Texas Estate Planning

Do I Really Need a Will?

The truth is that drafting your will can be an uncomfortable experience. That’s because nobody wants to consider their own mortality.

However, you need to move past that discomfort and put that key document into place.

No matter if you're wealthy or have little to no assets, a will is an important document to have.

MSN’s recent article entitled “4 Reasons to Get a Will if You Don't Have One Already” says that a big myth is that there's no reason to have a will, if you hardly have any money.

However, wills are not just for the wealthy. No matter your situation, there are four reasons why it is important to have one.

1. Control what happens to your assets. You may only have a couple of thousand dollars in the bank and limited assets of value, like a PC and an older car that is about ready to pass away. However, wouldn't you like to be the one who says where those assets will go upon your passing? Without a will, you will not necessarily get to do that. However, if you draft a will, you can detail the way you want your assets divided, including the computer and your clunker.
2. Be sure someone you know, and trust will care for your children. If you have minor children, it is very important that you draft a will. Without a legal will, you will not have a clear plan for their care in the event of your death. To that end, you should talk to trusted family members and friends about who might be willing to step up and raise your children, if needed.
3. Create a contingency plan for your pets. Your pets rely on you to provide food, shelter and care, and there is no way you’d willingly dump them out on the street. Avoid a situation where your pets end up neglected when you pass away. Have some discussions to see who in your life would be willing to take in your pets, should the need arise.
4. Peace of mind. While the actual process of drafting might stir up some unsettling feelings, once it is done, you might breathe a sigh of relief because you'll have completed an unpleasant task. You will also have your final wishes mapped out clearly and legally.

Have You Considered Estate Planning for Fido?

In Montana, a pet is “any domesticated animal normally maintained in or near the household of its owner.” In Kansas, the statutes define an “animal" as “any live dog, cat, rabbit, rodent, nonhuman primate, bird or other warm blooded vertebrate or any fish, snake, or other cold-blooded vertebrate.”
Wealth Advisor’s recent article entitled “Estate Planning For Pets” explains that a pet is tangible personal property—just like guns, cars, or jewelry. When a pet owner passes away, pets pass to beneficiaries by provisions in an owner’s will, by directives in an owner’s trust document, or by a priority list of heirs contained in the state probate laws, if an owner does not have a will or a trust.
Pet owners should select a willing care giver and make a care plan for their pet that will lower the pet’s stress in the first days after you are gone. Writing down your wishes can help your heirs avoid potential problems, if there is a need to cover expenses for food, medical requirements and transportation of the pet to the beneficiary.
For example, in Montana, an honorary trust for pets is valid for only 21 years, no matter if a pet owner writes a longer term in the trust document. As a result, the trust terminates the earlier of 21 years or when the pet dies. Unless indicated in the trust document, the trustee may not use any portion of the principal or income from the trust for any other use than for the pet’s care.
Pet owners have options, when funding a pet trust. Funds could come from a payable on death (POD) designation on financial accounts to the pet trust. Another option is a transfer on death (TOD) registration with the pet trust as beneficiary for stocks, bonds, mutual funds and annuities. The pet owner could also direct the trustee in the pet trust document to sell assets, like a vehicle, house, or boat, and place those funds in the trust for the care of the pet.
Life insurance is perhaps another option for funding for a pet’s care. States typically do not consider a pet to be a “person,” so Puffball cannot be a beneficiary of a life insurance policy. A pet owner can fund a living or testamentary pet trust, by naming the trustee of the trust as the beneficiary of a life insurance policy. As an alternative, a pet owner may have a certain percentage of an existing policy payable to the pet trust.
Pet owners should talk to an experienced estate planning attorney about the best way of naming the trustee of a pet trust as a beneficiary of a life insurance policy.
Reference: Wealth Advisor (June 14, 2021) “Estate Planning For Pets”

Cat Is Fighting for Her Inheritance?

A year later, and the estate of Chanel creative director Karl Lagerfeld is not yet finalized. However, some details have emerged that, while Lagerfeld’s cat Choupette is an heir, she isn't the only one who will inherit a share of Lagerfeld’s grand fortune.
The seven beneficiaries are trying to access Lagerfeld's assets that include real estate in Paris and Monaco, a bookstore and designer furniture.
Choupette is a blue-cream tortie Birman cat who was owned by German fashion designer Karl Lagerfeld from around December 2011 until Lagerfeld's death in February 2019 at the age of 85.
The designer’s feline has her own agent and, according to The New York Times, at the height of her fame she had two minders, a bodyguard, a concierge veterinarian and a personal chef.
Wealth Advisor’s article entitled “Karl Lagerfeld's cat is locked in inheritance battle” says that Lagerfeld's "trusted" accountant for many decades, 87-year-old Lucien Frydlender has been named to manage the creative director's finances. In addition, Frydlender is responsible for distributing the estate, according to Lagerfeld’s will.
However, an investigation by French publication Le Parisienfeatured in Voici magazine found that Frydlender hasn’t been taking calls from the beneficiaries. The magazine also says that "after closing his office in September 2019, the former collaborator of Karl Lagerfeld has simply disappeared from the radar," raising questions for those involved.
Frydlender's wife has defended her husband and assured the public that there's nothing suspicious going on. She says he’s not "on an island paradise with a hidden treasure." Instead, she tells reporters that he’s "very sick".
When Choupette the cat will get her inheritance and what that will look like is unknown. It’s been more that a year since the death of her owner, Lagerfeld. Choupette fans have been concerned for the pet, but the cat isn’t scrounging in garbage cans: she made over $4 million in 2015.
"People came by the store and said how sad they were, and half of it was about Choupette," Caroline Lebar, head of communications for the Karl Lagerfeld brand, admits. "They'd say, 'If she's alone, I'll take her home.'"
However, Lebar promises Choupette is in safe hands, living in Paris with Lagerfeld's former housekeeper Françoise Caçote. "She is in good shape, and is surrounded by love."
Reference: Wealth Advisor (June 9, 2020) “Karl Lagerfeld's cat is locked in inheritance battle”

Cat Is Fighting for Her Inheritance?

A year later, and the estate of Chanel creative director Karl Lagerfeld is not yet finalized. However, some details have emerged that, while Lagerfeld’s cat Choupette is an heir, she isn't the only one who will inherit a share of Lagerfeld’s grand fortune.
The seven beneficiaries are trying to access Lagerfeld's assets that include real estate in Paris and Monaco, a bookstore and designer furniture.
Choupette is a blue-cream tortie Birman cat who was owned by German fashion designer Karl Lagerfeld from around December 2011 until Lagerfeld's death in February 2019 at the age of 85.
The designer’s feline has her own agent and, according to The New York Times, at the height of her fame she had two minders, a bodyguard, a concierge veterinarian and a personal chef.
Wealth Advisor’s article entitled “Karl Lagerfeld's cat is locked in inheritance battle” says that Lagerfeld's "trusted" accountant for many decades, 87-year-old Lucien Frydlender has been named to manage the creative director's finances. In addition, Frydlender is responsible for distributing the estate, according to Lagerfeld’s will.
However, an investigation by French publication Le Parisienfeatured in Voici magazine found that Frydlender hasn’t been taking calls from the beneficiaries. The magazine also says that "after closing his office in September 2019, the former collaborator of Karl Lagerfeld has simply disappeared from the radar," raising questions for those involved.
Frydlender's wife has defended her husband and assured the public that there's nothing suspicious going on. She says he’s not "on an island paradise with a hidden treasure." Instead, she tells reporters that he’s "very sick".
When Choupette the cat will get her inheritance and what that will look like is unknown. It’s been more that a year since the death of her owner, Lagerfeld. Choupette fans have been concerned for the pet, but the cat isn’t scrounging in garbage cans: she made over $4 million in 2015.
"People came by the store and said how sad they were, and half of it was about Choupette," Caroline Lebar, head of communications for the Karl Lagerfeld brand, admits. "They'd say, 'If she's alone, I'll take her home.'"
However, Lebar promises Choupette is in safe hands, living in Paris with Lagerfeld's former housekeeper Françoise Caçote. "She is in good shape, and is surrounded by love."
Reference: Wealth Advisor (June 9, 2020) “Karl Lagerfeld's cat is locked in inheritance battle”

Don’t Forget to Plan for Your Furry Friends

If you have pets that you consider family members, you’ll want to make sure you have made plans for their care, after you have passed. That’s the message from U.S. News & World Report in the article “How to Build an Estate Plan for Your Pets.”

How much time and money you devote to your pet’s care after you are no longer able to care for them, varies widely from state to state and depends on what you consider a comfortable lifestyle for your furry pals. You might include your pet in your estate in some states, or you may do better with a pet trust.

Include your pet in your will. One option is to use your will to leave your pet and some money to a trusted caretaker. This is kind of like leaving a collectable car to someone, as opposed to asking someone to be a guardian for your minor children. You are transferring the pet as an asset and making a bequest of a certain amount of money for their care. However, remember that the funds are being transferred with the hope and trust that the person will use them as you intend. The use of the money is not legally binding.

Have a pet trust created. This is admittedly a more expensive way to go but it gives you more control over the care of your pet. It allows you to set up a plan that mirrors how you’d create a plan for guardianship, rather than a piece of property. Your estate planning attorney will know what your state allows for pets. 

The key part of a pet trust is the designation of a primary caretaker or physical custodian who will be responsible for caring for your pet on a daily basis. The second is a trustee, who will be sure that funds allocated to the pet trust are managed, invested and paid out as needed.

Get buy-in from the trustee and the caretaker. This is not something you want to spring on someone after you’re gone. Make sure the people you have in mind understand what you want them to do and what their responsibilities will be. You also want a back-up plan. Some shelters, especially no-kill shelters, have plans for taking in pets for the rest of their lives, although they do request a donation be made. Visit the facility and make sure you understand how their program works, before naming them as a back-up on your pet care plan.

Know how much this will cost. Caring for a quarter horse will have a completely different cost than caring for a 70-pound golden retriever. If you can, track the cost of care, including food, toys, vet visits, groomers, etc., over the course of a year. Talk with your vet about expected medical costs for the future, especially if your pet is very young. Plan out your budget carefully, so the caretaker will have enough money, then leave a little extra for unforeseen circumstances.

Keep your pet care plan up to date. Just as your estate planning documents need to be kept up to date, so do those for your pets. If you add another furry member to the family, or if one dies, make sure that your estate plan reflects these changes.

Resource: U.S. News & World Report (Sep. 20, 2018) “How to Build an Estate Plan for Your Pets”

These Pets Are Probably Richer than You

In recent years including pets in estate plans has become more and more popular. People want to know that both their human relatives and their pets will be okay when it comes to distributions from their estates.

Typically, only enough money is set aside in as estate plan to provide for a modest life for the pets. A few pets, however, have inherited extreme amounts of wealth. 

Recently, Time published a list of some of these wealthy pets in "The 10 Richest Pets of All Time." 

The list includes:

• Gunther III - A German countess left her dog her entire $80 million estate. The trustees of the estate have grown the fortune to $375 million that now belongs to Gunther's child, Gunther IV.
• Toby Rimes - This poodle inherited $40 million when its owner passed away in 1931. However, Toby died a few months later and the estate was divided between various charities.
• Tommaso - This Italian cat was a stray adopted by an elderly woman who left it her $13 million estate.
• Gigoo - A British publisher left his beloved chicken Gigoo a fortune worth approximately $15 million.
• Trouble - Leona Helmsley left her dog Trouble $11 million – although the inheritance was later reduced to a mere $2 million by a judge.

Of course, you do not need to leave a pet anywhere near the above amounts to make sure they are taken care of after you pass away. If you would like to include your pet in your estate, then visit an estate planning attorney to learn about your options.

Reference: Time (Oct. 5, 2015) "The 10 Richest Pets of All Time."

 

How to Care for Your Pet … After You Pass Away

The Naples Daily News recently published an article, “Pet Trusts Gaining Popularity.” The article describes how the state of Florida enacted laws that authorized the establishment of pet trusts in 2003. These rules allow for people to provide for the care and maintenance for the lifetime of their pets. 

Now almost every state recognizes these trusts (which vary in each state). A named trustee will typically be responsible for the investment, management and distribution of the trust assets. Another individual is named to avoid conflict of interest as the pet’s caregiver. The trust will include details for caregivers, medical needs, and the final arrangements for the pet’s death.

However, Internal Revenue Code typically doesn’t recognize pet trusts, as an animal isn’t a “person” by definition. The trust wouldn’t work because it doesn’t have a legal "beneficiary.” Nonetheless, the IRS does recognize pet trusts for tax purposes. 

If the trust is validly established under state law, the assets passed to a pet trust are included in the decedent’s gross taxable estate. But no part of the assets qualifies for a charitable deduction—even if the remainder beneficiary after the passing of the pet is a qualifying charity. 

You should speak with a qualified estate planning attorney because estate taxes and other expenses attributable to the trust will need to be considered when drafting a pet trust. Planning for your pets can be an important part of your estate planning process. Make sure that all members of your family—including your pets—are cared for in your estate plan.

Reference: Naples Daily News (August 17, 2015) “Pet Trusts Gaining Popularity”