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From the VetPartners Experts: The Ultimate in Responsible Ownership

Apr 25, 2019 at 1:12 pm
Paul Criscione

If you assume that a friend or relative will love and care for your pet as much as you do, think again. Only one of five Americans has an up-to-date will and only 20% of those include provisions for pets. Unfortunately, this leads to an estimated 500,000 dogs and cats being euthanized every year when their owners die.

Every animal shelter in the country deals with orphaned pets. They arrive for one reason: Their owners didn’t plan to die or become incapacitated. That didn’t prevent them from having heart attacks or accidents, and now their precious companions are homeless. Worse, they may be left alone, starving, and frightened. Does anyone know they exist? Do they need medication? Are they on special diets? Unless your clients make effective plans for the welfare of their family pets in case of an unforeseen emergency, the worst could happen.

Pet trusts

Accidents can happen anywhere at any time, but if your clients are elderly, live alone, or have health problems, it’s especially important to educate them about setting up a pet trust. Since the historic adoption of the 1990 Uniform Probate Code (UPC) allowing for pet trusts, the landscape of estate planning has forever changed. In general, three types of Pet Trusts exist:

  • Statutory pet trust (triggered by a clause in a will)
  • Freestanding Pet Protection Agreement® pet trust
  • Freestanding pet trust

Statutory pet trusts

The statutory pet trust can be easy to implement and cost effective. However, it’s not a perfect solution. A will distributes property and cannot give directions on how to use the property or care for an animal. A court has an obligation to review and the right to revise a will. This can take time, and animals, unlike real property, need immediate attention.

Freestanding pet trusts

The other two types of pet trusts, the Freestanding Pet Protection Agreement® pet trust and the freestanding pet trust, are not created by a will. They stand alone and are legally enforceable when signed by the pet owner and the pet guardian. These trusts offer the advantage of covering all animals owned by the pet owner, both present and future, and can be valid during the pet owner’s lifetime, during any disability, and after the pet owner’s death.

The freestanding pet trust requires an attorney, a trustee, and funds to be set aside. It may name a trust protector. The Freestanding Pet Protection Agreement® pet trust is designed to offer the best features of a trust, a contract, and a will, without their disadvantages. As a freestanding trust, funds pass outside of probate. There is no approval needed by a judge. Like a contract, it includes consideration and acceptance and survives legislative edict. Like a will, it can disburse property upon the death of the pet owner. A pet owner can make annual tax-free gifts up to a yearly limit (in 2019, $15,000 for an individual or $30,000 for married couples). The “beneficiary” of the pet trust is the pet guardian named in the trust. Since statutory pet trusts are only funded at the pet owner’s death, these gift tax rules are applicable only to freestanding pet trusts.

Have your clients made plans to ensure their pets will be taken care of in case tragedy strikes? We advise pet owners considering a pet trust to speak with a financial advisor first to determine which trust is best suited to their needs before working with an attorney to legally draw up trust documents.

 

IMPORTANT DISCLOSURES

Securities and advisory services offered through Royal Alliance Associates., Member FINRA / SIPC. Fixed insurance services offered through Freedom Capital Management, which is not affiliated with Royal Alliance Associates. Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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Paul Criscione
Paul Criscione, CFP, is senior vice president of Freedom Capital Management (FCM), an independent investment advisory firm located in Colts Neck, New Jersey, since 2008. Supported by a network of premier partners, such as Royal Alliance and Pershin LLC, FCM designs strategies that bring strength, stability, and security to clients with one goal in mind: their success. As senior vice president and a certified financial planner, Paul coaches clients through complex financial decisions. Using a comprehensive and collaborative approach, he translates confusing jargon and fine print into clear, manageable steps, enabling clients to quantify decisions over the long-term. He collaborates with like-minded professionals that specialize in areas such as retirement income planning, business valuations, structured sales, wealth transfer, and tax and legacy planning in order to create a dynamic, integrated financial plan that is designed to work for the client throughout his or her lifetime. As a longtime resident of Holmdel, New Jersey, Paul enjoys playing golf and traveling with his wife, Dr. Regina Criscione. Together, they serve their community by volunteering at Pet Adoption Network, a nonprofit organization focused on saving animals from kill shelters.

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