In law school there is a famous case where a man leaves money in trust to take care of his dog and the question becomes who pays the estate tax, the dog or the trustee? The Court held that since a dog has no tax duties and since the trustee was not making income no one had a tax liability. These seems like a wise decision I doubt that our feline and canine friends will ever get their W-2s in on time. Furthermore animals cannot own property so if you are considering leaving your pet something in your Palm Beach Estate Plan I am glad you are reading this: that gift is invalid and will not be respected! What you can do is set up a pet trust for your fine furry (or feathered) friend. Here is my quick reference guide on pet trusts complete with four things to know about Florida Pet Trusts.
- The traditional law of England (called the common law) was adopted upon America’s independence and the rule was clear: animals cannot own, or inherit money, property or estates.
- This makes sense after all considering you can dispose of your pets through your will it would seem backwards that they can also own that with which they are a class.
- In the past in order to set up a trust for a pet a person needed to find an intermediary to hold the funds and care for the pet, luckily this is not the case anymore.
- Another legal obstacle for pet trusts is the rule against perpetuities, which generally provides that an interest in property must vest, if at all, not later than 21 years after the death of someone alive when the interest was created (a measuring life). The measuring life needs to be human, and if the measuring life in a pet trust is that of a pet, such trusts violated the rule against perpetuities and were deemed void.
- The Uniform Probate Code along with an abolition of the Rule Against Perpetuitiesallowed for modern estate planning for pets.
So what is the deal with pet trusts in Florida?
- A trust may be validated for the entirety of the pets life now.
- Florida authorized the creation of a trust for pets in 2002, now codified as F.S. §736.0408,8 under which, a trust may be established for the pet’s lifetime to provide for the care and maintenance of the animal. If the trust has been established to care for more than one animal, the trust will remain in effect until the death of the last animal.
- Numerous additional factors need to be considered when establishing a pet trust, such as provisions for alternate caregivers, the day-to-day care requirements for the pets, including emergency or extraordinary care, and, ultimately, the final disposition of the pet. The current Florida statute addresses only a few of these considerations.
- The IRS does not recognize pet trusts as under the IRS code trusts only apply to testamentary trusts with human beneficiaries. Thus asset transfers under these trusts are treated as part of the decedent’s gross taxable estate.