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FORUM MAGAZINE

IN THIS ISSUE

Editor's Letter – Kristin Doucet

This & That

Relationship Management – The Inheritors by Susan Yellin

Practice Management – Multidisciplinary Advising by Leah Golob

Practice Management – Demystifying Social Media by Geoff Evans

Tax & Estate Planning – Pets in Estate Planning by Doug Carroll

Corporate Insurance – The Tax Exempt Test by Kevin Wark and Glenn Stephens

The Small Business Client – Divorce Settlements by Gary Opolsky and David Louis

Leadership & Growth – Dissecting Leadership by Rob Popazzi

Advocis News

The Final Word by Greg Pollock

TAX & ESTATE PLANNING

By Doug Carroll

Pets in Estate Planning

And to my faithful companion, I leave …

I often refer to estate planning as the process of taking care of yourself and those close to you — now and when you are no longer around. Typically, “those close to you” are human beings, although this is not always the case.

Pet Peeves

Love you to death.
An Illinois woman left a $1.3 million estate to some animal charities, but directed that her own cat be euthanized for fear it would end up in an abusive home. The executor applied to court, and instead the cat was placed in a home with a reputation for caring for cats.

No Trouble.
Leona Helmsley’s dog Trouble inherited $2 million. It cost over $150,000 annually to maintain her in the lap of luxury to which she had become accustomed, including a personal bodyguard. Upon Trouble’s death three years later, the remaining funds went to charity.

Lions ‘n’ tigers ‘n’ lizards, oh my!
An Ontario Serpentarium owner died unexpectedly of a stroke at age 52. With no will, a dispute arose over his 200+ exotic animals, requiring a six-week trial before his brother was awarded ownership. The animals were donated to two zoos.

Many people love their pets deeply and want them to be well cared for after they die. The death of a single or widowed senior in particular can have serious, perhaps even fatal, ramifications for the pet. In cases where no family member or close friend steps forward to claim the furry friend, it is often euthanized (See sidebar – Love you to death).

On the other hand, consider the fortunes of Trouble, the Maltese lapdog to whom New York City landlord and real estate maven Leona Helmsley bequeathed a good portion of her estate on her death in 2007. While Ms. Helmsley’s human descendants managed to have the value of the dog’s inheritance reduced, Trouble lived in the lap of luxury for years before moving on to that Great Kennel in the Sky. (See sidebar — No Trouble)

Apart from any legal issues, there are some practical concerns that a pet owner should carefully consider when trying to choose an appropriate successor owner/ caregiver:

  • Does the person have the disposition to be a pet owner?
  • Would the person’s schedule allow for adequate care? How would travel and vacations factor in?
  • Is the person physically up to the task?
  • Are there any safety issues (to pet or people), particularly where there are young children in the home?
  • Are there allergy issues?

Is there space to care for the pet? Do condominium or housing rules allow pets?  What are the municipal bylaws in the case of exotic pets? (See sidebar — Lions ’n’ tigers ’n’ lizards, oh my!)

And then there is the matter of money. As any pet owner can attest, there is the cost of food, accessories, heath checkups, emergency medical care, and possibly boarding when the owner is travelling. Multiply this by the number of years the pet has left in his or her life and you’re talking about a heavy financial burden on an individual or family. On top of that, there can be a significant time commitment for which, in fairness, one  should be compensated.

In Canada, a pet cannot be named as a beneficiary in a person’s will or under a life insurance policy, so you can’t give the money to the pet directly. Rather, pets are considered property. They can be given away as a gift to the intended caregiver in the owner’s will. Attached to a monetary gift could be an understanding that it is to compensate for the deceased’s pet’s future maintenance.

If the pet owner is concerned that the caregiver may fail to fully carry out their wishes, it’s certainly possible to establish a trust to provide for the cost of the pet’s upkeep. The compensation to the caregiver would then be based on continuing to provide the appropriate care. Of course, this would bring into question whether the right person has been selected, not to mention the complication and cost of drafting the trust and providing for its proper administration.

Above all, one must keep in mind how beneficiaries and family will respond. As you well know, a will challenge can be costly, time-consuming and acrimonious. As with many estate planning issues, open communication of the pet owner’s wishes is key. It can uncover obstacles and options, and put the owner’s mind to rest that the pet’s creature comforts will be assured in their absence.


Doug Carroll, JD, LLM (Tax), CFP, TEP, is vice-president, tax and estate planning at Invesco Trimark and can be reached at Doug.Carrol@invescotrimark.com.