SERVICE DOGS AND EMOTIONAL SUPPORT ANIMALS

This post diverges somewhat from my usual practice areas, but the topic interests me and I hope it will interest my readers as well.

Many people suffer from conditions which require assistance.  Often, that assistance comes from animal support in the form of a service dog.  Your legal rights vary depending upon the status of your service animal. 

The Americans with Disabilities Act (ADA)  requires privately owned businesses that serve the public to allow people with disabilities to bring their service animals onto business premises in whatever areas customers are generally allowed. 

 The ADA defines a service animal as any guide dog, signal dog, or other animal individually trained to do work or perform tasks for an individual with a disability.  The task(s) performed by the animal must be directly related to the person's disability.   Service animals perform some of the functions and tasks that the individual with a disability cannot perform for him- or herself. People are most familiar with guide dogs for the blind, but service animals that provide assistance for any other disability meeting this definition are also considered service animals under the ADA.    The ADA does not require service animals to be licensed or certified by any governmental entity, nor does it require service animals to wear a vest, ID tag, or specific harness.  Business owners are not permitted to request any documentation for the animal, require that the animal demonstrate its task, or inquire about the nature of the person's disability.  They may ask only whether the service animal is required because of a disability, and what work or task the dog has been trained to perform.  People who use service animals may not be isolated from or treated less favorably than other patrons, and may not be charged additional fees due to the presence of a service animal.

 

Growing attention is being paid to the category of “emotional support animals (ESA).”     An ESA is not a service animal as defined by the ADA.  Rather, an ESA is a companion animal that has been prescribed by a licensed mental health professional for a person with a verifiable disability as part of a treatment program, and is meant to bring comfort and minimize the negative symptoms of a person’s emotional or psychological impairment.  A formal prescription letter from a licensed mental health professional is sufficient to categorize an animal as an ESA.   Unlike service dogs, ESAs do not need any specific task-training.  They are not required to perform any specific tasks for a disability, but are meant solely for emotional stability.   Their presence alone mitigates the symptoms for which they assist the owner.  Any domesticated animal (not only dogs) may qualify as an ESA.  Once again, ESAs do not need to be licensed or certified by any governmental entity, or wear a vest, ID tag, or specific harness.

ESAs, however, are entitled to fewer legal protections than those afforded to service animals.  The main difference is that with two exceptions, no public or private entity is legally required to permit an ESA access to their establishment, and their entry is not protected by law.  The proprietor of any establishment that does not permit pets has no obligation to grant access to an ESA.

There are two exceptions to this ESA policy.  First, under the Federal Department Air Carrier Access regulations, an airline must permit an ESA to fly with its handler in the cabin of an airplane without being charged a pet fee.   The carrier may require certain documentation, most customarily a letter from a mental health professional verifying the necessity of the ESA for emotional or psychological support. 

The other exception relates to housing.  The Federal Fair Housing Amendments Act of 1988 (FHA) requires “reasonable accommodations” in housing communities, even those that have a “no pets” rule.  An ESA is considered a reasonable accommodation and must be permitted by property owners and landlords without extra charge.  The FHA applies to most housing types, including apartments, condominiums and single family homes.  Certain types of housing are exempted.  For more specific information, see http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/FHLaws/yourrights.

One last caveat:  several creative entrepreneurs have established websites offering their services to register your service animal or ESA with official-looking organizations such as the “United States Dog Registry”, the “National Service Animal Registry” the “United States Service Dog” registry, and others.  Again, neither service dogs nor ESAs need be registered anywhere, so do not be taken in by these commercial websites who “facilitate” the registration of your animal for a sometimes substantial fee, and while they are at it, try to sell you a variety of equipment such as vests, tags and similar items which they suggest are necessary for proper identification of your service animal.  Those items are not required.  Do not be fooled by these sites. 

Irrevocable Life Insurance Trusts

Under federal and state estate tax laws, the face (payout) amount of a life insurance policy owned by an individual will be included in the taxable estate of such individual at death if the policy is owned in the name of the insured during his or her life.  If the life insurance policies have substantial payout amounts,  the decedent’s taxable estate may exceed the allowable estate tax exemption.  If life insurance policies represent much of the taxable estate, a Irrevocable Life Insurance Trust (ILIT) is a good tool for removing the face amount of a life insurance policy from the taxable estate of the insured. 

The ILIT is created to own the life insurance policies in its name, and is also named as the beneficiary of any policies owned.  Upon the death of the insured, the proceeds of the policies on the life of the insured will be paid to the ILIT and held by the ILIT in accordance with its terms.  Generally the ILIT requires that the proceeds of policies owned by the ILIT are held for benefit of the surviving spouse. Distributions may be made to the spouse only at the discretion of the Trustees.  Upon the death of the surviving spouse, the terms of the ILIT will govern the division and distribution of the assets in the Trust.  Most commonly, upon the death of the surviving spouse, the proceeds will be distributed to children according to the terms of the ILIT, though any successor beneficiary may be named if there are no children to receive a share.  By using an ILIT, the policy proceeds will not be included in the taxable estate of either the insured or the surviving spouse.

If you are applying for new life insurance and have established an ILIT, the application should be made by the ILIT rather than by the individual.  When the policy is issued, it will be owned by the ILIT, and In that event, the tax protections of an ILIT are immediately available.   If you transfer already existing policies into an ILIT, there is a three year waiting period before the transfer is deemed complete.  If the insured dies within that three year period, the proceeds of the ILIT will come back into his/her estate.

It is important to note that or an ILIT to be effective, the policy owner must give up all “incidents of ownership” in the policy. Thus, an independent third party trustee must be named to take active responsibility and control at inception.  it is important to name a trustee with whom the surviving spouse will feel comfortable since the Trustee controls the payout of trust assets.  It is prudent to name at least one successor trustee in the event the initial trustee is unable to serve.  Because of the potential length of time the ILIT may exist, it is prudent to select a younger person as trustee to ensure they will be able to serve for the duration, and to name a series of successor Trustees to avoid a complete vacancy in that office.

The Trustee will be responsible for all administrative duties.  One such duty is the payment of annual premiums on the policy.   When a premium is due, the insured may not pay the premiums directly. Instead the insured must make a “gift “ in the amount of the premium to the ILIT, and the Trustee will then pay the premium from that gift.   To comply with gift tax laws, the beneficiaries are entitled to withdraw a portion of the gift within a 30 day period after the gift is made.  These are known as “Crummey Powers”.  The trustee must send written notices to each beneficiary of the gift made and the right of withdrawal.

Although there are great advantages to using an ILIT to own life insurance policies, there are certain downsides:

1.       An ILIT is irrevocable. The insured surrenders all control over the policies and any other contributions made.  The settlor of the trust cannot change the beneficiaries, cancel the policies, borrow against the trust, or otherwise alter the provisions of the trust if circumstances change, nor can anyone compel the Trustee to do any of those actions.  

2.       If an existing policy is transferred to the Trust less than three years prior to the death of the insured, the ownership of that policy will revert back to the estate of the insured and the face amount thereof will be includible in the calculation of his or her taxable estate.

3.               The beneficiaries are given a mandatory withdrawal right which could result in the exercise of that right in opposition to your intent.

4.               The surviving spouse as beneficiary of the ILIT does not receive the policy proceeds free and clear, but instead must work with the independent trustee on matters of management and distribution of trust assets.

Notwithstanding these limitations, an ILIT it is widely considered to be a worthwhile tool in estate planning as a very effective way of reducing the size of a taxable estate, thereby reducing estate taxes by a substantial amount.  

Wow, technology is tough

Greetings, loyal readers.  Once again, I have not been able to post, simply because google has changed their platform and it has taken me until now to figure out how to get back into this blog page to post new entries.  This is a test, and with luck, I will be back in and posting articles far more interesting than this one.  Thanks for your patience.  And here we go...