Setting Up A Trust - Estate Planning For Your Horse

I lost a very close friend this month. She and I were close enough that we named each other as the person in charge of what happened to our horses (and other animals) in the event of our deaths. Mostly we discussed it as if our deaths would also coincide with our husbands’ passing; like in an auto accident or some such thing. Only it didn’t happen that way with her. 

Her husband is alive and therefore is the automatic benefactor of all of her estate, including the horses—which are considered property—and he has the final say, regardless of what she wanted. The way this is all unfolding got me to thinking and led to a long discussion with my own husband about what I would want to happen to my three horses if I should die before him, and led to the question of how to best set up a safe life for my horses after mine is over. My husband is not a horse person and would have no desire to keep three horses and do all the work and care that comes with them even though he loves them. And so, my research began in earnest.

Estate planning is more than writing documents, and sets up, in advance, who will pay for their boarding, grooming, and any other expense that comes along with owning or caring for a horse. Who will train, ride, care for and in what manner is as important as being certain the animals are fed and watered. How to establish what we want is best done legally and with people being named as guardians written down and notarized. But where to start?

What I learned is that basically, we have two choices; writing a will or leaving a trust. 

Trusts are carried out by appointed trustees. The trustee is given access to funds and is given guidelines as to how you want them to use the money.  The trustee is someone you choose based on your faith in them carrying out your wishes and their knowledge to care, feed, and train your horse.

Here are two different options in setting up your preferences for your horse(s): wills and trusts.

1) Name your horse(s) in your will:

A will is a legal document that allows you leave property to whomever you choose. Horses are property and you may designate either individuals or organizations as the benefactor, but remember that some organizations will be unable to take the horse except sell him. In this case, you will not be able to choose the buyer or your horse’s future.

Some owners will take the simplest option and state in their will that the horse must be given to a person they trust to care for him and may leave a specific amount of cash or even property to help cover the costs that will always be a part of caring for horses. 

The downside of stating a caretaker in your will is that even though you write a will laying out your wishes, it does not automatically mean anything will happen the day you die. If your family members don’t want to oblige, or if the will hasn’t been through probate—this can take a year or more—your well-intentioned instructions could be tied up and ignored for many months or even years. If you owe money to anyone, this can also prohibit your wishes from being met.

You must make provisions for the probate period, even though the person left as executor is legally bound to care for all the estate assets. If you haven’t, and if your family doesn’t understand how to care for your horse, or if your assets are not available to pay for horse’s needs, (veterinary, board, feed, training and farrier care, for example) your beneficiary will be left with all the expenses. This means you should choose someone financially able to withstand these unexpected expenses, or set up a trust for your horse(s). Remember that even the most well-trained horse will lose value if not kept in a program that keeps him fit and kept up in regards to his training.

2.) Set up a Trust:

A trust is a written statement saying that you leave your estate to specific persons or organizations. The biggest advantage of a trust is that the funds needed to care for your horse are available immediately since trusts do not go through the probate period. Setting up a trust in the U.S. today is around $1500.

There are two types of trusts used most often for horses—testamentary and inter vivos. Make sure copies that have been notarized are given to the person or people you are leaving as the trustee or beneficiary. Consult a legal professional to make sure it’s done right. 

Testamentary Trust:  This is a trust document created when the horse owner dies, as specified in their Last Will and Testament. 

There are typically four parties involved in a testamentary trust:

• The grantor—this is you, and is set up during your lifetime.
   
• The trustee, carries out the terms of the will. He or she may be named in the will, or may be appointed by the probate court that handles the will.
   
• The beneficiary, who will receive the benefits—usually funds or property as designated in the trust.
   
• The probate court oversees the trustee’s handling of the trust.

Inter vivos trust: (AKA living trust) is a trust document set up by the owner of the horse before they die. 

In either kind of trust, the owner names a trustee who will follow your directions. It is advisable to name a back -up person as secondary trustee in case needed. In the trust written information and instructions on how to care for the horse in all aspects and how funds are to used for the horse and where any other assets would go in the event of the horse dying.—at which time the trust ends. 

Since this article is so long already, and since creating a will is something you’ll do with an attorney, I made up a FREE CHECKLIST FOR SETTING UP A LIVING TRUST here: https://lp.constantcontactpages.com/su/NVwj70Q/ChecklistHorseTrust

***This article is not written to offer any legal or professional advice and should not be construed as legal, financial, advisory recommendation to you or anyone else. Please obtain professional instruction from a qualified person in regards to your own objectives and needs.

Setting a plan into place will help you enjoy your horses and your life worry-free, Happily Ever After!

~Tanya Buck

TanyaBuck.com