Future Returns: Why Fido Needs a Trust

Many well-off pet owners have left millions of dollars to their cats, dogs, and even chickens—perhaps most notoriously Leona Helmsley, who left US$12 million when she died in 2007 to her white Maltese dog Trouble.

But because pets are considered property, individuals can’t directly bequeath money to their dog or cat. Instead, they should make some type of arrangement to care for their beloved animals should they become incapacitated or die, according to Annamaria Vitelli, head of PNC Private Bank Hawthorn.

“Pet trusts are often thought of as something wealthy eccentric folks would do,” Vitelli says. “But now it’s becoming mainstream.”

The reason? Close to 70% of households in the U.S. own a pet, she says, so “70% of households need to think about this.”

Also, as of 2016, all 50 states and Washington, D.C., have created statutory provisions for pet trusts, Vitelli says.

At Hawthorn, pets often come up in wealth planning as advisors get to know and understand the families they work with and recognize the value they place on their critters. As the bank has worked more with families in Texas, they are also having conversations with ranch owners about what will happen to horses that aren’t part of a working farm, but are pets, Vitelli says.

Penta recently spoke with Vitelli about what pet owners need to consider when ensuring the care of their non-human loved ones.

Selecting a Caregiver

Whatever plan a family creates for their pet’s future, the main consideration is designating a reliable caregiver, Vitelli says.

Many pet owners have trusted family members and friends who already lend a hand in caring for their pets. Those who don’t have that kind of social network should research organizations that care for animals or animal sanctuaries that can provide for a pet with money set aside by the pet owner.

Vitelli recalls a client who had a parrot and was concerned about who would care for her bird when she died because some parrots can live for 100 years. “The parrot went to a bird sanctuary with their stipend and was being cared for at the sanctuary,” Vitelli says.

It’s also important pet owners let the caregiver they designate know their intentions and understand what’s involved. “You may have the perfect person in your mind, but you shouldn’t spring it on them at the reading of the will—start talking to them now,” she says.

Some potential caregivers may simply not want to do it, or they may be precluded from taking in a pet for some reason. Also, because a caregiver’s circumstances can change, no longer allowing them to care for a pet, it’s important to name a successor who can step in, Vitelli says.

Picking a Pet Trust

Once a caregiver is selected, pet owners can simply set up an informal arrangement with them that includes funds bequeathed in their will to cover costs. But there is no way to legally ensure that any funds designated this way are used to care for a pet. That may not be an issue for those who can rely on trustworthy family members or friends. But for those who have doubts, or don’t have the perfect person to rely on, it’s best to create a more formal structure.

“As much as we love our pets, the law doesn’t recognize pets as people. They are a piece of property, so once you give that property away, how it’s treated by the person who takes it on is not anything you can enforce,” Vitelli says.

Setting up a pet trust can create that assurance. The simplest is a traditional trust, which would be governed by general trust law. In this case, a pet owner needs to name a beneficiary (the caregiver) and needs to fund the trust with sufficient money to care for the pet. A trust also requires a trustee, most likely another individual who can make sure any funds distributed from the trust are spent according to a pet owner’s wishes, and that the pet is healthy and safe.

“So long as the trust complies with the law of the state in which it is created, and state law enforces conditional distributions from a trust, the care of your pet can be enforced in court,” according to a note to client from PNC Private Bank.

State Law Matters

Another option is a statutory trust, which would be governed by the law of each specific state. As with a traditional vehicle, a statutory trust is enforceable, although it must comply with state law. Because these laws can be wildly different state-to-state, it’s important to work with an attorney who knows the statute and can draft a trust.

Pennsylvania, for instance, requires a trust to end when the last pet covered by the contract dies, while other states may limit the trust’s length to at most 21 years. While that accounts for the life of most pets, many animals can live longer.

PNC advises clients to put a reasonable amount of money in a trust to cover a pet’s needs throughout its life, and to make a plan for unused funds to be returned to their estate. But how much is reasonable? That can be difficult for some families to decide, particularly when they are childless and pets stand in for two-legged family members. “It has more to do sometimes with the endearment of that pet to that family member,” Vitelli says.

Also, some states limit how much money a pet can receive, and, as is the case in Florida, penalize “overfunding.” In the year after Helmsley died, for instance, a Manhattan surrogate court judge reduced her dog Trouble’s inheritance from US$12 million to US$2 million, awarded US$6 million to two grandchildren who had been disinherited, and had the remainder go to Helmsley’s charitable fund.

“You just want to make sure you’re not running afoul of a judge’s sensibilities and state rules,” Vitelli says.

As Paris makes its final preparations for the Olympic games, its residents are busy with their own—packing their suitcases, confirming their reservations, and getting out of town.

Worried about the hordes of crowds and overall chaos the Olympics could bring, Parisians are fleeing the city in droves and inundating resort cities around the country. Hotels and holiday rentals in some of France’s most popular vacation destinations—from the French Riviera in the south to the beaches of Normandy in the north—say they are expecting massive crowds this year in advance of the Olympics. The games will run from July 26-Aug. 1.

“It’s already a major holiday season for us, and beyond that, we have the Olympics,” says Stéphane Personeni, general manager of the Lily of the Valley hotel in Saint Tropez. “People began booking early this year.”

Personeni’s hotel typically has no issues filling its rooms each summer—by May of each year, the luxury hotel typically finds itself completely booked out for the months of July and August. But this year, the 53-room hotel began filling up for summer reservations in February.

“We told our regular guests that everything—hotels, apartments, villas—are going to be hard to find this summer,” Personeni says. His neighbours around Saint Tropez say they’re similarly booked up.

As of March, the online marketplace Gens de Confiance (“Trusted People”), saw a 50% increase in reservations from Parisians seeking vacation rentals outside the capital during the Olympics.

Already, August is a popular vacation time for the French. With a minimum of five weeks of vacation mandated by law, many decide to take the entire month off, renting out villas in beachside destinations for longer periods.

But beyond the typical August travel, the Olympics are having a real impact, says Bertille Marchal, a spokesperson for Gens de Confiance.

“We’ve seen nearly three times more reservations for the dates of the Olympics than the following two weeks,” Marchal says. “The increase is definitely linked to the Olympic Games.”

Worried about the hordes of crowds and overall chaos the Olympics could bring, Parisians are fleeing the city in droves and inundating resort cities around the country.
Getty Images

According to the site, the most sought-out vacation destinations are Morbihan and Loire-Atlantique, a seaside region in the northwest; le Var, a coastal area within the southeast of France along the Côte d’Azur; and the island of Corsica in the Mediterranean.

Meanwhile, the Olympics haven’t necessarily been a boon to foreign tourism in the country. Many tourists who might have otherwise come to France are avoiding it this year in favour of other European capitals. In Paris, demand for stays at high-end hotels has collapsed, with bookings down 50% in July compared to last year, according to UMIH Prestige, which represents hotels charging at least €800 ($865) a night for rooms.

Earlier this year, high-end restaurants and concierges said the Olympics might even be an opportunity to score a hard-get-seat at the city’s fine dining.

In the Occitanie region in southwest France, the overall number of reservations this summer hasn’t changed much from last year, says Vincent Gare, president of the regional tourism committee there.

“But looking further at the numbers, we do see an increase in the clientele coming from the Paris region,” Gare told Le Figaro, noting that the increase in reservations has fallen directly on the dates of the Olympic games.

Michel Barré, a retiree living in Paris’s Le Marais neighbourhood, is one of those opting for the beach rather than the opening ceremony. In January, he booked a stay in Normandy for two weeks.

“Even though it’s a major European capital, Paris is still a small city—it’s a massive effort to host all of these events,” Barré says. “The Olympics are going to be a mess.”

More than anything, he just wants some calm after an event-filled summer in Paris, which just before the Olympics experienced the drama of a snap election called by Macron.

“It’s been a hectic summer here,” he says.

Hotels and holiday rentals in some of France’s most popular vacation destinations say they are expecting massive crowds this year in advance of the Olympics.
AFP via Getty Images

Parisians—Barré included—feel that the city, by over-catering to its tourists, is driving out many residents.

Parts of the Seine—usually one of the most popular summertime hangout spots —have been closed off for weeks as the city installs bleachers and Olympics signage. In certain neighbourhoods, residents will need to scan a QR code with police to access their own apartments. And from the Olympics to Sept. 8, Paris is nearly doubling the price of transit tickets from €2.15 to €4 per ride.

The city’s clear willingness to capitalise on its tourists has motivated some residents to do the same. In March, the number of active Airbnb listings in Paris reached an all-time high as hosts rushed to list their apartments. Listings grew 40% from the same time last year, according to the company.

With their regular clients taking off, Parisian restaurants and merchants are complaining that business is down.

“Are there any Parisians left in Paris?” Alaine Fontaine, president of the restaurant industry association, told the radio station Franceinfo on Sunday. “For the last three weeks, there haven’t been any here.”

Still, for all the talk of those leaving, there are plenty who have decided to stick around.

Jay Swanson, an American expat and YouTuber, can’t imagine leaving during the Olympics—he secured his tickets to see ping pong and volleyball last year. He’s also less concerned about the crowds and road closures than others, having just put together a series of videos explaining how to navigate Paris during the games.

“It’s been 100 years since the Games came to Paris; when else will we get a chance to host the world like this?” Swanson says. “So many Parisians are leaving and tourism is down, so not only will it be quiet but the only people left will be here for a party.”

Future Returns: Why Fido Needs a Trust

When it comes to estate planning, pets need to be considered, too.