Not only does our firm have a personal love for horses, but also many of our clients share that same passion. As such, we have become experts in educating clients in the nuances of estate and financial planning specific to equestrians and equine businesses.
Consider a Will or Horse Trust
- In your will you can specifically bequest your horse to an individual as a guardian, but if you want to leave cash to pay for equine expenses or name a secondary guardian, a trust will offer more oversight. Trust assets will be segregated from the trustee’s personal assets and must be used to pay for the horse’s care, such as board, feed, and farrier costs. A trust can be inter vivos (created during the lifetime of the horse owner) or created under your will after your death. A horse trust terminates upon the death of the horse or last surviving horse if there are multiple.
- Other options include placing your horse in a retirement home, which will require you provide sufficient funds, or donating your horse to a 501c3 charitable organization and receiving a tax deduction for the fair value of the equine.
Registration Papers and Medical Records
- Make sure that a copy of registration papers and medical records are kept with your will and estate documents. In the event that your executor or the guardian must step in to care for the horse, you will want them to have access to all up-to-date records as soon as possible. You might also check with your veterinarian that you can grant access to medical records to specific individuals, as it is typical that veterinarians will only release medical records to owners.
Update Boarding Contracts
- Review your boarding contract with your boarding stable to ensure that it includes instructions on how to handle veterinary emergencies when you cannot be reached. Many times, these contracts extend from full authorization to a specified expense limit. You might also designate a secondary contact to be authorized to make emergency decisions. Be sure to have your equine insurance policy information on file with your boarding stable, since many policies require “immediate” notice of the insured horse’s illness or injury to approve a claim. You will want to be sure your boarding stable or trainer can contact the insurance provider in the event of your extended absence.
Understand the Equine Activity Liability Act (EALA)
- Most states have passed the EALA, which provides some protection for horse owners, by transferring liability from the horse owner to the horse participant for risks inherent in horse-related activities. The EALA does not provide coverage if the equine owner displays willful or intentional disregard for safety for the participant. Because the EALA doesn’t provide blanket protection for horse owners, equine insurance coverage should be considered to provide valuable financial protection as discussed below.
Equine Mortality Insurance Coverage
- Equine mortality insurance provides financial coverage for horse theft and death by certain causes. Your horse must be between the ages of 24 hours through 17 years to insure for Full Mortality. If your horse is age 18 or older, Extended Named Perils coverage is available. You can add endorsements to the policy to add coverage for major medical fees or opt for surgical coverage only. If your horse is valued at $25,000 or more, you can add loss of use coverage. Lastly, you can add trip transit coverage as well.
General Liability Insurance Coverage
- Equestrian sports have high-risk factors when compared to other sports because you must keep both the rider and horse safe. You will want to be sure that you as the horse owner cover your legal liability for both bodily injury and property damage to others resulting from horse ownership. You can do this through general liability insurance policy specific to equine owners and this policy should be reviewed annually to be sure you maintain adequate coverage.
Protecting Horse Farms via Conservation Easement
- If you are interested in protecting the land on which your horse lives from being sold and developed, you might consider a conservation easement. A conservation easement is a legally binding agreement that limits the use of the land. This type of agreement can decrease the value of the land and make it more difficult to sell in the future, but you may receive income and estate tax benefits in addition to protecting the land for future generations. Another resource, you can look to is the Equine Land Conservation Resource found online.
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Disclaimer: Information provided is for educational purposes only. HBWM does not provide tax, legal, compliance, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions. Further, HBWM makes no warranties with regard to such information, or a result obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.