But, What Will Happen to Fluffy When I Die?

For many Americans, pets are more like a family member than a piece of property. Yet, more than 500,000 pets are euthanized in the U.S. each year because owners die or become incapacitated. The law treats pets as mere property, making their futures uncertain, unless they are provided for in estate planning. Fortunately, the law is moving in the right direction, and several states, including California, have adopted laws which formalize the process of providing for care of beloved pets when their owners become unable to do so.

The Law and Pets

Historically, and in most states today, there was no way to require anyone to take care of your pet after you die. The main option was to give a friend or relative the pet to take care of, and hope they would do so. But you could not guarantee that they would, and could only rely on faith. You could not even be sure that the executor of the estate would give the animal to the right person – since the animal was a mere piece of property like furniture – unless you gave the animal to the right person as property in your will.

Some estate planners for the wealthy experimented with pet trusts; you may recall that Leona Helmsley created a $12 million trust for her dog, “Trouble”.  But, even if a pet trust was created, there was no assurance it would be carried out, since these were only considered “honorary” trusts – the assets were actually left to a designated person, and it was hoped that they would take care of the pet: however, it was not enforceable against them.

Finally, in 2009, California enacted Probate Code § 15212: “Trusts for care of animals.” This section recognized the Pet Trust as a lawful and enforceable trust, and created requirements and conditions for enforcement.[*]

The main features of the Pet Trust law are:

  • A trust for the care of an animal is deemed to be for a “lawful non-charitable purpose.”
  • The trust funds may be used only for the benefit of the animal, unless the trust instrument provides otherwise.
  • The court must liberally construe the trust and presume that the trust language is intended to be enforceable and not honorary.
  • Both an animal caretaker (“enforcer”), to have custody of the pet, and a separate trustee, to handle the money, are provided for under the law. The settlor may name both the trustee and enforcer, or the court may appoint them.
  • Anyone interested in the welfare of the animal and any nonprofit charitable organization that has as its principal activity the care of animals may petition the court to enforce the trust.
  • The trust terminates when the last animal dies that was alive when the settlor died (unless the settlor provided otherwise in the trust instrument).
  • Unless the trust is less than $40,000, accountings must be given to the remainder beneficiaries (those who would take upon the death of the animal) as well as to any nonprofit charitable corporation (Humane Society, etc.) whose principal activity is the care of animals and has made a written request. Upon request, the animal and the trust records may also be inspected by that charity, any beneficiary or the trust enforcer.
  • When the trust ends, the balance of the trust property passes: (1) according to the terms of the trust (i.e., to the remainder beneficiaries); (2) if there no remainder beneficiaries, and the settlor created the trust in a non-residuary will clause, under the residuary clause, or (3) in other cases, to the settlor’s heirs.

Of course, the law is not perfect. Some commentators have criticized the law as being unworkable and an invitation to litigation, in that it gives animal charities and “anyone interested in the welfare of the animal” the right to inspect and receive records about the animal as well as the power to petition the court to enforce the trust.  Certainly, there is the possibility of abuse of these powers.

The new law also fails to resolve some issues which have came up in previous cases. It does not treat the issue of “over-funding.”  Pet trusts have been reduced in amount when courts ruled that the pet-care fund was more than reasonable for the purpose. The $12 million  Leona Helmsley left for “Trouble” was reduced to $2 million, with the rest of the money being diverted to the benefit of human heirs.  It is unclear whether California courts will honor the settlors’ wishes about amount, or will accede to the demands of the human beneficiaries.

Despite these flaws, the law is better than what preceded it, and provides a valuable tool to be used by estate planners.

Setting up the Pet Trust

Pet Trusts may be created as an independent document, or may be created within the context of your overall estate planning. Certainly it would be more economical to have the pet trust created when you are having your will, living trust or other estate documents drawn up; it can be added as simply one more sub-trust.  If care for your pets is a concern, make sure you estate lawyer is made aware of the need, and that the lawyer is able to provide guidance and appropriate documents.

Pet trusts must cover two scenarios: there must be a testamentary trust to provide care after your death, and an inter vivos trust for when you living but unable to care for your animal because you are incapacitated or in an assisted-living facility. The lifetime care portion can be in the trust or can also be provided by a durable power of attorney.

It is important to think carefully about whom to designate as caretaker and trustee. Obviously, the caretaker must love animals, but should also be dedicated to you and the specific animal. The law will see to it that the money is available, but it can’t require love and affection. In some cases, you might consider adding a stipend for the caretaker. Remember that the money is being given to the trust for the care of the animal- the money does not belong to the caretaker. You want to make sure that the caretaker feels rewarded: particularly if you don’t specify a caretaker so that the court must appoint one.

It is also important to think about the amount of the amount of the trust. It should be adequate to cover the needs of the animal into an uncertain future time. Try to calculate all of the hidden costs. On the other hand, it should not be so much as to invite greedy humans to petition the court that it is “overfunded”.  It may be a good idea to be somewhat specific about defining your pet’s health needs, routine and care, both as a guide for those involved and as a justification for the amount to be funded.  You can also provide that any excess will go to charity and not your heirs, to remove the incentive to petition.

What if you don’t have sufficient funds to leave enough to ensure that there will always be money for the animal’s care? If you have chosen a caretaker who loves the animal, they may simply bear the burden. You could also provide an adequate fund by purchase of life insurance to fund the pet trust. Another option would be to arrange for permanent care with a shelter or animal rescue organization. Many of these will agree to provide lifetime care to your pet in exchange for a specified donation from the trust. This must be arranged while you are alive, and it is a good idea to have a written agreement which specifies the undertaking, i.e.: that the animal will be cared for during its natural life, no euthanasia, whether adoption is permitted, etc.

Conclusion

If you want assurance that your beloved pet will be cared for no matter what happens, specifically providing for that care in your estate planning can provide peace of mind. Happily, the law is finally recognizing that Fluffy in more like a friend than a piece of furniture.


[*] Probate Code § 15212: (a) Subject to the requirements of this section, a trust for the care of an animal is a trust for a lawful noncharitable purpose. Unless expressly provided in the trust, the trust terminates when no animal living on the date of the settlor’s death remains alive. The governing instrument of the animal trust shall be liberally construed to bring the trust within this section, to presume against the merely precatory or honorary nature of the disposition, and to carry out the general intent of the settlor. Extrinsic evidence is admissible in determining the settlor’s intent.
(b) A trust for the care of an animal is subject to the following requirements:
(1) Except as expressly provided otherwise in the trust instrument, the principal or income shall not be converted to the use of the trustee or to any use other than for the benefit of the animal.
(2) Upon termination of the trust, the trustee shall distribute the unexpended trust property in the following order:
(A) As directed in the trust instrument.
(B) If the trust was created in a nonresiduary clause in the settlor’s will or in a codicil to the settlor’s will, under the residuary clause in the settlor’s will.
(C) If the application of subparagraph (A) or (B) does not result in distribution of unexpended trust property, to the settlor’s heirs under Section 21114.
(3) For the purposes of Section 21110, the residuary clause described in subparagraph (B) of paragraph (2) shall be treated as creating a future interest under the terms of a trust.
(c) The intended use of the principal or income may be enforced by a person designated for that purpose in the trust instrument or, if none is designated, by a person appointed by a court. In addition to a person identified in subdivision (a) of Section 17200, any person interested in the welfare of the animal or any nonprofit charitable organization that has as its principal activity the care of animals may petition the court regarding the trust as provided in Chapter 3 (commencing with Section 17200) of Part 5.
(d) If a trustee is not designated or no designated or successor trustee is willing or able to serve, a court shall name a trustee. A court may order the transfer of the trust property to a court-appointed trustee, if it is required to ensure that the intended use is carried out and if a successor trustee is not designated in the trust instrument or if no designated successor trustee agrees to serve or is able to serve. A court may also make all other orders and determinations as it shall deem advisable to carry out the intent of the settlor and the purpose of this section.
(e) The accountings required by Section 16062 shall be provided to the beneficiaries who would be entitled to distribution if the animal were then deceased and to any nonprofit charitable corporation that has as its principal activity the care of animals and that has requested these accountings in writing. However, if the value of the assets in the trust does not exceed forty thousand dollars ($40,000), no filing, report, registration, periodic accounting, separate maintenance of funds, appointment, or fee is required by reason of the existence of the fiduciary relationship of the trustee, unless ordered by the court or required by the trust instrument.
(f) Any beneficiary, any person designated by the trust instrument or the court to enforce the trust, or any nonprofit charitable corporation that has as its principal activity the care of animals may, upon reasonable request, inspect the animal, the premises where the animal is maintained, or the books and records of the trust.
(g) A trust governed by this section is not subject to termination pursuant to subdivision (b) of Section 15408.
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