats.

Full post as published by Death and Taxes Blog on August 04, 2010 (boomark / email).