The Administration of the Estate of Darth Vader

A long time ago, in a galaxy far, far away, Darth Vader (“Vader”) died at the end of the movie ‘Return of the Jedi’. Movie-goers around the world flocked to the cinema to see the story of Vader’s redemption and to learn about the twisted Skywalker family tree. I was 9 when ‘Jedi’ was released, and it was awesome.

When I see the Star Wars movies now, I know I am getting old because I start asking questions like, “Did someone have to administer Vader’s estate?”, “How much did Vader get paid”, and “what sort of property would a guy like that have in his estate?” In this blog post, I’ll take a look at what administering Vader’s estate may have looked like. In my next post I will analyze some of the property interests he may have owned at his death and see if there are some lessons to be learned from Vader’s estate. First, a few assumptions:

1. If Vader lived in the United States in 2012, he would probably choose to live in Vader, WA for obvious reasons. Let’s instead assume that Vader was based out of the Empire’s Portland, OR office and maintained a sweet penthouse condo in Portland’s Pearl District as his home.

2. Let’s also assume that Vader died in 2012 and that he had no estate planning documents. If there was important property that was going to pass via Vader’s Last Will or that was stored in a safe deposit box, Vader probably would have mentioned it to Luke as Vader was dying in Episode 6. He did not.

3. Luke’s Aunt Beru and Uncle Owen were killed by stormtroopers on Tatooine during the early part of the first Star Wars movie (Episode 4). For our analysis, let’s assume that Beru and Owen had no living parents, siblings, or children when they died. Let’s also assume that Owen and Beru never legally adopted Luke (in order to stay off of the Empire’s radar).

4. In Episode 1, we learn that Anakin Skywalker (the little kid who would become Darth Vader) had no father. His mother claims that his birth was the result of some sort of immaculate conception. According to Google, Anakin may have been conceived by Darth Sidious’ master using the Dark Side of the Force. We do not have a statute for immaculate conception via Sith Lords in Oregon, so let’s assume that Vader’s father (whomever it is) died before Vader did.

5. We will treat Vader as a member of the armed forces, rather than a high-ranking government employee, independent contractor, or owner of a partnership interest. We will further assume that the families of all of Vader’s victims have no valid claims for the wrongful death, murder, torture, etc of their loved ones.

6. Finally, let’s assume that the commentators on Fox News are correct when they allege that the current federal government is analogous to the Empire in Star Wars. For our example, that means the same tax code, same forms and the same procedures (and the same relaxed gun control policies).

Note: For our not-so-geeky readers, there are 6 Star Wars movies: Episodes 4-6 were released from 1977 – 1985 and Episodes 1-3 were released from 1999 – 2005.

Here is how the estate administration would probably shake out here in Oregon:

At the time of Vader’s death in ‘Return of the Jedi (Episode 6), he had two living children (Princess Leia and Luke Skywalker). Vader’s wife (Padme Admidala) predeceased Vader, as she died at the end of Episode 3 in one of the more foolish deaths in cinematic history when she “lost the will to live”. Vader’s mother died during Episode 2 and we are assuming Vader’s father predeceased him. Vader’s step-brother Owen was killed early in Episode 4. No reference was ever made to Vader having any other siblings. In summary, Vader’s parents, step-brother, and spouse predeceased him, he had no other siblings, he left two surviving children, and he had no grandchildren.

ORS § 112 includes provisions for the distribution of assets of Oregon residents who die intestate (without a will). Vader’s estate would be administered under Oregon’s intestacy statutes in our example. Because Vader did not have a surviving spouse, the administrators of Vader’s estate would look to ORS § 112.045 to determine the distributions passing to people other than a surviving spouse. Under ORS §112.045(1), property would pass, “To the issue of the decedent. If the issue are all of the same degree of kinship to the decedent, they shall take equally, but if of unequal degree, then those of more remote degrees take by representation.”

In our example, since Luke Skywalker and Princess Leia were Vader’s children, they are of the same degree of kinship. Vader had no other children (alive or dead), so Luke and Leia would each inherit 50% of Vader’s assets. Vader did not name a Personal Representative to handle his affiars (since he left no will). The court would appoint a Personal Representative in this case. While most of our clients are not Jedi Masters or Sith Lords, many of them do die without valid Last Wills in place. This is the sort of analysis we have to go through when that happens.

One remaining issue to be discussed in our analysis of Vader’s estate distribution is as follows: Luke was arguably responsible for Vader’s death. If a court found that Vader died as a result of Luke striking Vader during their final lightsaber battle in Episode 6, then Leia would likely inherit 100% of Vader’s estate. ORS 112.465 provides that, “property that would have passed by reason of the death of a decedent to a person who was a slayer or an abuser of the decedent, whether by intestate succession, by will, by transfer on death deed or by trust, passes and vests as if the slayer or abuser had predeceased the decedent.” My collegue Steve Kantor was quick to point out that Luke could likely argue self defense. I countered by arguing that Luke started the fight. Steve countered by calling me a nerd. There is also the possibility that it was an assisted suicide ("Luke, help me take this mask off…"). These (and other) arguments about the slayer statute are beyond the scope of this article.

The distribution of Vader’s assets is fairly straightforward, since he left two surviving children and no one else. The composition of Vader’s assets is more complex and will be the subject of a future post.
 

It was Professor Plum, in the library, with the lead pipe.

Many law school professors test their students by presenting long and complicated fact patterns which must be analyzed issue by issue. When the law student graduates, he or she must then pass a state-specific exam consisting of the same sort of questions. These essay questions are designed to cover a broad range of topics in each area. The fact patterns are long and occasionally outrageous. For example, in the criminal law section of my Massachusetts Bar Exam I had to write an essay about the following fact pattern:

Guy 1 hires Guy 2 to kill Guy 1’s Wife. Guy 1 pays Guy 2 with a bag of drugs. Guy 2 goes to Guy 1’s house to kill Wife. Guy 2 breaks the glass in the kitchen door, reaches through, turns the door handle, and lets himself in, only to find Guy 1 and Wife in their kitchen arguing violently. Wife realizes Guy 2 is there to kill her so she stabs herself (thereby killing her unborn child). Wife dies 366 days later. Examine the issues.

Needless to say, real life rarely introduces such issue-packed cases. The administration of the $60 million estate of American painter Thomas Kinkade is an exception to that rule, packing enough legal elements to satisfy any bar examiner. In addition to the handwritten wills that I discussed in an earlier post, Mr. Kinkade’s girlfriend Amy Pinto-Walsh has refused to move out of the home she shared with the decedent. As a result, the estate has been footing the bill for the mortgage each month and sending Pinto-Walsh bills for rent, upkeep and maintenance.

Additionally, Kinkade’s wife Nanette Kinkade has filed court documents contesting the handwritten wills and accusing Pinto-Walsh of taking advantage of Kinkade as he escalated his alcohol and drug use, became estranged from his wife and four daughters, and ultimately died of toxic levels of alcohol and valium. Mrs. Kinkade is accusing Pionto-Walsh of using her influence over Mr. Kinkade to get the artist to change his will on several occasions near the end of his life.

Finally, the Kinkades were residents of California, a community property state. One-half of Mr. Kinkade’s estate therefore belonged to Mrs. Kinkade at her husband’s death – since they were separated, but not divorced. The court battles are all being fought over control of the other half, which is estimated to be worth about $30 million.

Very few of us will ever make millions by selling our paintings, but our estates may run into the same issues Mr. Kinkade’s has: imperfectly executed or updated documents, substance abuse issues, fighting relatives and charges of improper influence over mom or dad. It is also likely that the states in which we live and die will play a significant part in the administration (and taxation!) of our final affairs.

Many problems can be avoided with proper planning. Sometimes the best answer is to appoint a neutral party to play referee or to manage assets, other times the answer is formally documenting your wishes in the appropriate manner. Whatever the issues, the planning starts with communicating concerns over potential problems to your attorneys and advisors.

Jeff Cheyne and I will be discussing some of the common errors in estate planning and administration at an upcoming seminar in our office. If you would like to join us from 7:30-9:00 am on Tuesday August 23, please rsvp by calling our office at (503) 226-2966 or by email at events@samuelslaw.com. We will be discussing a broad spectrum of issues – from well drafted wills that don’t control any assets, to dying with no will at all – and many topics in between. Light refreshments will be provided.
 

Painter of light; writer of Wills?

The family of artist Thomas Kinkade is doing what many families do after the loss of a loved one (particularly when the loved one is wealthy): “lawyering up” to fight over the estate.

Mr. Kinkade was an American painter who passed away in April of 2012. He referred to himself as the Painter of Light and he was America’s most collected contemporary artist at the time of his death. Mr. Kinkade left behind an estate worth over $60 million, a wife from whom he was legally separated, and a girlfriend who had lived with him for more than a year.

A probate court in Santa Clara, California is now faced with the following arguments: In one corner is the decedent’s wife (from whom he was separated), who is arguing for the administration of the formal estate plan the couple had prepared during their marriage. In the other corner is the girlfriend, who has presented two handwritten wills to the court that leave the girlfriend Mr. Kinkade’s home, his studio and $10 million to establish a museum to display Mr. Kinkade’s paintings. Will these holographic (handwritten) wills stand up in court? Stay tuned, as that remains to be determined.

What is certain at this point is that Mr. Kinkade could have saved his family loads of unwanted publicity (and legal expenses) if he had executed a formal plan that outlined his wishes for the museum and the gifts to his girlfriend. Handwritten wills may hold up in some courts; however an estate plan is more likely to survive challenges if the family takes the time to execute proper documents in accordance with the appropriate state laws. Mr. Kinkade should have also been advised to formally amend or replace his estate planning documents as his relationship changed with his wife.

Properly executing and updating estate planning documents requires an investment of time and money. Improperly prepared documents may force family members into making far more substantial investments to protect their rights after we’re gone. 

You can find more on the Kinkade dispute here:

http://news.yahoo.com/kinkade-estate-dispute-remain-public-now-202323026–finance.html

Which Will is the right Will, Willis?

As a child growing up in the late ‘70’s and early 80’s, my earliest sitcom memories are of classics like ‘Silver Spoons’, ‘Eight is Enough” and, of course, “Diff’rent Strokes”. Arnold Jackson’s famous phrase, “Whatchu talking about Willis?” made actor Gary Coleman a sensation during the show’s six-year run, and it is not surprising that his career could go nowhere but downhill after becoming a superstar at age 10. Few could have predicted the sad trail his career (and his life) would take. No one could have predicted the bizarre ending that is taking place in a courtroom in Provo, Utah this week.

The bizarre ending I refer to is an ongoing argument over the administration of Mr. Coleman’s estate. First, a little background: Mr. Coleman got married to Shannon Price in 2007 and they were divorced in 2008. The couple lived together until Mr. Coleman died in 2010, two days after a fall in his home that resulted in a brain hemorrhage. Ms. Price made the decision to take Mr. Coleman off of life support.

Two documents have been presented to the court as the valid Last Will of Gary Coleman: a Will written in 2005 and a hand-written amendment written in 2007. The 2005 Will leaves Mr. Coleman’s assets to Anna Gray, his longtime friend and business associate. The 2007 amendment names Ms. Price as his sole heir.

Ms. Price is arguing that she and Mr. Coleman changed their minds about getting divorced and that their post-divorce relationship constituted a common-law marriage. The court has examined evidence of Ms. Price and Mr. Coleman’s joint bills and tax returns and has heard the testimony of conflicting witnesses about how close Mr. Coleman and Ms. Price were after their divorce. The court must now decide whether a common law marriage existed. If the court finds that such a relationship did exist, then Ms. Price will get everything. If not, Mr. Coleman’s assets will go to Anna Gray.

The case presents enough legal issues to excite a law professor. It also presents a life lesson that each of us should take to heart: The only way an estate plan works is if it is properly updated. If you get married, have a child, move, inherit assets, or if your life changes in any other material way, check with your attorney to see if your estate planning documents need to be updated to reflect the change. The alternative is often an expensive court battle where the only winners are the lawyers and the losers are your loved ones.

 

“Send lawyers, guns and money, they’d get me out of this…”

The first cassette I ever owned was Michael Jackson’s ‘Thriller’, purchased in 1982. Ten years later, my mom bought the soundtrack to the movie “The Body Guard”, which featured Whitney Houston’s rendition of “I will always love you”. ‘Thriller’ has now sold over 65 million copies and ‘The Body Guard’ has sold over 40 million, making these two albums the number one and number four best selling albums of all time, respectively. Between the two of them, Whitney Houston and Michael Jackson sold well over 250 million records during their lifetimes.

Unfortunately, selling millions of albums is not the only thing Whitney and Michael had in common. Both stars died over the last three years, both had well-documented battles with substance abuse (that may have lead to their deaths), and both were deeply in debt when they died. Whitney Houston borrowed tens of millions of dollars against the sales of records she had not yet made and Michael Jackson owed millions to a long line of creditors, including promoters, banks, and the second son of the king of Bahrain, among others.

Substance abuse and personal debt issues come up regularly in the estate planning process. Where appropriate, many parents condition receipt of trust funds on the passing of drug tests or attending counseling. A properly drafted trust may also protect your assets from the creditors of one of your beneficiaries. If you have relatives who struggle with debt or substance abuse issues, you may want to consider a trust as part of your estate plan.

If you have personal loans, documenting them properly may save your family attorney fees. The federal and state estate tax returns include schedules of the assets and liabilities of the decedent. These schedules are essentially a snapshot of everything a person owned (and owed) when he or she died. Tracking the debts of a decedent is often one of the more challenging parts of compiling the estate tax schedules, because many personal debts are informally documented, if they are documented at all. If you have personal loans, you should discuss these loans with your estate planning attorney, as properly drafted loan documents, combined with accurate amortization schedules, can save your attorney time (and therefore save your family money) during the administration of your estate.

One more note – there are provisions of the tax code which penalize parties for loans made at below market interest rates. If you have a substantial loan – whether personal or business – you may want to discuss the loan terms with your attorney.

The estates of Michael Jackson and Whitney Houston have benefited from increased record sales following the stars’ deaths. A large part of the estate income from these sales will be going to the satisfaction of personal debts. Most estates do not have this sort of income to offset debts and the debts are instead paid from the residue of the estate. For this reason, debts (including your home mortgage) should be considered when planning the distribution of your assets under a will or trust.

Most families will (hopefully) never have to deal with the sort of  substance abuse and debt problems that followed Michael Jackson and Whitney Houston through the later years of their lives. When the issues do arise, however, properly drafted documents may be the family’s best protection agaist creditors and predators who are looking to get access to the assets of the estate. The key, as always, is to communicate the specifics of your situation to an attorney who specializes in estate and business planning.  

Trustees behaving badly

From time to time we publish summaries of interesting trust and estate cases.

In today’s post we discuss a recent Oregon Appeals Court case that addressed the availability of a constructive trust to remedy a breach of duty by a successor trustee. The case is a good illustration of the legal remedies available to beneficiaries who pursue claims against trustees behaving badly.

Olson v. Howard, 237 Or App 256, 239 P.3d 510, (2010)

Background: Plaintiff, the beneficiary of a trust, brought an action against the trustee and the purchaser of land from the trust, alleging that the purchase was the result of self-dealing by the trustee. The settlor of the trust had named himself trustee and appointed Howard as successor trustee. Howard, purporting to act as successor trustee, sold the property to his son, the defendant, for $55,000. Plaintiff contended that the fair market value of the property was actually $122,760. Moreover, defendant borrowed the money to purchase the property from his father, Howard. Seven years after the sale, plaintiff filed claims against both defendant and Howard, alleging that Howard acted unlawfully when he essentially sold the trust property to himself for grossly inadequate consideration, and that defendant knowingly and willfully acted as a strawman in the transaction. Plaintiff then sought return of the property to the trust, a resale of the land, and distribution of the proceeds of that sale to the trust beneficiaries. The trial court dismissed the case after finding that plaintiff failed to provide an “objectively reasonable” basis for his claim. 

 

Holding: The trial court erred in determining that plaintiff’s contentions were devoid of factual and legal support. Plaintiff’s claim sought the imposition of a constructive trust, which would be available to him upon showing that the defendant possessed property that should belong to the trust as a result of the property being transferred without authority, by a self-interested party, and without sufficient consideration. Moreover, the fact that plaintiff had signed a release as a trust beneficiary relinquishing all claims against the trustee or trust did not prohibit his claim, as the release did not bar claims against the defendant. The case was remanded to the lower court.

The effect mental capacity has on contractual rights

From time to time we publish summaries of interesting trust and estate cases. Today’s post examines a recent Oregon Appeals Court decision in the rapidly expanding field of elder law. The case involves an elderly woman with impaired mental capacity and asks whether she may be a considered a third-party beneficiary (under contract law) of a residency agreement signed on her behalf. The case also touches on the issue of arbitration clauses in residency agreements at senior housing facilities. Arbitration clauses like the one at issue in this case have been the subject of a number of recent 9th circuit cases.

Drury v. Assisted Living Concepts, 245 Or App 217 (2011)

Background: Dorothy Drury was suffering from dementia and her mental capacity was severely impaired at the time her son, Eddie, admitted her to the defendant’s assisted living facility. Eddie signed the facility’s admission paperwork and residency agreement. At that time he was not yet Dorothy’s guardian or conservator and did not then have a power of attorney for her.

The residency agreement included a clause requiring arbitration for all claims or disputes relating to the agreement or the services provided “to You by Us.” After about a year in the facility, Dorothy died as a result of injuries sustained in a fall. Her estate’s personal representative sued the facility for wrongful death resulting from negligent conduct. The defendants (unsuccessfully) moved to compel arbitration, arguing that the estate was bound to the arbitration clause in the residency agreement as a third-party beneficiary of the contract.

On appeal, the court held that Dorothy’s estate was not bound to the agreement and its arbitration clause. Under general contract law principles, a third-party beneficiary is presumed to assent to a contract when it accepts benefits or otherwise seeks to enforce rights under that contract. Dorothy was a “third-party donee beneficiary” of the residency agreement signed by her son. The critical issue for the court was Dorothy’s mental capacity – or lack thereof. Even though Dorothy accepted the contract’s benefits (the facility’s services and apartment), her lack of requisite mental capacity meant that her acceptance of benefits did not ratify the contract.

Have You Updated Your Estate Plan Lately?

The recent passing of 27 year-old entertainer Amy Winehouse is tragic on many levels. Her family and friends will never be able to replace their lost daughter and friend; her fans will forever miss Amy’s undeniable talent and unique voice. Her well documented substance abuse problems, shared with the world through 24-hour cable news and the internet, were a tragedy in themselves.
 

Ms. Winehouse is the most recent in a long line of musicians who have left us at 27, a line that includes Jim Morrison, Kurt Cobain, Brian Jones, Janis Joplin, and Jimi Hendrix, among others. Unlike many of the musicians on this list, however, it appears Amy Winehouse had sound legal counsel somewhere along the way.

First, a little background: Amy Winehouse married Blake Fielder-Civil in 2007. The couple divorced in 2009. During the time that they were married, Winehouse’s second LP, “Back to Black” took her from anonymity to superstardom. She won 5 Grammy Awards and the album shot to #1 on charts around the world. Mr. Fielder-Civil’s life was traveling in the opposite direction – six months into their marriage he was sentenced to 27 months in prison for assaulting a man and then offering the man $400,000 to not show up in court. He was recently arrested again and is currently serving a 32 month sentence for robbery.

Under British law, Ms. Winehouse’s ex-spouse would have been in line to inherit the bulk of her estate, which is estimate to be worth over $15 million. Fortunately, in this case, reports indicate that she executed a new will after the divorce. This new will, according to published reports, leaves her estate to her mother and family while excluding her ex-husband.

The estate planning lesson in this case is clear: Individuals should update their estate plans when they go through life-altering events like marriage, divorce, retirement, having children, or becoming international rock stars.

Is Your Pet Prepared? (Part III)

There are several ways that attorneys can utilize estate-planning documents to provide for pets upon the death of their owner. One popular method is leaving a sum of money to a caretaker in the pet owner’s will. There are two potential issues to consider with this method of planning: The pet owner has no way of ensuring that the assets will be used to cover pet-related expenses and there may be negative tax consequences to leaving the caretaker a sum of money outright. These same problems can exist when an owner makes a monetary bequest to a pet caregiver towards the end of his or her life.

These factors were overblown in many of the publications I read when preparing my own estate plan. Under today’s $5 million federal estate tax exemption, there are virtually zero federal estate or gift tax implications when a person leaves $5-10,000 to a trusted caretaker. There may be state tax implications in some circumstances and your attorney should discuss potential state taxes with you when considering this option. As for guaranteeing the money is spent properly? Many of my clients have told me that they would not be naming the person to look after the pets if they did not trust them. This issue is a non-factor in these cases and in others it is the primary factor – it depends on the relationship the owner has with the potential caretaker(s).

A second way that pet owners can utilize wills to provide for their pets is by making a bequest to animal organizations that will work to place your pet in a home if you leave assets to the organization. The Oregon Humane Society’s Friends Forever program is an example of one of these programs. The Portland-based shelter adopted out over 17,000 animal in 2010, including all of the animals that came in under ‘Friends Forever’. 

If a pet owner makes no provisions for his or her animal, the pet will become part of the owner’s residuary estate and will usually pass to a new owner under the residuary clause of the will. In Oregon the estate may reimburse the caretaker who looks after the animal immediately after the owner’s death.

Attorneys regularly address these (and other) pet planning issues through the use of the pet trust. Pet trusts determine custody of the animal, provide instruction for the caretaker and pay for the animals’ expenses. Pet trusts can be stand-alone documents or they can be incorporated into the pet owner’s will or trust. Pet trusts should be considered very carefully, as they can be surprisingly expensive to administer. If your animal is one that will likely outlive a caretaker or two (a parrot or turtle for example) or is particularly expensive to care for (a horse or a pet with high medical expenses maybe) then a pet trust might be the perfect document for you. If it is just your cat or your dog, carefully consider your pets needs vs. the amount of administration required to maintain the pet trust.

The first question an owner must answer when preparing a pet trust is, “who will look after the animal on a day to day basis?” The caretaker(s) should be familiar with the pets and should receive a copy of the pet instruction letter discussed in my previous blog post. Pet owners should consider the tax implications involved when leaving assets to a caretaker. The owner may consider providing additional compensation to the caretaker to make up for any tax liability imposed due to the financial bequest under the pet trust.

The next individual an owner may name in a pet trust is the trustee. The trustee is in charge of tracking trust expenses, bank accounts and, in some states, preparing trust tax returns and distributing an annual accounting. A pet owner should consider these activities (and their associated cost) when selecting a trustee for their pet trust.

The last person an owner may name in the pet trust is the trust protector. This independent person has no role in the day-to-day operation of the trust. He or she is in charge of monitoring the overall performance of the trust to ensure the pet is being cared for properly. This trust protector checks in on the actions of the caretaker and the trustee. The trust protector holds the other parties accountable when there are questions about the administration of the trust. ORS 130.185 allows for an interested party to petition the court on the pet’s behalf, so if even if the document does not name a trust protector, a friend of family member could petition the court to remove a trustee if the animal was not being cared for as outlined in the trust.

A word of warning: Not all pet trusts are created equal. There is a lot more to a well written pet trust than merely listing the people to serve in the roles outlined above. These documents should also allocate funds, account for expenses of trust administration and occasionally outline investment strategies, among other things. The trust should clearly outline which expenses may be paid from the trust property and tell the reader exactly how these fees are to be paid. A pet trust should also provide for back-ups in the event that the named individuals cannot serve.

The most famous pet trust of them all is the one that belonged to the late Leona Helmsley. This trust provided $12 million to care for her dog and the story garnered media attention around the world. The trust was established to pay for her dog Trouble’s expenses with any remaining assets passing to a charitable foundation at Trouble’s death. Helmsley’s executors petitioned the New York Court to reduce the amount of assets going to the trust, in an effort to minimize the taxes due on Helmsley’s estate. They were successful in their petition and the judge ordered the pet trust funded with “only” $2 million. The remaining assets flowed to the charitable foundation in a $10 million transfer that qualified for the charitable deduction.

The New York judge in the Helmsley case relied on the language of New York’s pet trust statute. In New York, and in states that have adopted the Uniform Trust Code’s pet trust language, courts may “determine the value of the trust property that exceeds the amount required for the intended use”. The courts may then reduce the funding of the pet trust accordingly and direct the excess assets into a resulting trust for the benefit of the settlor’s successor in interest.

The pet trust statutes in Oregon and Washington do not contain language allowing courts to reduce the amount of assets directed to these trusts. Had Leona Helmsley relocated to the Pacific Northwest, Trouble may still be living large off of $12 million. ORS 130.185 specifically states, “Property of a trust authorized by this section may be applied only to its intended use.” Similarly, RCW 11.118.030 provides, “no portion of the principal or income of the trust may be converted to the use of the trustee or to any use other than for the trust’s purpose or for the benefit of the designated animal or animals.”

While most of us will never have to worry about leaving a pet $12 million, there is an important lesson to be learned from Leona Helmsley’s pet trust. The $10 million implications of the seemingly subtle differences in the statutory language highlights the importance of putting together your pet’s long-term plan with an advisor that understands the delicate issues involved.
 

Is your pet prepared (Part II)

The first step in planning for pets is to address the question “who will take care of the animals in an emergency?” If there is a short-term disability or illness, do you have someone who will go to your home and feed the cat or walk the dog? Does that person have a key? Do they know where the dog food is? Are the animals familiar with this person?

The short-term caretaker may be identified by an informal agreement like the one we have with one of our family friends. He has a key to our place, knows the animals well and we have shown him where their food is kept, where the vet records are, etc. He has our family contact information and he is an emergency contact on file with our employers and the day care facilities we take our dog to.

Some of our clients have taken a more formalized approach by authorizing an agent to care for their animals in periods of disability and/or hospitalization. This is accomplished by adding language to the power of attorney that specifically grants an agent the power to care for the pet(s). The decision on whether to make a formal or an informal agreement with the caretaker depends on a number of owner-specific issues: the proximity of friends and family, the amount of time and/or work the pets require and the expenses involved in caring for the animals, to name a few.

Regardless of whether an owner takes a formal or an informal approach to short-term planning, it is most important that they have a plan and they write it down. ORS § 130.185 instructs Oregon courts by providing for, “the liberal construction of oral or written instruments as enforceable pet trusts and not unenforceable honorary trusts.” Make a plan. Write it down.

There is a second document that pet owners should be creating for both their short-term and long-term planning: instructions for the day-to-day care of the animals. This document should include all of the necessary contact information for vets, trainers, kennels, etc. It should note the exercise routines of the pets, their feeding habits and any other relevant information. It should tell the caretaker the location of the animals’ health records, vaccination history and licensing information. The U.S. Census Bureau estimates that 22 percent of the nation’s dogs and 25 percent of our cats live in single person households. Creating a detailed set of instructions is particularly important for these pet owners, as it is less likely there will be another individual who is familiar with the pets’ day-to-day routines. A detailed instruction letter is also crucial if your pet has special dietary needs, medical concerns or training issues.

A well drafted estate plan provides the family with adequate instructions on how matters are to be handled during a time of crisis. If your family includes household pets, you should think about what would happen to them in a short term emergency. Do you have a friend or family member that would look after your pets? If so, talk to that person about the arrangement and write it down. In my next blog post I will discuss planning for the long-term care of our furry friends.