A Legal Introduction to a Pet Trust Fund
Brad Reid | DEC 18, 2015
Animal law has become a legal specialty in the past thirty years. While historically animals were purely "property," a "rights" or "companionship" viewpoint is slowly developing. For example, a few states have enacted legislation or have judicial decisions allowing some financial recovery for owners beyond fair-market-value for the wrongful death of domesticated dogs and cats. A further illustration of this trend is legislation specifically addressing the creation of trust funds to care for pets, typically effective after the death of the owner. A legal phrase, "honorary trust," describes a trust fund for which there is no charitable purpose or human or institutional beneficiary to enforce the trust. One relies on the "honor" of the trustee to execute the creator's wishes. Pet trust funds by statute create an exception to the honorary trust concept. This comment contains a brief and incomplete educational overview of these pet trust funds. Always consult an experienced attorney in specific situations.
While a great majority of states have enacted pet trust fund legislation, there are other legal options. A financial gift to a designated caretaker either during the lifetime of the owner or by a provision in a will is possible. However, there is typically no easy method of monitoring the use of the funds and the care provided. One might also consider utilizing a local humane society or create a "pet protection agreement" contract. Both the Uniform Probate Code and Uniform Trust Code, enacted by many states, contain provisions allowing the creation of trust funds for pets. There are numerous resources online.
A pet owner may print and carry an "alert card" providing information concerning the pet, to be accessed in the event the owner is injured or dies. In like manner, a longer "emergency caregiving" document provides details concerning the pet, its medical history, and instructions for long term care. A home "door sticker" may alert emergency workers and responders.
Pet trust funds may be created either during the owner's lifetime or at death. A life insurance policy could name the trustee as the beneficiary to provide funds. It is important to exercise due diligence concerning the selection of both the trustee of the funds and the pet's caretaker. A financial institution or individual may be a trustee. Alternative trustees and caregivers should be named. Another possibility is having individuals such as family members, friends, or veterinarians designate a caregiver.
The pet is bequeathed to the trustee, in trust, to be delivered to the caregiver. Be careful to document the reasons why you are creating the trust fund. This may help prevent legal challenges by heirs who assert that undue influence or mental incompetency invalidates the trust fund.
Thoughtfully determine the appropriate amount of funds to place in the trust. Too large a gift or a transfer of one's entire estate invites a contest by heirs and a court determining a "reasonable" amount of money to care for the pet. A "standard of living" provision for the pet and a carefully considered list of expenses that the funds may be utilized for is important. For example, should the caretaker be authorized to purchase a home, automobile, and appliances? What expenses are appropriated related to the pet's care? The easiest way to distribute funds to the caretaker is a fixed amount per month. However, will the caretaker be tempted to personally keep any excess funds or not spend beyond the monthly allowance? An alternative is for the caregiver to present receipts to the trustee and be reimbursed. Should the caregiver receive a stipend for providing care?
Carefully provide a method for identifying the animal or animals that are to benefit from the trust fund. A DNA sample or samples, entrusted to a veterinarian or other reliable person, while expensive, may be the best method of identification. This helps reduce potential fraud. Again, exercise due diligence when selecting the caretaker and trustee. Require, or at least request, the trustee and/or other individual to make unannounced random inspections of the animal at the caregiving location. Provide specific instructions for the final disposition of the animal when it dies. Much depends on the integrity of the caregiver and trustee.
Utilizing the life of the pet or pets as the measuring life of the trust fund, most state animal trust fund statutes provide that the trust terminates when the last animal benefiting from the trust dies. Some statutes require the trust to designate a "trust protector" to act on behalf of the animal. The trust should carefully, by specific legal name and location, designate a remainder beneficiary, such as a charity that benefits animals, to receive the funds when the trust fund ends. A general or vague designation creates confusion and legal contests. It is best not to name an individual as the remainder beneficiary. Name an alternative remainder beneficiary as well. The creator of the trust fund (settlor) has considerable discretion in exercising her or his wishes.
This comment provides a brief and incomplete educational overview of a complex topic and is not intended to provide legal advice. Always consult an experienced attorney and financial adviser in specific estate and trust fund situations.