This week I’m at the Heckerling Institute on Estate Planning. In the Recent Developments session during the opening day of the Institute, we looked at a Tax Court case involving a taxpayer with dozens of cats. Van Dusen v. Commissioner, 136 T.C. No. 25 (2011). In fact, she had so many cats that she could not invite guests over. The number of cats in her home varied between 70 and 80 over the course of the year. In addition, the taxpayer had 7 cats who were her pets and who had names.

The taxpayer claimed an income tax deduction for various cat-related expenses including: pet food, medical expenses, increased utilities for laundering of feline linens, etc. The taxpayer worked closely with “Fix Our Ferals,” a cat rescue operation, and other charities. The IRS denied her a charitable deduction. However, the Tax Court found for the taxpayer because of the close connection between the charity and the taxpayer. However, they limited the deduction to $250 because there was no contemporaneous acknowledgement of the gift/expenses by the charity, as required by regulation for a larger deduction.

This shows the importance of planning. If she had planned and obtained contemporaneous acknowledgment from the charity, all of those expenses would have been deductible. While she did not plan well for her income tax deduction, we can hope that she has planned for someone to care for her 7 pet cats and the dozens of other cats in the event of her death or incapacity.

Estate Planning attorneys plan for our clients and their human families. However, often, the non-human members of the family are overlooked in the planning process. As Van Dusen shows, pets may be a very important part of a client’s life. It is important to do Pet Planning so that a willing and able caretaker is designated to carry on with pet care. (Can you imagine how quickly a home with 80 cats would deteriorate without someone to take care of them?) Also, Pet Planning provides the financial support necessary to care for the pets. It’s easy to underestimate the financial obligation pets require. Ms. Van Dusen spent over $12,000 a year in caring for cats.

“Pet Planning” is planning for the often-overlooked, non-human members of a client’s family. Do you provide Pet Planning as part of the estate planning services you provide?

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com

I spent an hour or so a couple weeks ago talking to an attorney who focuses on Pet Planning. She is quite successful in her efforts and I wanted to know more about how she attracted such a great flow of business. There were no huge secrets in what she had to say:

1. Be passionate about the pet niche or any other niche you are making an effort to serve. Be clear about what the estate planning challenges, needs and solutions are for the niche. It’s also very important to identify exactly what it is about the niche that causes you to connect to the needs people in that niche are worried about.
2. Connect with referral sources. In the case of the Pet Niche, are you making the professionals who work at the Humane Society, training or grooming providers or Rescue Shelters easier in some way. Find something that you do, that could take a little of their load off and provide it. Help them understand what you do. Ultimately, in addition to referrals, they can feature you as a guest speaker on the estate planning topic that they need to hear more about.
3. Go back through your existing clients and educate them on this new or renewed focus you have for the niche you’re passionate about.
4. Make the topic part of your consultation. Look at your Client Intake Forms and customize a corner or add a few questions about whether this prospective client has a pet, how many, what kind, how old are they, what’s the plan for them down the road… you’re guaranteed to find the person lights up and talks more about their pets that they often do their children!

Let your prospective clients, clients and centers of influence catch a glimpse of what you find important. Be human and take an extra moment to share a SMALL bit about why it is you have such a soft spot for the same thing they do.

Jennifer Price
Director, Member Services
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com