Mr. and Mrs. Richards continue their visit with their attorney, begun in the September 16 edition of this fine publication. Their estate of $1.0 million is presently exempt from Maryland and federal estate tax, but they hope their estate will grow as they continue to invest and the markets improve.

Their attorney has shared with them that, if their estate is worth $1.5 million when the second of them dies, the estate will be subject to Maryland estate tax in the amount of $63,500.

"Nobody knows what Congress will do about the federal estate tax," opines their attorney. "The tax is due to expire in 2010, and be reinstated in 2011 with an exemption of $1.0 million, so under current law your estate will also be subject to federal estate tax of $210,000, so the total tax bill will reach nearly $275,000, or about thirty percent of your estate."

"That's a lot of tax," interjects Mrs. Richards. "I thought President Obama was going to raise the exemption or freeze it at $3.5 million or something."

"That was the plan," their attorney replies, "but nothing has been done yet and it's mid-October. Congress is so fixated on the healthcare issue that nobody's really moving forward on the estate tax.

"The Democrats seem to want to freeze the exemption at present levels, but it looks like the Republicans will wait until 2010 when the estate tax is repealed, and then try to make the repeal permanent. The Democrats don't want the estate tax to expire at all. The Republicans are concerned that they don't have enough votes to make the repeal of the estate tax permanent, and that the Democrats will just wait until 2011 when the exemption drops.

"So the answer is that nobody knows."

"You're not very helpful," complains Mr. Richards.

"Hey," their attorney replies, "I'm just the messenger. If you don't like how this is playing out, call your Congressman! What worries me is either hasty legislation that causes more problems than it fixes, or retroactive legislation passed sometime in 2010 that undoes planning.

"The real question is whether you want to plan to avoid an estate tax to which you're not subject yet. Remember, you only have $1.0 million right now. Maybe we should defer that discussion until Congress acts on the estate tax.

"In the meantime, you have your children to plan for, and you wanted to make sure the dogs were cared for."

"That's right," nods Mrs. Richards. "The kids are responsible enough that we're not worried about them wasting their inheritance. We are worried about the dogs, though. Our daughter-in-law and our daughter simply can't abide the dogs. We're thinking about leaving them to friends, along with some money for their care, but want to be sure that the money goes for the dogs, and not someplace else. We trust our friends, but . . ."

Their attorney agrees, "The problem with people is that they're people, and even good people can be tempted to do bad things.

"How about putting the money in trust for the dogs. Under the new Maryland pet trust law that went into effect October 1, the money in the trust may be used only for your dogs' benefit, as long as it's a reasonable amount, so your friends can't just use the money to take a nice vacation. You can appoint an 'enforcer,' maybe your son, to be sure the terms of the trust are carried out. When the dogs have died, left-over money can be given to a charity, maybe an animal rescue.

"We can put this in your will, so it's part of your estate plan. The pet trust should provide instruction on diet and exercise, medical care and permissible euthanasia, burial or cremation and disposition of remains and other things that are important to you. Because your dogs might need care during your lifetime, such as during a period of incapacity, pet trust provisions should be included, not just in your will, but also in your Durable Power of Attorney. I have a form on my website, www.barkleylaw.com/barkleylaw_pettrustchecklist.pdf, that might be helpful."

"That's a lot to think about," comments Mrs. Richards. "Let us mull over this and we'll get back to you. Can we get together in a few weeks?"

"Certainly," affirms their attorney, standing up and shaking their hands, "let's go ahead and schedule our next meeting for mid-November!"