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%).

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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.

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.

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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

Posted in Law Blogs, Law Tips0 Comments

Law Tips: Mediation from One Divorce Lawyer’s Perspective, Part 2

Welcome back to Law Tips as Bruce Pennamped provides his valuable perspective on preparing and working the mediation session. In case you missed last week’s blog, you’ll find it below. Now let’s hear more on Bruce’s tested mediation techniques. One of the objectives he emphasized earlier was: ‘”As I prepare for mediation I try to minimize the possibility of ‘settlement regret’.“ Join him as he discusses those efforts:

My preference, except in unusual circumstances, is to deal with all the issues at once as opposed to separating the property matters from those relating to the children. While arguably not legally linked the dynamics change significantly when separated. In the case of the custodial parent it is impossible to understand how the economic circumstances arising from the disposition of the property will affect his/her ability to support the child if you do not know what will be received from the marital estate. The custody orders may well effect how the marital estate is divided.

Generally, I provide a settlement offer (in the form of a Settlement Agreement formatted in WORD so it can be edited as the day goes on) and Marital Balance Sheet (“MBS”, formatted in EXCEL again, to edit as the day goes on) to the other side prior to the session. Obviously, both are approved by the client prior to transmittal The practice allows the client to focus on the key issues and to review the “boilerplate” prior to the session. At the time I send the offer and MBS to the other side I copy the Mediator. Hopefully, a response will be forthcoming a reasonable amount of time in advance of the session.

The objective is to have a “conformed” MBS and a Settlement Agreement on which the differences are noted when we arrive at the session. If that does not happen I may request the Mediator allow me and my client to arrive at the session a reasonable amount of time after the other side so as to give the other party time to formulate a counter. If the other side is unwilling to allow me to appear on that basis, depending on the complexity/acrimony, I may request a premeditation conference in an effort to make sure everyone is on the same page. A side benefit is that the client usually appreciates the fact that he/she is saving money by not sitting around waiting for a response.

There is an inherent friction between Rule 2.7. Mediation Procedure (A) Advisement of Participants (3)-(5) and divorce mediation. In some instances I look to the Mediator to reinforce the efficacy, or lack thereof, of the proposal under consideration as such reinforcement is generally needed to move the day along. A mediator who lacks direction is akin to a counselor who listens but provides no guidance. Neither assist is the resolution of the issues.

While I explain the process in advance of the session the advice I give to my clients prior to and throughout the session on protocol is generally limited to two primary pieces: 1.) if the client desires that the mediator not share the substance of the discussions in our room with the other side, he or she, must advice the mediator before that person leaves the room; and, 2.) if there is “buyer’s remorse” or “settlement regret” after the fact it is too late. Typically, I do not ask the mediator to leave the room. If the mediator is not present for all the discussions he/she lacks a true understanding of the dynamics of the room and is less able to manage the process.

In the end my goals are to: a.) assist my client reach the best result possible through the mediation process with a minimum of “settlement regret”; and, b.) to be in a position to manage “settlement regret” if it manifests itself after the fact.

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About our Law Tips faculty participant:
Bruce M. Pennamped, Cross, Pennamped, Woolsey & Glazier, P.C., Carmel, IN. Bruce limits his practice to Family Law. He earned his BS and JD from Indiana University. Among the programs and activities he devotes time to are:

  • Certified Family Law Specialist by and, Co-Chair of, Family Law Certification Board;
  • Fellow of the American Academy of Matrimonial Lawyers;
  • Serves on the Indiana Child Custody and Support Advisory Committee, a Committee created by statute to make recommendations to the Indiana Supreme Court on the Child Support Guidelines;
  • Chair, participant on numerous panels, and author of texts for Indiana Continuing Legal Education Forum;
  • Pro bono Volunteer and Attorney, Hamilton County Guardian Ad Litem Program.

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 Blogs, Law Tips0 Comments

Law Tips: Mediation from One Divorce Lawyer’s Perspective, Part 1

It’s my pleasure to welcome to Law Tips Bruce Pennamped, Carmel, Indiana, to share his particular expertise in mediations. He brings valuable pointers for minimizing your client’s regrets and preserving your professional reputation.

From a practitioner’s perspective what is the best way for a divorce lawyer to prepare for and work the mediation session?

In my view, it is to get the issues framed before you arrive at the session. The work should be done and the outcome communicated to the mediator prior to the 11th hour, i.e., the night before the session. The mediator’s job is not to sift through the discovery and/or “figure it out” for the parties. If left to those devices the process will be more cumbersome, frustrating and expensive than need be and, more often than not, produce some sort of buyer’s remorse after the fact.

According to Ira Daniel Turkat, PhD, Licensed Psychologist, Family Law Litigation Strategist, in an article published in the American. Journal of Family Law, Vol. 28, Number 3, Fall, 2014: “A recent Harvard Negotiation Law Review found in a five-year period more than 1,000 state and federal decisions reported in which mediation itself was the subject of litigation. (FN omitted). This should come as no surprise because it is not uncommon to hear an experienced mediator profess that, ‘one definition of a good settlement is when both sides are equally unhappy’ (FN omitted) or that ‘a truly good settlement is one that leaves everyone unhappy’. (FN omitted). Although not a universal viewpoint, if many start with the notion that a ‘good’ mediated agreement will produce up to I00 percent of clients unhappy with it, reducing settlement discontent would appear increasingly unlikely.”

So what, you may ask? The “what” is my exposure from a professional standpoint and your reputation as a mediator.

As I prepare for mediation I try to minimize the possibility of “settlement regret”. As Dr. Turkat posits: “The effort to prevent settlement regret begins by avoiding, eliminating, or minimizing those factors believed to increase risk for its development, when possible ….. first steps might include the following:

  1. Read your client well so that you don’t encourage adopting the wrong language or terms.
  2. Aim to create an agreement that ends conflict.
  3. Approach settlement as a means to an end and not as the primary goal.
  4. Reduce or eliminate unnecessary pressures to settle.
  5. Do not encourage a rush to an agreement at the expense of proper consideration.
  6. Approach unresolved issues with specificity over ambiguity.
  7. Do not advise silence on known issues of concern.
  8. Do not create terms that sound right but are unrealistic.
  9. Anticipate where things can go wrong and create terms to prevent that.
  10. Articulate how the other party could out maneuver the final version of the proposed agreement.” ld p. 128

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We’ll take a break at this point to digest Mr. Pennamped’s introductory pointers. Next week he’s back with us at Law Tips to delve further into his mediation objectives and practices.

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About our Law Tips faculty participant:
Bruce M. Pennamped, Cross, Pennamped, Woolsey & Glazier, P.C., Carmel, IN. Bruce limits his practice to Family Law. He earned his BS and JD from Indiana University. Among the programs and activities he devotes time to are:

  • Certified Family Law Specialist by and, Co-Chair of, Family Law Certification Board;
  • Fellow of the American Academy of Matrimonial Lawyers;
  • Serves on the Indiana Child Custody and Support Advisory Committee, a Committee created by statute to make recommendations to the Indiana Supreme Court on the Child Support Guidelines;
  • Chair, participant on numerous panels, and author of texts for Indiana Continuing Legal Education Forum;
  • Pro bono Volunteer and Attorney, Hamilton County Guardian Ad Litem Program.

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 Blogs, Law Tips0 Comments

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