More often than not, pets are part of the family. I fondly remember playing fetch with our family dog, lounging on the couch with her, and vividly remember the feeling of satisfaction when I taught her to get the newspaper at the end of the driveway every morning. Growing up, I didn’t interact with cats very much and discovered later in life that I was allergic to them. Nevertheless, I now have two cats I love, and they’re a constant source of joy and entertainment for our entire family. (For those keeping score, over time, I developed some immunity, and the cat breed we have produces fewer allergens than most).
These furry family members can often be overlooked when people create their estate plans. Although trust law has existed for centuries, pet trusts are somewhat of a newer concept. This article will focus on California, but each state has its own laws regarding pet trusts. We’ll touch on how pet trusts operate, when it might be appropriate to establish one, and how they can fit into an estate plan.
1. Pet Trust Structure
First, it’s important to remember that in the eyes of the law, pets are property, so pets can’t inherit property. Thus, attempting to leave money, real estate, or other assets to pets simply won’t work. California first introduced a pet trust law in 1991 which was revamped in 2008. At its heart, California’s law solidifies the validity of pet trusts as well as imposes some requirements to ensure that the trust’s intended purpose is achieved, and that the trust doesn’t last forever.
There are two ways to create a pet trust. It can be created by a will and would come into existence at the death of the person who made the will/trust (the settlor) – this would be classified as a testamentary trust. Alternatively, the settlor can create a trust during their lifetime which could begin operating immediately (i.e., a living trust). In either type of trust, the structure would generally be the same: there would be a trustee, successor trustee(s), and the purpose of the trust would be to care for the animal(s).
Depending on the settlor’s wishes, there could also be a named caretaker of the animal. In this type of setup, the trustee would manage the assets of the trust, and the caretaker would care for the animal. For example, the caretaker would do the hands-on work of feeding the animal, providing water, taking it to the vet for checkups, etc.; while the trustee would just provide the caretaker with trust funds in order to carry out those tasks. This would probably be more complex than necessary, but it is an option. In most scenarios though, the trustee and the caretaker would likely be the same person.
Although the animals who will be cared for pursuant to the trust will benefit, the animals are not the technical beneficiaries in terms of the law. The beneficiaries of a pet trust are actually those individuals or entities (such as other trusts or charities) who will inherit the trust property once the animals have passed away and the trust terminates.
California’s pet trust law is part of the probate code. A few highlights are as follows[i]:
A trust for the care of an animal is for a lawful, noncharitable purpose
The property in the trust cannot be used by the trustee for any other purpose than to benefit the animal
When there are no animals living who were alive on the date of the settlor’s death, the trust terminates
When the trust terminates, the remaining property must be distributed
Reports about the trust assets (accountings) must be made to the beneficiaries unless the assets in the trust are less than $40,000
The trust can be enforced by outside parties (such as nonprofit organizations that care for animals)
2. When Might a Pet Trust be Appropriate & How Would It Fit Within an Estate Plan?
Everyone’s situation is different when it comes to estate planning. A large part of evaluating a pet trust depends on what you value and your life circumstances. For someone with no children and no other family, a pet trust might make perfect sense – especially if the pets served as faithful companions during the person’s life. For someone who has children to whom they would like to leave assets, a pet trust might take away from their children’s inheritance. The level of assets will be a major factor in deciding whether a pet trust makes sense. The more assets there are to go around, the more likely someone may be to set some aside specifically for the care of their pets.
I began this article by reflecting on dogs and cats. However, another factor to consider when evaluating a pet trust is the life expectancy of the animal. With their long life expectancies, animals such as horses (25-30 years), parrots (40-60 years), and tortoises (80-150 years) would all make good potential candidates for a pet trust. Since these animals could outlive the settlor by a significant amount of time, a pet trust could be beneficial.
We always recommend working with a licensed estate planning attorney to effectuate your wishes, but the good news is that a pet trust should be relatively straightforward for an attorney to create. The provisions for the pet trust could be inserted into your will, or a living pet trust could be created right alongside a traditional living trust.
If you decide you want to provide for your pets, but a pet trust is not right for you, one option would be to work with your attorney to amend your existing living trust to add provisions to address the care of your pets. Although it wouldn’t be as stringent as a full-on pet trust, you could make specific monetary gifts to whomever you designate to care for your pets with the intention that the funds be used for the pets.
3. Final Thoughts
As you assess your estate plan, pets can be an important consideration, especially because they can’t speak for themselves. If we can assist in navigating any aspect of your planning, please don’t hesitate to schedule a call or email us at info@sherwoodfp.com.
Disclosures: This information should not be construed as investment, tax, or legal advice. All statements and opinions expressed herein are based upon information considered reliable at the time of publication and are subject to change without notice.
i. California State Legislature. “California Probate Code Section 15212.” California Legislative Information Code Section. Accessed May 18, 2023. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB§ionNum=15212.