Law Tips: Pet Trusts – Client Friendly FAQ’s

Dogs, cats, parrots, and other pet animals play extremely significant roles in the lives of many individuals. Research indicates that pet ownership positively impacts the owner’s life by lowering blood pressure, reducing stress and depression, lowering the risk of heart disease, shortening the recovery time after a hospitalization, and improving concentration and mental attitude.1

The love owners have for their pets transcends death as documented by studies revealing that between 12% and 27% of pet owners include their pets in their wills. The popular media frequently reports cases that involve pet owners who have a strong desire to care for their beloved companions.2

Our Law Tips faculty participant, Professor Gerry Beyer, is here to share his professional insights into estate planning for pets. During his CLE instruction at the Midwest Estate, Tax and Business Planning Institute, he raises questions that often spring into a client’s mind when they begin to make provisions in their will for their pets’ care. Here’s a sample of Prof. Beyer’s “Client Friendly” Frequently Asked Questions:

What is a “pet trust”?
A pet trust is a legal technique you may use to be sure your pet receives proper care after you die or in the event of your disability.

How does a pet trust work?
You (the “settlor”) give your pet and enough money or other property to a trusted person or bank (the “trustee”) with the duty to make arrangements for the proper care of your pet according to your instructions. The trustee will deliver the pet to your designated caregiver (the “beneficiary”) and then use the property you transferred to the trust to pay for your pet’s expenses.

What are the main types of pet trusts?
There are two main types of pet trusts.

The first type, called a “traditional pet trust,” is effective in all states. You tell the trustee to help the person who is providing care to your pet after you die (the beneficiary) by paying for the pet’s expenses according to your directions as long as the beneficiary takes proper care of your pet. Many pet owners will prefer the traditional pet trust because it provides the pet owner with the ability to have tremendous control over the pet’s care.

The second type of pet trust, called a “statutory pet trust,” is authorized in almost 40 states. A statutory pet trust is a basic plan and does not require the pet owner to make as many decisions regarding the terms of the trust. The state law “fills in the gaps” and thus a simple provision in a will such as, “I leave $1,000 in trust for the care of my dog, Rover” may be effective.

How much property do I need to fund my pet trust?
You need to consider many factors in deciding how much money or other property to transfer to your pet trust. These factors include the type of animal, the animal’s life expectancy (especially important in case of long-lived animals), the standard of living you wish to provide for the animal, the need for potentially expensive medical treatment, and whether the trustee is to be paid for his or her services. Adequate funds should also be included to provide the animal with proper care, be it an animal-sitter or a professional boarding business, when the caretaker is on vacation, out-of-town on business, receiving care in a hospital, or is otherwise temporarily unable personally to provide for the animal.

The size of your estate must also be considered. If your estate is relatively large, you could transfer sufficient property so the trustee could make payments primarily from the income and use the principal only for emergencies. On the other hand, if your estate is small, you may wish to transfer a lesser amount and anticipate that the trustee will supplement trust income with principal invasions as necessary.

You should avoid transferring an unreasonably large amount of money or other property to your pet trust because such a gift is likely to encourage your heirs and beneficiaries to contest the trust. If the amount of property left to the trust is unreasonably large, the court may reduce the amount to what it considers to be a reasonable amount.

How do I fund my pet trust?
Direct transfers: If you create your trust while you are alive, you need to transfer money or other property to the trustee. You need to be certain to document the transfer and follow the appropriate steps based on the type of property. For example, If you create the trust in your will, you should include a provision in the property distribution section of your will that transfers both your pet and the assets to care for your pet to the trust. For example, “I leave [description of pet] and [amount of money and/or description of property] to the trustee, in trust, under the tenus of the [name of pet trust] created under Article [number] of this will.”

Pour over will provision: If you create your pet trust while you are alive, you may add property (a “pour over”) from your estate to the trust.

Life insurance: You may fund both inter vivos and testamentary pet trusts by naming the trustee of the trust, in trust, as the beneficiary of a life insurance policy. This policy may be one you take out just to fund your pet trust or you may have a certain portion of an existing policy payable to your pet trust. This technique is particularly useful if you do not have or anticipate having sufficient property to transfer for your pet’s care.

Pay on death accounts, annuities, retirement plans, and other contracts: You may have money in the bank, an annuity, a retirement plan, or other contractual arrangement that permits you to name a person to receive the property after you die. You may use these assets to fund both inter vivos and testamentary trusts by naming the

trustee of your pet trust as the recipient of a designated portion or amount of these assets. There may be income tax consequences to your estate when retirement plans are used in this way.

Who should be the trustee of my pet trust?
The trustee needs to be an individual or corporation that you trust to manage your property prudently and make sure the beneficiary is doing a good job taking care of your pet. A family member or friend may be willing to take on these responsibilities at little or no cost. However, it may be a better choice to select a professional trustee or corporation that has experience in managing trusts even though a trustee fee will need to be paid.

In closing, Professor Beyer sums up thusly:
Estate planning provides a method to provide for those whom we want to comfort after we die and to those who have comforted us. It is not surprising that a pet owner often wants to assure that his or her trusted companion is well-cared for after the owner’s death. By using a properly constructed traditional trust or a statutory pet trust, you may carry out your client’s intent to protect his or her non-human family members.

  1.  See A Dog’s Life (or Cat ‘s) Could Benefit Your Own, SAN ANTONIO EXPRESS-NEWS, May 18, 1998, at lB (explaining how some insurance companies lower life insurance rates for older owners of pets).
  2.  See Anne R. Carey & Marcy E. Mullins, USA Snapshots- Man’s Best Friend?, USA TODAY, Dec. 2, 1999, at lB (12%); Elys A. McLean, USA Snapshots – Fat Cats-and Dogs, USA TODAY, June 28, 1993, at lD (27%); Vital Statistics, HEALTH, Oct. 1998, at 16 (18%).

Many thanks to Professor Beyer for sharing a glimpse inside pet trusts. You are invited to attend the 9.5-hour 42nd Annual Midwest Estate Tax & Business PlanningTM Institute by video replay in various locales around Indiana the next 90 days. Click here to choose your convenient date and place.

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About our Law Tips faculty participant:
Professor Gerry W. Beyer joined the faculty of the Texas Tech University School of Law in June 2005 as the first holder of the Governor Preston E. Smith Regents Professorship. Previously, Prof. Beyer taught at St. Mary’s University and has served as a visiting professor at several other law schools including Boston College, The Ohio State University, Southern Methodist University, the University of New Mexico, Santa Clara University, and La Trobe University (Australia). Prof. Beyer was the recipient of the 2012-2013 Outstanding Researcher Award from the Texas Tech School of Law. As a state and nationally recognized expert in estate planning, Prof. Beyer is a highly sought after lecturer.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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Law Tips: Smoking Guns; 3 Ways Technology has Changed Employment Law

Technological advancements such as email and the virtual office have made life easier, for sure! But these conveniences can carry challenges. Certain areas of law, such as employment law, are impacted directly by these changes in the technology arena. Our latest Law Tips participant, Danuta (Donna) Bembenista Panich, of Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Indianapolis, is acutely aware of these effects on the practice of employment law. Ms Panich has been an employment law practitioner for more than 35 years and serves as chair of Ogletree Deakins’ Record Retention and E-Discovery Practice Group. I appreciate her sharing with Law Tips readers background on the “smoking guns” she encounters and the prudent advise she offers employers:

Clearly, the advent of computers and the intemet was technology change of proportions not experienced by anyone who graduated from law school after 1995. But I want to focus here on more recent, incremental changes in technology that have substantively altered employment law, as well as materially affected its practice:

  1. The virtual office
  2. Mobile communications devices
  3. Electronic communication and messaging systems
  4. Social media
  5. Big data (aka centralized databases).

Individually or in combination these advances in technology have affected employment law in at least the six ways discussed here.

I. “Off The Clock” And “Refusal To Accommodate” Claims Are Proliferating.

The virtual office has greatly expanded the ability to work from home and outside regular hours. There are positive effects flowing from the flexibility this creates: flex-time makes employees happier and makes it easier to balance work and family needs. But blurring the lines between workplace and home and on-duty/off-duty time also creates employment issues. The ability to work remotely opens the door to more accommodation claims under the Americans with Disabilities Act. The requirement to work specific hours from the confines of an office is harder to justify in today’s virtual environment. Similarly, that environment makes it far more difficult to argue against flexibility when requested by a pregnant employee, thus increasing the likelihood of Title VII liability. Prudent employers should carefully consider whether such accommodations are workable, rather than assuming they are not.

Because working from home/outside regular hours is difficult to supervise/control, the virtual office, particularly when coupled with mobile communications devices, can result in some challenging off the clock claims under state and federal wage and hour laws. If an employee checks email, or looks at a work order from a car or home, is that time compensable? And if it is compensable, does it prematurely start or extend the continuous workday?

Employers should be very deliberate in establishing and enforcing policies in order to avoid liability for unintended work time. This is particularly true since date and time stamping of all computer-related activities has provided a ready means of measuring time outside the confines of a time-clock. This ability makes proof of lost time far easier and more accurate. It concurrently increases the burden on the employer who must locate, reserve, and produce the data. In combination, these factors enhance the plaintiff employee’s chance to turn his claim into a class or collective action while also improving his or her settlement posture.

II. The Number Of “Smoking Guns” Have Increased Because We Have Changed The Formality And Frequency With Which We Communicate In Written Form.

People treat email, text messages, tweets and other electronic communications as the equivalent of oral communications. They blurt out whatever comes to mind, pay little attention to whom they direct their communications, and fail to proofread.

Electronic communication has also become a substitute for oral communication. People used to “tell” off-colored jokes to a small well-defined group. Now they broadcast them in written form, for endless redistribution. The result? The number of EEO and retaliation cases continues to grow. Nor is there any diminution in the percentage of cases found meritorious. Given the fact that 50 years of operation under equal opportunity laws must have resulted in less, not more, overt discrimination, one can only conclude that the proliferation of smoking guns has contributed to the seemingly inverse results. Employers should redouble efforts to sensitize employees to these dangers, and might wish to consider new rules on appropriate use of electronic communications.

Poor communication hygiene has also dramatically changed litigation practice. The plaintiff focuses on all forms of electronic communication as the richest potential source of helpful evidence – even if there is no true smoking gun, it is a rare case that does not include problematic or at least embarrassing electronic communications. Defense counsel’s witness preparation takes on a whole new dimension of scouring the record for any potentially harmful remark, and ensuring that the witness is cognizant of, and prepared to explain, all his/her linguistic faux pas. (Plaintiffs preparation should be similarly rigorous.)

III. Metadata and Big Data Create Unprecedented Transparency

Metadata – information about information – sometimes makes guilt or innocence irrefutable. For example, in a retaliation claim, the create date of a document in which the plaintiff’s termination from employment is discussed and agreed upon may prove beyond doubt that the decision was made before a protective activity occurred.

Conversely, metadata reflecting deletion of files, access to files, sending files, or the date of certain communications may prove the violation of a non-compete agreement or the theft of trade secrets.

Big data allows an employer to track every moment of an employee’s workday and every activity of the employee. Performance and productivity can be measured with astonishing precision both in and out of the office. The positive effects in the employment environment are that neither employees nor employers can avoid accountability and subjectivity and selective memory are removed from the decisional process. The negative impacts are greater job stress, less interdependence, trust, and loyalty. From the practitioner’s perspective, the results are more claims, more hard evidence, but less institutional knowledge and client loyalty.

Let’s take a break at this point in Donna Panich’s discussion of issues presented to employment law practitioners by technological change. But stay tuned! In next week’s Law Tips she talks about the alterations in such areas as asymmetrical discovery and the tracking of cross-country incidents.

Meanwhile, if you are interested in a comprehensive Employment Law CLE, check out the On Demand Seminar or Video Replay Seminar of 54 Practical Issues, Tips and Traps for Employment Lawyers by Clicking Here.

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About our Law Tips faculty participant:
Danuta (Donna) Bembenista Panich, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Indianapolis, has a varied practice dealing with all aspects of labor and employment law. However, since 1995, she has focused primarily on defending employers – including many of the nation’s largest companies – in class actions, multi-plaintiff and collective actions, pattern and practice claims, and other “bet the company” matters such as investigations of catastrophic industrial accidents. Ms. Panich has dealt extensively with electronic discovery and litigation preparedness. Since she joined Ogletree Deakins in 2007, she established, and has since served, as chair of Ogletree Deakins’ Record Retention and E-Discovery Practice Group.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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Law Tips: Top 10 List for a More Successful Mediation

How do you insure that your mediations have the best results possible? Do you have a routine that starts your client out on the right foot? During a recent CME for Family Mediators workshop, Alicia Gooden, The Mediation Group, Indianapolis, offered these well-honed pointers for a more successful mediation:

1. BE PREPARED!!!!
A. Prepare as you would for trial: Discovery, evaluations, income information, child support printout, appraisals.
B. Prepare your client: discuss the best/worst-case scenarios, strengths and weaknesses of the case, making sure they understand the realistic possible outcomes.

2. Discuss the mediation process with your client so they have a general understanding before they arrive. Talk to the client about the mediator himself/herself.

3. Send a confidential statement to the mediator- even if just a brief email. If there is a really difficult client or unique facts/background, ask for a telephone conference with the mediator or meet privately before the mediation.

4. Send all balance sheets to the mediator in advance in excel. This will save time during mediation.

5. If you want to be efficient, work on a draft of an agreement during the mediation.

6. If you are asking for fees, don’t wait until the last minute to bring that up as an issue.

7. Have any experts available during the mediation, i.e., business valuators, appraisers, other financial experts.

8. If you have a time deadline for the day, tell the mediator at the beginning of the session.

9. Don’t substitute your own opinion or view for that of your client. Listen to what your client is telling you about his/her priorities are. (This is also the job of the mediator.)

10. Have a good attitude about mediation!!

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Hopefully this review gave you some food-for-thought. I appreciate Alica Gooden sharing her expertise in mediations with Law Tips readers. ICLEF has a wide array of choices for improving your mediation skills and techniques. Whatever level or type of training you require, we’re here for you. Keep an eye on the latest programs by checking our library often. You can choose mediation training as live seminars, video replays, On Demand programs, CD-ROMs, electronic documents or publications. Click Here to see a full list of upcoming Mediation seminars.

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About our Law Tips faculty participant:
Alicia A. Gooden co-founded the Family Practice Division of The Mediation Group LLC, Indianapolis, in April of 2010. She serves as a mediator, arbitrator and parenting coordinator. In her conflict resolution work, Alicia features skills, perspective and insight gained from nearly ten years on the family court bench. Alicia was appointed Master Commissioner of Marion Circuit Court, Paternity Division in February of 2001. In her role as Commissioner, Alicia presided over custody, parenting time and support issues, and supervised all of the child support enforcement dockets, in paternity cases. Prior to her appointment to the bench, Alicia was an associate attorney at Kiefer and McGoff, in Indianapolis, Indiana, practicing in the areas of family law and criminal defense.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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Law Tips: Drones – What are the Civil Liability Issues and Questions on the Horizon? Part 2

Welcome back to our Law Tips exploration into Invasion of the Drones with Chris Stevenson, Wilson Kehoe Winingham, Indianapolis, Indiana. Chris raised the following alert last week: “The increase of drone activity in the United States will also lead to the potential for various types of civil liability for personal injuries and property damage/property rights claims.” You’ll find the first part of his discussion on the developments surrounding drone activity below. So what’s next? Let’s hear from Chris on property rights and damage:

Property Rights and Damage Related to Drones
Drones also have the potential to impact property law. Two legal theories which potentially could be argued to apply to drone use are nuisance law and trespass law. A nuisance can be either public or private. “A public nuisance is one which affects an entire neighborhood or community, while a private nuisance affects only a single person or a determinate number of people. The essence of a private nuisance is the use of property to the detriment of the use and enjoyment of another’s property.” Wernke v. Halas, 600 N.E.2d 117, 120 (Ind. Ct. App.1992).

From public/private nuisances, Indiana law further breaks it down to nuisance per se and nuisance per accidens. Id. “A nuisance per se, as the term implies, is that which is a nuisance in itself, and which, therefore, cannot be so conducted or maintained as to be lawfully carried on or permitted to exist.” Windfall Manufacturing Co. v. Patterson (1897), 148 Ind. 414, 420, 47 N.E. 2, 4. A nuisance per accidens is an activity that is otherwise

lawful, but “produces such a condition as in the judgment of reasonable persons is naturally productive of actual physical discomfort to persons of ordinary sensibility, tastes, and habits.” Wendtv. Kerkhof594 N.E.2d 795,797 (Ind. Ct. App. 1992).

Nuisance law has been applied to aircraft in prior cases. In Biddle v. BAA Indianapolis, LLC, 860 N.E.2d 570 (Ind. 2007) homeowners near the Indianapolis International Airport brought suit against the Indianapolis Airport Authority raising claims of nuisance related to low flying aircraft and noise. While the nuisance claim was dropped in exchange for a “takings” claim under eminent domain law, Biddle shows that nuisance law principles can be asserted in claims regarding aircraft. Due to potential nuisance issues involving wildlife, the National Parks System has recently passed a ban on the use of drones inside Park property. Thus, drone use is ripe for property nuisance and trespass claims.

One of the key questions related to low flying drone operation is who owns the airspace over one’s property. In United States v. Causby, 328 U.S. 256, 66 S.Ct. 1062, 90 L.Ed. 1206 (1946), the U.S. Sup. Ct found that: “[t]he airplane is part of the modern environment of life, and the inconveniences which it causes are normally not compensable under the Fifth Amendment. The airspace, apart from the immediate reaches above the land, is part of the public domain …. Flights over private land are not a taking, unless they are so low and so frequent as to be a direct and immediate interference with the enjoyment and use of the land.” The Fed. Claims Court later added the following presumption concerning the property rights associated with airspace. In Aaron v. United States, 160 Ct.Cl. 295, 311 F.2d 798 (1963), the court articulated a presumption based on navigable airspace boundaries. “When an aircraft flies within the navigable airspace directly above private property, the court presumes there is no taking unless the effect on private property is ‘so severe as to amount to a practical destruction or a substantial impairment of it.” Id. at 801. Indiana follows the Aaron presumption. Biddle, 860 N.E.2d at 580.

The problem with Aaron’s test is that it relies on “navigable airspace” to determine property rights. Currently navigable airspace is defined as airspace above the minimum altitudes of flight … including airspace needed to ensure safety in the takeoff and landing of aircraft. 49 U.S.C. § 40102(a)(32). In most areas the minimum altitude for flight is 500 feet above the ground. Thus, what happens when a drone is hovering only 100 feet above your house, or cuts across your yard at 50 feet to land at a neighbor’s house? Obviously, the current test provided by Aaron is not going to work for drones. What test will evolve to address property right claims of nuisance or trespass of drones will likely depend on what the FAA does to realign “navigable airspace.”

While there are many uncertainties about drones and property rights, one thing is certain, new law will be created to deal with the ever increasing use of drones. As one can see, there are many more questions than answers in trying to envision how the law will adapt to the use of drones in the coming years.

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Thanks again to Chris Stevenson for his insights on this milestone topic. I’m sure we’ll want to ask him back to share his expertise as the law develops further around drones

If you would like to take advantage of the CLE program including Mr. Stevenson’s complete presentation, sign up for ICLEF’s Invasion of the Drones Video Replay seminars or On Demand Seminar.

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About our Law Tips faculty participant:
Chris Stevenson is an attorney with Wilson Kehoe Winingham, Indianapolis, Indiana. He graduated from the IU Robert H. McKinney School of Law in 2003 and has focused his legal career on helping injured clients. Chris, a graduate of the Purdue University Aviation Flight Technology program, uses his technical and engineering background to focus on the firm’s product liability, aviation, and construction accident caseload.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

Posted in Law Tips, News0 Comments

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