Caring for Your Horse's Future: Why a Will is Not Enough

[Catbird]

I’m a longtime follower of this forum, a horse nut from birth, and an estate-planning attorney in Colorado with an interest in animal trusts. I have long wanted to address the topic of horses and wills and trusts. I know there was at least one thread in August 2017, but I can’t find it.

People wonder how to protect their horses and other animals after they die or become disabled, and they often think of wills as a solution. But wills alone are insufficient.

Let’s say you name in your will a friend or family member to take your horse. You even leave money for upkeep. But unforeseen events can occur, and a person’s circumstances may change. They might refuse the money if, for instance, it puts them into a higher tax bracket. The money could be lost if they die, go bankrupt, or get a divorce. Or they may simply be unable to take your horse when the time comes.

The law treats animals as property. If your estate lacks money to pay off creditors, whoever’s administering your will may have to sell your horse.

In any case, wills mean probate, a legal process that takes place before your beneficiaries can receive your property. Probate takes time, sometimes months, and what happens to your horse in the meantime? No money will be available for routine care or other bills until probate is completed.

A revocable living trust solves these problems. You place money in a trust while you’re alive or buy a life insurance policy to fund the trust when you die. Money in a trust is available almost immediately, and a trust gives you tremendous control over your horse’s care. You name a trustee, a person to disburse the money as needed. You also name a caretaker, a horse person to care for your horse over its lifetime.

In a trust, you can be as specific and detailed as you wish about your horse’s future care. It can be drafted to cover your disability as well. It’s a legally enforceable document. As of January 2017, all 50 states and the District of Columbia have animal trust laws.

I urge all horse and animal owners to investigate revocable living trusts in your state so that your animals are protected going forward.

[Training_Cupid]

Yes I do think people should think about estate planning (whether or not they have a horse), but there is some misinformation and a bit of fear-mongering in your post I would like to clarify.

@Catbird

Let’s say you name in your will a friend or family member to take your horse. You even leave money for upkeep. But unforeseen events can occur, and a person’s circumstances may change. They might refuse the money if, for instance, it puts them into a higher tax bracket. The money could be lost if they die, go bankrupt, or get a divorce. Or they may simply be unable to take your horse when the time comes.

Yes there are risks with an “honorary trust” but the administrative and tax implications of a formal pet trust may not always be worth it.

@Catbird

The law treats animals as property. If your estate lacks money to pay off creditors, whoever’s administering your will may have to sell your horse.

A revocable trust wouldn’t necessarily prevent this; in my state if there are insufficient probate assets then creditors could go after the revocable trust. Also, specific gifts would be the last thing creditor could claim.

@Catbird

In any case, wills mean probate, a legal process that takes place before your beneficiaries can receive your property. Probate takes time, sometimes months, and what happens to your horse in the meantime? No money will be available for routine care or other bills until probate is completed.

At least in my state, the administrator would manage assets and pay continuing expenses, so yes money would be available for routine care.

@Catbird

In a trust, you can be as specific and detailed as you wish about your horse’s future care.

True, but good luck enforcing it. That takes all the time and money you were trying to prevent in probate.

[Where_sMyWhite]

Done and dusted many years ago for me and my ponies

[Catbird]

Training Cupid, thank you for your comments.

Yes there are risks with an “honorary trust” but the administrative and tax implications of a formal pet trust may not always be worth it.

All 50 states now have statutes that make honorary trusts for pets enforceable. Of course, anyone wishing to include their horse in their estate planning should consult an attorney. My point was that a trust may offer advantages that should be considered. As for taxes, a revocable living trust conveys no tax advantages. For the great majority of people, federal estate taxes are not an issue, although, state death taxes may be a consideration. As far as the taxes and the trust itself, any profits made from invested funds would be taxed, and the trustee would have to file a return.

A revocable trust wouldn’t necessarily prevent this; in my state if there are insufficient probate assets then creditors could go after the revocable trust. Also, specific gifts would be the last thing creditor could claim.

In Colorado, it is more difficult for a creditor to reach the assets of a trust than of a will. With a will, if the estate is unable to pay the debts, creditors can go after gifts of personal property. Selling a horse or horses would be unusual but is not unheard of. Owners who have considerable debt should keep this in mind.

At least in my state, the administrator would manage assets and pay continuing expenses, so yes money would be available for routine care.

The question is whether the estate would continue to have the cash to do so. If the cash runs out and there’s not enough money to pay expenses, the personal representative would usually need to liquidate assets.

True, but good luck enforcing it. That takes all the time and money you were trying to prevent in probate.

A pet trust is not meant to avoid probate. It is meant to help the horse owner plan for the future. With a trust, the owner can establish how they want their horse cared for at any level of detail they choose. The caretaker named in the trust is responsible to follow this plan. It is a good idea to also name an enforcer, someone who checks that the trustee and the caretaker are following the terms of the trust. Because a revocable living trust is a legal document, the enforcer can go to court to make sure the trust terms are being carried out. This is not possible with a will. In addition, a trust can be drafted to ensure care for the horse if the owner becomes sick or is incapacitated.

Different states have different laws. Owners interested in exploring how to best care for a horse or other animals after their death should investigate wills, trusts, and probate in their respective states.

[Mombie]

I literally just inherited a horse this week. Not sure when I can take him off the property or if money was left for his care… and I hate to intrude on the family’s grieving to ask questions…

[fordtraktor]

This is obviously an important issue but your post reads as if you can obligate someone to care for a horse after death. You can’t. If you want to leave a horse with someone, talk to them. they can decline the responsibility.

animal trusts are legal but the real issue is enforcement. So someone isn’t caring for your animal as you would like after your death. Who is GOING to enforce it? Who will sue for your pet!!!

precious few will know or care so be very careful. This is not a fault free solution.

i deal a lot with end of life issues and a Trust is not my first move if you have an involved family. Nothing is guaranteed but this newbie post sounds like someone wanting to be a trustee for a bunch of horse people. Not a good choice for rainmaking a budding law practice.

[Bluey]

@Mombie

I literally just inherited a horse this week. Not sure when I can take him off the property or if money was left for his care… and I hate to intrude on the family’s grieving to ask questions…

If you didn’t get from the deceased the name of the attorney in charge of those matters when you were assigned the horse, asking about the name of the attorney in charge of family business may not be intrusive, when it means someone will be taking care of the horse properly?

One dog we got decades ago almost died waiting for the family of the dog owner to remember/find out that dog was alone in the kennels and no one had gone feed and water it for some days!
They thought all dogs were gone.

[Mombie]

I’m the one taking care of him now. My horse lives with him. On the deceased’s property. I’ll ask soon…

[Bluey]

@Mombie

I’m the one taking care of him now. My horse lives with him. On the deceased’s property. I’ll ask soon…

Well, that covers the horse’s wellbeing then, giving this time won’t hurt then.

[dressagegirl123]

I have a question about a living trust. You have to transfer ownership of the horse into the living trust, as well as putting money into it to support the horse. Can you maintain some ownership of the horse yourself, so that when you show, your horse could still be listed with you as the owner?
Would it work to just put the horse in your friend’s name as well as yours, and fund a joint checking account? Obviously, this would have to be someone you trusted, but I’m leaving my horse to someone I trust! Then, upon your death, you friend just takes sole ownership of what was jointly owned…

[Bluey]

@dressagegirl123

I have a question about a living trust. You have to transfer ownership of the horse into the living trust, as well as putting money into it to support the horse. Can you maintain some ownership of the horse yourself, so that when you show, your horse could still be listed with you as the owner?
Would it work to just put the horse in your friend’s name as well as yours, and fund a joint checking account? Obviously, this would have to be someone you trusted, but I’m leaving my horse to someone I trust! Then, upon your death, you friend just takes sole ownership of what was jointly owned…

You don’t need a trust for that.

Trusts tend to be restrictive, why many don’t consider the first step in managing any assets, but rather limited to specific situations, how to care for horses maybe not always a good use of those instruments.
Then, I will listen to what our attorneys tell us, they are the experts on that.
They have always said, when trusts came up, they were not appropriate for the situations we were asking about their use, so I don’t know.

We did have one brush with a trust to manage one estate and the main problem was the designate trust manager was the estate’s attorney and he took 10 years to finalize the estate’s business, which should have taken a few months at most, ugh.

[Bogey2]

good info, it’s exactly what I did…I have a million dollar life ins. policy in a revocable living trust for my horses. Got it 15 years ago because I owned a lot of horses for my business. As they have passed on and I downsized my business I still keep (110. a month cost) ins. for my retired horses and my one competition horse.

[saultgirl]

My instructions are that everything is left to my husband, and I have asked him to try to find the horses good homes. He said he has thought about it, and he might try to keep them for me, but he’s not sure about that, because he’s not really a horse person. He has the names of horse people I trust that he could ask for help in selling/rehoming.

In the event that something should happen to myself and my husband at the same time, the horses would be left to my sister, who is a very accomplished horseperson although she is currently “taking a break” from horses. I have only asked of her, that she try to find them good homes.

I am content with the idea of my horses having to be sold should something happen to me.

[Chall]

So what happened to Leona Helmsley then? She had the best lawyers money could buy but a judge ended up giving the money to the caretaker.

[Catbird]

I have a question about a living trust. You have to transfer ownership of the horse into the living trust, as well as putting money into it to support the horse. Can you maintain some ownership of the horse yourself, so that when you show, your horse could still be listed with you as the owner?
Would it work to just put the horse in your friend’s name as well as yours, and fund a joint checking account? Obviously, this would have to be someone you trusted, but I’m leaving my horse to someone I trust! Then, upon your death, you friend just takes sole ownership of what was jointly owned…

In a revocable living trust, an owner can name herself as trustee. As trustee, the owner has the right to buy, sell or otherwise manage the horse, the only difference being that the horse is in the trust’s name rather than the owner’s. When a document asks for an owner’s signature, she would sign Jane Smith, Trustee. Therefore, you should be able to register a horse as you would if the horse were not in a trust.

USEF says it is very familiar with registration of horses in trusts. However, those considering an equine trust should check with the show organizations they frequent.

You can always choose to establish joint ownership of a horse with a friend and fund a joint checking account. You have to determine if the amount of money in the account will be enough to support the horse throughout his life. You must trust that your friend will use the funds to care for the horse as you would. You should be aware that funds in a friend’s name could be lost to divorce or bankruptcy.

The point of an equine trust is continuity of care. You are able to maximize control and minimize risk so that your horse will receive as much as possible the care he was receiving when you were alive. Moreover, the trust is a legal document, which means that the court can enforce your wishes. As always, if you’re interested in a pet trust, check with an attorney in your state.

[Catbird]

So what happened to Leona Helmsley then? She had the best lawyers money could buy but a judge ended up giving the money to the caretaker.

The Helmsley trust controversy was interesting. Leona Helmsley was a billionaire who left $12 million in a pet trust for her dog Trouble. Custody of Trouble was to go to her brother or her grandson but neither wanted the dog. The trustees settled on Carl Lekic, general manager of a Helmsley hotel in Florida, as caretaker. It was determined that $12 million was too much for the dog’s care and a judge in the case cut the amount down to $2 million. This money went to the trust, not to Lekic, who received $60,000 a year to take care of Trouble until he died.

[Gloria]

Thank you, @Catbird, for bringing this up. The August 2017 post you mentioned may be the one I started. I have been contemplating the issues surrounding the cares of my animals after my and my husband’s deaths, whichever come later.

What kind of attorneys should I look for when inquiry about establishing an equine trust?

How is fund distributed? The caretaker submits receipts to request reimbursement? That seems rather tedious for some routine cares. On the other hand, if the caretaker were to be given a large lump sum., how do we minimize the possibilities that the caretakers would misuse the fund?

Here I’m trying to leave “I trust XYZ completely and irrevocably, regardless their own circumstances” out of the equation. There are very few people in the world I can place that kind of trust on, and they are of my age. Most people will place their own needs over a dead friend’s animals’.

I don’t have children, and except for some small gifts, I don’t plan to leave my assets to any of my relatives. With the bulk of value in real estate, in the case when cash runs out, how do we use the equity of the estate (land/house/buildings/etc) to pay for the care of the animals? If we can keep the animals on the property until they pass, that would be my preference, but if sale is necessary, then that is what will be done. However, even though, i’m not sure of all the details of how to handle this.

[Catbird]

@Gloria

Thank you, @Catbird, for bringing this up. The August 2017 post you mentioned may be the one I started. I have been contemplating the issues surrounding the cares of my animals after my and my husband’s deaths, whichever come later.

What kind of attorneys should I look for when inquiry about establishing an equine trust?

How is fund distributed? The caretaker submits receipts to request reimbursement? That seems rather tedious for some routine cares. On the other hand, if the caretaker were to be given a large lump sum., how do we minimize the possibilities that the caretakers would misuse the fund?

Here I’m trying to leave “I trust XYZ completely and irrevocably, regardless their own circumstances” out of the equation. There are very few people in the world I can place that kind of trust on, and they are of my age. Most people will place their own needs over a dead friend’s animals’.

I don’t have children, and except for some small gifts, I don’t plan to leave my assets to any of my relatives. With the bulk of value in real estate, in the case when cash runs out, how do we use the equity of the estate (land/house/buildings/etc) to pay for the care of the animals? If we can keep the animals on the property until they pass, that would be my preference, but if sale is necessary, then that is what will be done. However, even though, i’m not sure of all the details of how to handle this.

You can look for an animal-law attorney who also practices estate planning. A competent estate planning attorney who has had experience in pet trusts would be another option.

There are a variety of ways to administer the funds. The caretaker can submit receipts to the trustee but, as you point out, this can be cumbersome. A budget can be drawn up estimating monthly, quarterly, or annual costs. A trustee can provide the caretaker with a budgeted amount and the caretaker can apply to the trustee for any amount above the budget they had to spend. One way to minimize the possibility of a caretaker or a trustee abusing the trust’s funds (or more importantly, not caring for your horse properly) is to name what is called an enforcer or an inspector. This person would in effect check up on both the trustee and the caretaker on a periodic basis.

I’m not sure I understand your second point. Are you talking about cash running out after your death? Most people don’t have the money on hand to fund a trust that will care for a horse to the end of his life. This is where a term life insurance policy can be helpful. You determine how much money your horse will need and then purchase a policy for that amount. People also leave retirement accounts, checking and savings accounts, 401K’s, etc. to the trust. When you die, these funds are available for your horses’ care.

One helpful book on estate planning for pet owners is Who Will Care When You’re Not There? by Robert E. Kass and Elizabeth A. Carrie.

[Gloria]

@Catbird

You can look for an animal-law attorney who also practices estate planning. A competent estate planning attorney who has had experience in pet trusts would be another option.

There are a variety of ways to administer the funds. The caretaker can submit receipts to the trustee but, as you point out, this can be cumbersome. A budget can be drawn up estimating monthly, quarterly, or annual costs. A trustee can provide the caretaker with a budgeted amount and the caretaker can apply to the trustee for any amount above the budget they had to spend. One way to minimize the possibility of a caretaker or a trustee abusing the trust’s funds (or more importantly, not caring for your horse properly) is to name what is called an enforcer or an inspector. This person would in effect check up on both the trustee and the caretaker on a periodic basis.

I’m not sure I understand your second point. Are you talking about cash running out after your death? Most people don’t have the money on hand to fund a trust that will care for a horse to the end of his life. This is where a term life insurance policy can be helpful. You determine how much money your horse will need and then purchase a policy for that amount. People also leave retirement accounts, checking and savings accounts, 401K’s, etc. to the trust. When you die, these funds are available for your horses’ care.

One helpful book on estate planning for pet owners is Who Will Care When You’re Not There? by Robert E. Kass and Elizabeth A. Carrie.

Oh, thank you for the detailed explanations. Very much appreciated. And yes, my “running out of cash” concern is what happens when/if cash runs out after my death. I have very little cash in bank. A chunk of my “value” is in liquid assets such as 401K and stocks, but an even larger portion is in real estate that is difficult to convert to cash without sale.

I just ordered the book Who Will Care When You’re Not There. It should arrive in a few days.