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Monday, March 27, 2017

Estate Planning for Pets - Part 6

This series of articles was originally published online by The Estate Planning for Pets Foundation, copyright © 2003. The Foundation appears to be now defunct and the website where these articles were published is now owned by a private legal firm in southern California. The articles were reprinted with permission in the Michigan Boxer Club newsletter, The ChatterBoxer, from June - August 2004 and are being revived here, with a few updates to applicable tax issues and website links, under that same reprint permission.

OTHER LEGAL RESOURCES

In addition to consulting the statutes and case law of your own jurisdiction, the Estate Planning for Pets Foundation also recommends considering the following secondary sources:

Beyer, Gerry W., Pet Animals: What Happens when Their Humans Die?, 40 Santa Clara L. Rev. 617 (2000)
Hirschfield, Rachel, Estate Planning Issues Involving Pets, American Bar Association GPSOLO, (July/August 2009)

Jensen, J. Alan, Tax and Estate Planning Involving Pets: Stupid Pet Tricks for the IRS and Fido, (Aug. 2000)

Marquand, Barbara, Trusts for Dogs? Providing for Pets After You're Gone, Forbes (December 1, 2105)

MSU Animal Legal & Historical Center: Wills and Trusts

Uniform Trust Code


WHERE CAN I FIND AN ORGANIZATION TO CARE FOR MY PET?

Depending on the circumstances, you may have to consider naming an organization as the caretaker for your pet.

If the organization is a particular type of tax-exempt, nonprofit corporation or association, it may already have a legal duty to provide for the welfare and prevent cruelty to, animals. In any case, you should personally visit the facilities and discuss the matters directly with a party who represents the organization before making the decision.

The following is a list of links to organizations, commercial and nonprofit, that have formal programs for the care of dogs upon the death or disability of their owners.

Permanent Care

The following organizations have specific programs to provide permanent care for a dog after the owner’s death, either through fostering or adoption:

Peace of Mind Dog Rescue Lifetime Care, California

Pet Alliance of Greater Orlando, Florida

Pet Estates Inc., New York


The Silver Streak Kennel, New York

Watermelon Mountain Ranch, New Mexico



Lifetime Care Programs for Animals (List)

Organizations Providing Animal Care After Owner's Death (List)


WHERE CAN I FIND MORE INFORMATION?

If you would like additional information about estate planning for pets, consider the following books, written with the non-lawyer reader in mind:

Anderson, Mary G. &  Frank Doyle, Pet Protection Legal Care Plan (Be Here Now Publishing Group, 2015)

Congalton, Donald & Charlotte Alexander, When Your Pet Outlives You: Protecting Animal Companions After You Die (New Sage Press 2002)

Hoyt, Peggy R., All My Children Wear Fur Coats: How to Leave a Legacy for Your Pet (Legacy Planning Partners, LLC 2002)


MICHIGAN COMPILED LAWS §700.2722 

Honorary trusts; trusts for pets.

(1) Subject to subsection (3), if a trust is for a specific lawful noncharitable purpose or for lawful noncharitable purposes to be selected by the trustee, and if there is no definite or definitely ascertainable beneficiary designated, the trust may be performed by the trustee for 21 years, but no longer, whether or not the terms of the trust contemplate a longer duration.

(2) Subject to this subsection and subsection (3), a trust for the care of a designated domestic or pet animal is valid. The trust terminates when no living animal is covered by the trust. A governing instrument shall be liberally construed to bring the transfer within this subsection, to presume against the merely precatory or honorary nature of the disposition, and to carry out the general intent of the transferor. Extrinsic evidence is admissible in determining the transferor's intent.

(3) In addition to the provisions of subsection (1) or (2), a trust covered by either of those subsections is subject to the following provisions:

  (a) Except as expressly provided otherwise in the trust instrument, no portion of the principal or income may be converted to the use of the trustee or to a use other than for the trust's purposes or for the benefit of a covered animal.

  (b) Upon termination, the trustee shall transfer the unexpended trust property in the following order:

    (i) As directed in the trust instrument.

     (ii) If the trust was created in a nonresiduary clause in the transferor's will or in a codicil to the transferor's will, under the residuary clause in the transferor's will.

    (iii) If no taker is produced by the application of subparagraph (i) or (ii), to the transferor's heirs under section 2720.

  (c) For the purposes of sections 2714 to 2716, the residuary clause is treated as creating a future interest under the terms of a trust.

  (d) The intended use of the principal or income can be enforced by an individual designated for that purpose in the trust instrument or, if none, by an individual appointed by a court upon petition to it by an individual.

  (e) Except as ordered by the court or required by the trust instrument, 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.

  (f) The court may reduce the amount of the property transferred if it determines that that amount substantially exceeds the amount required for the intended use. The amount of the reduction, if any, passes as unexpended trust property under subdivision (b).

  (g) If a trustee is not designated or no designated trustee is willing or able to serve, the court shall  name a trustee. The court may order the transfer of the property to another trustee if the transfer is necessary 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. The court may also make other orders and determinations as are advisable to carry out the intent of the transferor and the purpose of this section.

  (h) The trust is not subject to the uniform statutory rule against perpetuities, 1988 PA 418, MCL 554.71 to 554.78. 

History: Pub Acts 1998, No. 386, §2722, by §8101 eff April 1, 2000 (see §700.7101)

Please consult the Michigan Legislature website for the most current Michigan statutes online.

Search your own state's legislature website for laws regarding pet trusts and estate planning.


Articles in this series:

Part 1 - Introduction and Legal Issues
Part 2 - Statutory Pet Trust
Part 3 - Traditional Legal Trusts and Tax Considerations
Part 4 - Drafting Estate Planning Documents
Part 5 - Sample Language
Part 6 - Resources and Further Reading

Estate Planning for Pets - Part 5

This series of articles was originally published online by The Estate Planning for Pets Foundation, copyright © 2003. The Foundation appears to be now defunct and the website where these articles were published is now owned by a private legal firm in southern California. The articles were reprinted with permission in the Michigan Boxer Club newsletter, The ChatterBoxer, from June - August 2004 and are being revived here, with a few updates to applicable tax issues and website links, under that same reprint permission.

This sample language below is intended for illustrative purposes only and should not be used or otherwise relied upon in drafting legal documents without accompanying legal advice and making necessary changes to appropriately integrate such sample language with the other provisions of the applicable legal document.

Language similar to the following could be used in the dispositive provisions of a pet owner's will or revocable living trust.

SAMPLE LANGUAGE FOR CONDITIONAL BEQUEST TO CARETAKER

I hereby give my pet, [NAME OF PET], [DESCRIPTION OF PET], [0] to [NAME OF CARETAKER], and the sum of $________, which shall be expended for the care of my pet during its remaining lifetime; provided, however, that this gift shall lapse if my pet is not living at the time of distribution according to this provision or if [NAME OF CARETAKER] does not undertake to use the funds gifted herein for the care of my pet.[1] [OPTIONAL: This provision is intended to be a gift subject to a condition precedent, and I do not intend impose any trust upon the beneficiary herein, under common law or statute.[2]]

[0] As an alternative to specifically naming the pet (as provided above), the drafter could simply refer to "my pets" and define the term to include all the pets owned by the testator at the time of the testator's death. This approach takes into account the fact that the testator may have a different group of pets at the time of his or her death.

[1] The assumption behind this language is that the pet owner does not desire to make a gift subject to a condition subsequent, whereby the beneficiary would be entitled to the caretaking funds even if the pet does not survive the pet owner.

[2] Many pet trust statutes provide that language in a will may be liberally construed to impose a statutory pet trust upon the beneficiary. This language counters the application of such a statute.


SAMPLE LANGUAGE FOR STATUTORY PET TRUST

The Settlor hereby gives [his/her] pet, [NAME OF PET], [DESCRIPTION OF PET],[0] and the sum of [AMOUNT OF CARETAKING FUNDS] to the Trustee of the [NAME OF TRUST] (the “Trust”), to be administered and distributed as follows:

A. Trustee. [NAME OF INITIAL TRUSTEE] shall serve as initial Trustee; but in the event that [NAME OF INITIAL TRUSTEE] is unable or unwilling to serve, [NAME OF SUCCESSOR TRUSTEE] shall serve as successor Trustee. In the event that both of the above-named parties are unable or unwilling to serve, the successor Trustee shall be appointed by the [NAME OF ENFORCER], if she is unable or unwilling to do so, by a court of competent jurisdiction.[1] The Trustee may resign upon by providing 30 days’ written notice thereof and possession of [NAME OF PET] to [NAME OF ENFORCER] or any other party appointed by the court to enforce this Trust. The Trustee may be removed, at any time, by the [NAME OF ENFORCER] or by a court of competent jurisdiction, and upon receipt of written notice of removal, the Trustee shall relinquish possession of [NAME OF PET] and the remaining assets of the Trust to the duly-appointed successor Trustee, or if there is no such party, to [NAME OF ENFORCER]. [2] Notwithstanding the foregoing, in no event shall [NAME OF ENFORCER] or any other party appointed by the court to enforce this Trust serve as Trustee.[3] Except as otherwise provided herein, the Trustee shall have all the rights, powers, duties, and obligations of a trustee under applicable law.

B. Expenditures and Distributions. During the term of the Trust, the Trustee shall be entitled to expend such sums of net income, and if necessary, principal, as the Trustee determines to be necessary or advisable for the health, care, and welfare of [NAME OF PET], including (but not limited to) food, veterinary care and/or insurance, toys and other recreational activities, and temporary boarding and/or pet-sitting fees. In exercising such discretion, it is intended that the Trustee will maintain [NAME OF PET] in the same standard of health, care, and welfare as the Settlor.[4] The Trustee is also authorized to pay, or reimburse to the Trustee, any income taxes attributable to the Trust and other necessary expenses associated with the administration and distribution thereof. [5] [OPTION: In addition to the foregoing, the Trustee is authorized to receive compensation in the amount of $____ per year.[6]]

C. Termination and Final Distribution. The Trust shall terminate upon the earlier of the following: (a) the net value of the Trust assets (other than [NAME OF PET]) decreases to less than $_______; [7] or (b) the death of [NAME OF PET]. If termination of the Trust occurs because of the death of [NAME OF PET], the Trustee shall, at the expense of the Trust, provide for the respectful and proper disposition of the remains of [NAME OF PET], pay any remaining debts and expenses of the Trust, and then distribute the remaining assets of the Trust to [NAME OF REMAINDER BENEFICIARY] OPTION FOR CHARITABLE BENEFICIARIES: “; provided, however, that if [NAME OF REMAINDER BENEFICIARY] does not then qualify as an organization exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code, then the Trustee shall select an appropriate tax-exempt organization that provides for the care of similar pets to receive such distribution"]. If termination occurs for any other reason, the Trustee shall distribute the remaining assets of the Trust to the Trustee, who shall hold such assets outright and free of trust, but conditioned on providing for the continued health, welfare, and care of [NAME OF PET].

D. Enforcement of Trust by Third Party. The purposes and terms of this Trust may be enforced, at any time, with or without court intervention, by [NAME OF ENFORCER], or if [NAME OF ENFORCER] is unable or unwilling to do so, by any party appointed by a court pursuant to [CITATION TO PET TRUST STATUTE]. To this end, [NAME OF ENFORCER] may (but is not required to) request an accounting for the funds of the Trust, not more frequently than quarterly, and inspect [NAME OF PET] and the conditions of the premises where [NAME OF PET] is kept, from time to time, to ensure that appropriate care is being provided by the Trustee. This provision shall apply even if the party granted enforcement powers is not a beneficiary of the Trust.[8] Notwithstanding the foregoing, no provision in this paragraph shall be construed to limit the rights of the Trustee and the beneficiaries to enforce the terms hereof.

E. Purposes. While [NAME OF PET] is alive, the primary purpose of the Trust is to provide for the health, care, and welfare of [NAME OF PET].[9] Notwithstanding, if at any time, [NAME OF PET] suffers from a medical or physical condition or illness and the Trustee determines, based on a written opinion of a veterinary professional who has examined [NAME OF PET], that it would be more humane to euthanize [NAME OF PET], then the Trustee is authorized to do so at the expense of the Trust.[10]

F. Spendthrift Provision. As a material purpose of the Trust, the interest of any beneficiary in the net income or principal shall not be subject to the claims of any creditor, any spouse for alimony or support, or others, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered. Except as otherwise provided, no beneficiary’s interest shall be subject to anticipation, assignment, sale or transfer in any manner, nor shall any beneficiary have the power to anticipate, alienate, encumber or charge such interest, voluntarily or involuntarily, nor shall such interest be liable for or subject to the debts, obligations, liabilities, torts or contracts of any beneficiary.[11]

G. Applicable Law. This Trust is established by the Settlor and accepted by the Trustee under the laws of the State of [NAME OF STATE], and in particular, [CITATION TO PET TRUST STATUTE], and all questions concerning its validity and construction shall be determined under [NAME OF STATE] law, regardless of any change in the situs of the Trust.


[0] As an alternative to specifically naming the pet throughout the Trust (as provided above), the drafter could simply refer to the "Settlor's pets" and define the term to include all the pets owned by the Settlor at the time of the Settlor's death. This approach takes into account the fact that the Settlor may have a different group of pets at the time of his or her death.

[1] The trustee succession provisions may be drafted in a number of different ways. In addition, the applicable pet trust statute may allow a court to designate a successor trustee of a pet trust.

[2] In a statutory pet trust, the trustee has control over the pet and the funds, so at a minimum, the third-party enforcer should be able to remove the trustee without court intervention if necessary. As drafted, the above clause gives the third-party enforcer broad authority to do so, although such authority could be limited to removal for cause.

[3] Even if it is possible under the statute, the whole reason for creating a pet trust dictates that the trustee and the third-party enforcer should never be the same person.

[4] This provisions defines how the funds of the pet trust are to be used, and in doing so, attempts to balance the needs for detail in instruction with flexibility in execution.

[5] As discussed in the outline, it is unclear how a statutory pet trust would be taxed in this situation. In any event, this clause ensures that any taxes paid by the trustee will be reimbursed from the trust funds.

[6] This clause is entirely optional. In a perfect world, as a matter of incentives, the pet-owner would prefer to choose a caretaker who would be willing to care for the pet without compensation.

[7] It is assumed that, when the value of the funds falls under a certain amount (e.g., $1,000), it would no longer be cost-effective to keep the pet trust intact. In the alternative, this clause could provide for the “exhaustion of trust assets”.

[8] The enforcement of the trust by a non-beneficiary is one of the legal obstacles to creating a legal trust for the benefit of a pet that is intended to be addressed by the pet trust statute. See A.R.S. §14-2907(4). This clause is intended to define the third-party enforcer and certain rights that are essential to that function. However, as encountered with provisions trust protectors, the question remains as to whether such a third party has fiduciary duties associated with the rights to enforce the pet trust.

[9] The degree of importance of the purposes of the pet trust should be expressly stated, especially considering its unorthodox nature.

[10] Given the nature of the pet trust, the issue of euthanasia should be expressly discussed in the terms of the Trust.

[11] This provision is intended to protect the assets of the Trust form the creditors of the Trustee and the beneficiaries.


SAMPLE LANGUAGE FOR TRADITIONAL LEGAL TRUST

The Settlor hereby gives [his/her] pet, [NAME OF PET[0]], [DESCRIPTION OF PET], and the sum of [AMOUNT OF CARETAKING FUNDS] to the Trustee of the [NAME OF TRUST] (the “Trust”), to be administered and distributed according to the following provisions:

A. Trustee. [NAME OF INITIAL TRUSTEE] shall serve as initial Trustee; but in the event that [NAME OF INITIAL TRUSTEE] is unable or unwilling to serve, [NAME OF SUCCESSOR TRUSTEE] shall serve as successor Trustee. In the event that the above-named parties are unable or unwilling to serve, the successor Trustee shall be appointed by: (i) the written designation of previous Trustee (who has not been removed) delivered to the Caretaker Beneficiary and the Remainder Beneficiary; or (ii) if the previous Trustee does not make such a designation, the unanimous written designation of the Caretaker Beneficiary and the Remainder Beneficiary; or (iii) if such parties do not make such a designation, by a court of competent jurisdiction. Notwithstanding the foregoing, in no event shall the Caretaker Beneficiary serve as Trustee.[1] The Trustee may resign, at any time, by providing 30 days’ written notice to the Caretaker Beneficiary and the Remainder Beneficiary. Except as otherwise provided herein, the Trustee shall have all the rights, powers, duties, and obligations of a trustee under applicable law, and in addition, may (but is not required to) inspect [NAME OF PET] and the conditions of the premises where [NAME OF PET] is kept, from time to time, to ensure that appropriate care is being provided by the Caretaker Beneficiary, as provided below.[2]

B. Caretaker Beneficiary. [NAME OF INITIAL CARETAKER] shall be the initial “Caretaker Beneficiary”, but if [NAME OF INITIAL CARETAKER] is unable or unwilling to receive the benefits and meet the conditions set forth herein, then [NAME OF SUCCESSOR CARETAKER] shall be the successor Caretaker Beneficiary. Before any initial distribution is made, any party with an interest as Caretaker Beneficiary shall be informed of the conditions for possession of [NAME OF PET] and receipt of funds hereunder. If any party who is entitled to distributions as Caretaker Beneficiary is, in the sole discretion of the Trustee, unable or unwilling to provide sufficient care for [NAME OF PET] or the Trust’s ownership of [NAME OF PET] is jeopardized, then the Trustee may, without court intervention, acquire possession of [NAME OF PET] from such party, divest that party of any interest as Caretaker Beneficiary, and appoint another party as successor Caretaker Beneficiary who is willing and able to provide sufficient care for [NAME OF PET]. Notwithstanding any other provision herein, in no event may the Trustee, the Trustee’s estate, the creditors of the Trustee, or the creditors of the Trustee’s estate be the Caretaker Beneficiary.

C. Distributions and Possession of Trust Property. During the term of the Trust, the Trustee shall distribute to, or for the benefit of, the Caretaker Beneficiary such amounts of net income, and if necessary, principal, as the Trustee determines to be necessary or advisable for the health, care, and welfare of [NAME OF PET], including (but not limited to) food, veterinary care and/or insurance, toys and other recreational activities, and temporary boarding and/or pet-sitting fees. In exercising such discretion, it is intended that the Trustee will maintain [NAME OF PET] in the same standard of health, care, and welfare as the Settlor. The Trustee is also authorized to pay, or reimburse to the Caretaker Beneficiary for, any income taxes attributable to the Trust and other necessary expenses associated with the administration and distribution thereof. [OPTION: In addition to the foregoing, the Trustee is authorized to pay: (1) to the Caretaker Beneficiary, compensation in the amount of $______ per year; and (2) to the Trustee, compensation in the amount of $______ per year.] In any event, the Caretaker Beneficiary shall be entitled to possession of [NAME OF PET] for so long as he or she is providing for such care for [NAME OF PET] and the Trust’s continued ownership of [NAME OF PET] is not jeopardized.

D. Termination and Final Distribution. The Trust shall terminate upon the earlier of the following: (a) the net value of the Trust assets (other than [NAME OF PET]) decreases to less than $_________;[3] (b) the death of [NAME OF PET]; or (c) 21 years after the death of the last heir of the Settlor’s grandparents who is living at the time this Trust is established.[4] If termination of the Trust occurs because of the death of [NAME OF PET], the Trustee shall, at the expense of the Trust, provide for the respectful and proper disposition of the remains of [NAME OF PET],[5] pay any remaining debts and expenses of the Trust, and then distribute the remaining assets of the Trust to [NAME OF REMAINDER BENEFICIARY], the “Remainder Beneficiary” [OPTION FOR CHARITABLE BENEFICIARIES: “; provided, however, that if [NAME OF REMAINDER BENEFICIARY] does not then qualify as an organization exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code, then the Trustee shall select an appropriate tax-exempt organization that provides for the care of similar pets to receive such distribution”[6]]. If termination occurs for any other reason, the Trustee shall distribute the remaining assets to either the Caretaker Beneficiary and/or the Remainder Beneficiary, as the Trustee determines to be most consistent with the intent of the Trust.[7]

E. Purposes. While [NAME OF PET] is alive, the primary purpose of this Trust is to provide funds to the Caretaker Beneficiary for the health, care, and welfare of [NAME OF PET].[8] Notwithstanding, if, at any time, [NAME OF PET] suffers from a medical or physical condition or illness and the Trustee or the Caretaker Beneficiary determine, based on a written opinion of a veterinary professional who has examined [NAME OF PET], that it would be more humane to euthanize [NAME OF PET], then either the Trustee and/or the Caretaker Beneficiary is authorized to do so without court intervention.[9]

F. Spendthrift Provision. As a material purpose of the Trust, the interest of any beneficiary in the net income or principal shall not be subject to the claims of any creditor, any spouse for alimony or support, or others, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered. Except as otherwise provided, no beneficiary’s interest shall be subject to anticipation, assignment, sale or transfer in any manner, nor shall any beneficiary have the power to anticipate, alienate, encumber or charge such interest, voluntarily or involuntarily, nor shall such interest be liable for or subject to the debts, obligations, liabilities, torts or contracts of any beneficiary.[10]

G. Applicable Law. This Trust is established by the Settlor and accepted by the Trustee under the laws of the State of [NAME OF STATE] and all questions concerning its validity and construction shall be determined under [NAME OF STATE] law. Any questions relating to the administration of the Trust shall be determined by the law of the situs of the Trust at that time. [OPTION: In establishing this Trust, the Settlor does not intend to create an honorary trust or statutory pet trust, but an otherwise enforceable trust with at least one human trustee and a human beneficiary.[11]]


[0] As an alternative to specifically naming the pet throughout the Trust (as provided above), the drafter could simply refer to the "Settlor's pets" and define the term to include all the pets owned by the Settlor at the time of the Settlor's death. This approach takes into account the fact that the Settlor may have a different group of pets at the time of his or her death.

[1] The Trustee succession provisions may be drafted in a number of different ways. Nonetheless, in accordance with the practical purposes of the Trust, the Trustee and the Caretaker Beneficiary should never be the same party.

[2] The Trustee, as the enforcer of the Trust, must be able to check up on the pet without court intervention. As drafted, this clause is lenient in terms of a Trustee’s duty to check up on the pet. If the pet owner wishes to impose a more affirmative obligation upon the Trustee, then the drafter should be as specific as possible without overburdening the Trustee – e.g., “shall inspect [NAME OF PET] and the conditions of the premises where [NAME OF PET] is kept, not less frequently than once a month, to ensure that appropriate care is being provided by the Caretaker Beneficiary, as provided below.”

[3] It is assumed that, when the value of the funds falls under a certain amount (e.g., $1,000), it would no longer be cost-effective to keep the Trust in tact. In the alternative, this clause could provide for the “exhaustion of trust assets”.

[4] One of the roadblocks to a trust intended to benefit a pet for life is that the duration does not technically fall within the appropriate common law or statutory perpetuities period, which must often be based on a human life in being at the time the trust is created.

This clause is an example of a common law perpetuities savings clause, although the clause should always be tailored to the particular situation. For example, the above clause would not be of much use if the Settlor has no family. In this case, the clause could invoke the applicable statutory perpetuities period – e.g., in Arizona, 90 years after establishment of the Trust (A.R.S. §14- 2901(A)(2)).

[5] This clause concerning the disposition of the remains of the pet is worded very generally. The drafter could add more specific directions tailored to the Settlor’s desires

[6] This optional clause gives flexibility in the event that a charitable beneficiary is not in existence at the time of termination of the trust. The clause assumes that the Settlor would want the remaining funds to pass to an organization that cares for the same type of pet that the Settlor had, although this need not necessarily be the case.

[7] In general, the Trust would terminate early due to a lack of funds, and the question becomes who should receive the pet and/or the funds. The above language leaves the decision up to the Trustee. Note that if the Trustee was also the Caretaker Beneficiary, however, this clause would likely be considered a general power of appointment for tax purposes, although the value of the property subject to the power would presumably be limited.

[8] The degree of importance of the purposes of the trust should be expressly stated, especially considering its unorthodox nature.

[9] Given the nature of the pet trust, the issue of euthanasia should be expressly discussed within the terms of the Trust.

[10] This provision is intended to protect the assets of the Trust form the creditors of the Trustee and the beneficiaries.

[11] If the drafter is preparing a document in a state that has a pet trust statute, this provision could be added to make clear that such statute, and all its special restrictions, is not to be applied.



Language similar to the following could be used in a durable power of attorney (or revocable living trust[1]).

SAMPLE LANGUAGE FOR DURABLE POWER OF ATTORNEY

In the event that the Principal is unable to provide for the care of [his/her] pet, [NAME OF PET], [DESCRIPTION OF PET],[2] the Agent is authorized to: (1) take possession and custody of the pet [OPTION: or provide possession and custody of the pet to the Trustee of the [NAME OF REVOCABLE LIVING TRUST]]; and (2) expend or otherwise utilize such amounts of the Principal’s funds or other property as may be necessary or advisable to provide for the health, care, and welfare of the pet, including (but not limited to) food, veterinary care and/or insurance, toys and other recreational activities, and temporary boarding and/or pet-sitting fees. In exercising such authority, it is intended that the Agent will maintain [NAME OF PET] in the same standard of health, care, and welfare as the Principal. [OPTIONAL: Unless medically or physically impracticable, the Agent shall permit the Principal to have as much contact with [NAME OF PET] as the Principal did before becoming incapacitated.] For the purposes of this instrument, any such actions by the Agent taken for the benefit of the Principal’s pet shall be considered taken for the benefit of the Principal.


[1] This language could also be modified for placement in a revocable living trust, where the “Principal” is the settlor and the “Agent” is the successor trustee. However, it would be effective only if the pet animal actually becomes property of the trust.

[2] As an alternative to specifically naming the pet (as provided above), the drafter could simply refer to the "Principal’s pets" and define the term to include all the pets owned by the Principal at the time of the Principal’s incapacity. This approach takes into account the fact that the Principal may have a different group of pets at the time of his or her death.



Articles in this series:

Part 1 - Introduction and Legal Issues
Part 2 - Statutory Pet Trust
Part 3 - Traditional Legal Trusts and Tax Considerations
Part 4 - Drafting Estate Planning Documents
Part 5 - Sample Language
Part 6 - Resources and Further Reading

Estate Planning for Pets - Part 4

This series of articles was originally published online by The Estate Planning for Pets Foundation, copyright © 2003. The Foundation appears to be now defunct and the website where these articles were published is now owned by a private legal firm in southern California. The articles were reprinted with permission in the Michigan Boxer Club newsletter, The ChatterBoxer, from June - August 2004 and are being revived here, with a few updates to applicable tax issues and website links, under that same reprint permission.

Drafting a Conditional Bequest to the Caretaker

The pet owner may simply make a gift (either in a will or a revocable living trust) of the pet and the caretaking funds to the intended caretaker. This approach may be entirely appropriate in situations where the caretaker is very trustworthy or it is highly unlikely that the pet will outlive both the pet owner and the caretaker.

If this is the case, the pet owner should consider imposing a condition upon the gift of the caretaking funds – that the funds will actually be used for the care of the pet. To be sure, it is practically unlikely that a condition of this type may be enforced after the estate has been distributed, but for what it is worth, it does impose a moral obligation.

Furthermore, the pet owner should explicitly indicate whether the condition is a “condition precedent” (i.e., the caretaker does not receive the funds unless the pet outlives the pet owner) or a “condition subsequent” (i.e., the caretaker receives the funds regardless of whether the pet outlives the pet owner). If the sole purpose of including an express gift in the estate planning document is to provide for the care of the pet, then the pet owner would probably prefer the former.

Finally, many of the pet trust statutes provide that a gift will be liberally construed to impose a statute pet trust upon the caretaker (as discussed previously). If this result is not intended, then the drafter should prepare a provision that to expressly remove the conditional gift from the statutory scheme.

Drafting a Statutory Pet Trust

If an outright bequest of the pet and any caretaking funds is not desirable, it will be because the pet owner, for one reason or another, is not entirely confident that the designated caretaker will be willing and able to care for the pet for its lifetime in the manner the pet owner would like. In this case, the use of either a statutory pet trust or a traditional legal trust for a pet may be appropriate.

As an initial matter, establishing an effective statutory pet trust or traditional legal trust necessarily includes designating, at a minimum, the following two parties:

  • A caretaker who is willing and able to care for the pet (i.e., the beneficiary under the traditional legal trust, and the trustee under the statutory pet trust); and
  • A third party who can enforce the trust against the caretaker (i.e., the trustee under the traditional legal trust, and the untitled “individual” granted certain powers in the pet trust statutes).
In addition, the settlor may want to designate yet another party as remainder beneficiary (i.e., to receive any remaining trust funds upon the death of the pet) who, in avoiding conflicts of interest, should be someone other than one of the above parties.

This series of articles does include sample language. Nonetheless, because of the inherent uncertainties and limitations surrounding the use of a statutory pet trust, some experts recommend avoiding use of a statutory pet trust altogether. As such, a discussion of drafting the terms of a statutory pet trust has been omitted in favor of the following more detailed exposition pertaining to provisions for traditional legal trusts.

Drafting Trust Provisions for the Care of a Pet

The following is a list of recommended provisions for inclusion in a trust for pets. However, note that the list is not specifically applicable to a statutory pet trust, although many of the terms pertaining to the “caretaker-beneficiary” below could be applied to the “trustee” of a statutory pet trust, and the terms pertaining to a “trustee” below could be applied to a designated third party enforcer under the statutory pet trust. (See discussion regarding the use of statutory pet trusts above.)

  • Identifying the pet. The terms of the trust should identify the pet in a way that will, at very least, permit third parties to identify the pet after the settlor’s death, and preferably, prevent the caretaker from replacing the original pet with a new one to fraudulently perpetuate his or her right to distributions. An adequate identification of the pet depends on the circumstances involved. In most cases, merely identifying the pet by unique physical attributes is sufficient. In other cases, the pet may not be distinguishable from other animals of the same species, and the settlor may want to consult a veterinarian about having a microchip implanted in the pet or obtaining DNA “fingerprinting”. Such precautions are relatively inexpensive and may also prove to be very useful if the pet is lost.[1]
  • Identifying subsequent pets acquired by the settlor. Of course, including future pets in the terms of the trust saves the effort of having to formally amend the trust whenever a new pet enters the picture. On the other hand, defining the scope of covered pets too broadly may undermine the purposes of sufficiently identifying the pet, as discussed above.
  • Setting the amount of caretaking funds. If the trust is a traditional legal trust, setting the amount of caretaking funds passing to the trust should not be the issue that it is in the case of a statutory pet trust, whereby the court is authorized to reduce the amount to what it thinks is reasonable. Practically speaking, however, the larger the amount of caretaking funds passing to the trust – the more likely that disgruntled heirs will challenge its terms. One way to mitigate this potential problem, without reducing the amount of caretaking funds, is to designate a remainder beneficiary who would never make such a challenge (as discussed below).
  • Identifying any other assets to be used to care for the pet animal (e.g., a cage, a house, etc.)
  • Designating the caretaker-beneficiaries. The individuals or organizations that are willing and able to care for the pet should be named as caretaker-beneficiaries. That is, the terms of the trust should designate a successor caretaker-beneficiary in the event that the initial caretaker is unable or unwilling to serve. In addition, the trustee should be authorized to appoint a new caretaker-beneficiary (other than him or herself) in the event that the designated caretaker-beneficiaries are unable or unwilling to serve. In any event, as with fiduciary appointments, before the documents are executed, the settlor should be advised to discuss the matter with the proposed caretaker to ensure that he or she is willing and able to provide the same standard of care for the pet as the settlor did.
  • Designating the trustees. The trustee will oversee the caretaking funds, watch over the caretaker-beneficiary, and take care of any other matters pertaining to the trust (e.g., filing any fiduciary income tax returns). As such, the settlor should choose a party (other than the caretaker-beneficiary) who is willing and able to perform these functions. In addition, the settlor should designate a successor trustee, in case the first choice is unable or unwilling, or at least provide a mechanism for appointing a successor trustee without the necessity of court intervention. In any event, as with the caretaker-beneficiary, the settlor should discuss the matter with the proposed trustee before the documents are executed.
  • Defining the powers of the trustee over the caretaker-beneficiary. One of the primary purposes of using a trust is to provide a check upon the caretaker-beneficiary – if the caretaker- beneficiary is not providing adequate care for the trust, then he or she may be removed and replaced by the trustee without the necessity of court intervention. Therefore, the trustee should be given the power to remove the caretaker-beneficiary if the latter, in the opinion of the trustee, is not providing the level of care for the pet that is directed in the terms of the trust. That said, the trustee should not be permitted to appoint him or herself as a replacement caretaker-beneficiary, since this would undermine one of the primary purposes of the trust.
  • Defining the duties of the trustee. Because one of the primary roles of the trustee is to watch over the caretaker-beneficiary, the trustee should be charged with both the right and the duty to make periodic checks on the pet and the premises where the pet is housed. Depending on the size of the trust and the relationship of the parties involved, the settlor may desire to relieve the trustee of certain fiduciary duties that would normally apply. For example, the terms of the trust could exempt the trustee from having to post bond or other security.
  • Providing for distributions to the caretaker-beneficiary. There are a number of ways to structure distributions to the caretaker- beneficiary. The most simple method is to simply state a flat amount distributable on a consistent basis. But if this amount is too small, the caretaker-beneficiary may not have enough to cover the expenses for the pet, and if this amount is too large, the caretaker-beneficiary may end up being stingy in expending funds for the pet which he or she is already entitled to receive once the pet is gone. At very least, the terms of the trust should provide for distributions to reimburse the caretaker-beneficiary for out-of-pocket expenditures made for the care of the pet. In addition, the terms should cover any income tax liability of the caretaker-beneficiary – even if the only distributions he or she is receiving are reimbursements. The sample language presented on this series of articles uses a combination of both approaches, providing the caretaker-beneficiary with a fixed sum plus reimbursement of expenses.
  • Defining the standard for care for the pet. At very least, the terms for distributions to the caretaker-beneficiary should permit expenditures for food, shelter, medication, veterinary care, toys, boarding or pet-sitting while the caretaker-beneficiary is away on vacation, and costs for the respectful disposition of the pet’s remains. The settlor may also want to set more specific standards for such care – e.g., what type of food, how often the pet is to receive check-ups by the vet, how often the pet is to be walked. As long as the directions are not unreasonable in light of the amount of caretaking funds and leave enough flexibility for unforeseen contingencies, the settlor can be as creative as he or she wants.
  • Providing guidance for euthanizing the pet. One potential issue of controversy is euthanasia, especially if the caretaker-beneficiary’s interest in the trust ends with the death of the pet. That is, the settlor should clearly set forth the circumstances when euthanizing the pet would be appropriate – e.g., the veterinarian certifies that the pet has a terminal illness or will experience significant physical suffering for the rest of its life. In the alternative, the settlor should clearly indicate who has the discretion to make that decision – the trustee, the caretaker-beneficiary, or both.
  • Providing directions after the death of the pet. In most cases, the settlor has particular ideas about the disposition of the remains of the pet after its death – e.g., cremation of the animal and burial of the remains in a particular place. The terms of the trust should expressly include such provisions.
  • Designating the remainder beneficiary. The trust should designate a remainder beneficiary or beneficiaries or, at very least, provide a mechanism for the trustee to designate a remainder beneficiary (other than him or herself).[2] In considering this decision, the settlor should realize that the remainder beneficiary’s financial incentives run counter to the pet living a long life with the benefit of the trust funds. For this reason, the settlor should consider defining the class of remainder beneficiaries as nonprofit, tax-exempt organizations that have a stated purpose of caring for animals. Presumably, such organizations would be bound by law (if not principle) to refrain from challenging the generosity of the amount of caretaking funds or the liberal use of such funds by the trustee or the caretaker-beneficiary in spoiling the pet. Moreover, if all else fails, there will be yet another eye with legal standing to look out for the pet’s well-being.
  • Terminating the trust. The terms should provide that the trust is to terminate upon the earlier of: (a) the death of the pet and disposition of the pet’s remains; (b) the exhaustion of the funds of the trust or a determination by the trustee that the amount of the funds renders continued administration uneconomical; or (c) the expiration of the perpetuities savings period. That is, if the trust is to be administered in a jurisdiction that retains the rule against perpetuities (in whatever form), the trust should also include a perpetuities savings clause to the effect that the trust must terminate within the applicable perpetuities period. (The sample language includes a perpetuities savings clause that is in compliance with the common law rule against perpetuities.) Of course, this means that the trust could conceivably terminate before the pet dies, and as such, the terms should include a provision directing who is to receive the pet in this situation.


[1] For a good discussion of the various pet identification methods, please see www.lostpetfoundpet.com/Proper%20ID.htm .

[2] Allowing the trustee to designate him or herself not only creates a potential conflict of interest, but may also have unintended income, gift, or estate tax consequences to the trustee. See IRC §§678, 2041, 2514.


Drafting for Pet Care in the Event of Incapacity

Estate planning for pet care should always include a discussion of what would happen to the pet in the event that the pet owner is incapacitated. Planning for this contingency may be accomplished by one or more of the following documents:

1. Durable power of attorney

One of the primary tools used in planning for incapacity is the durable power of attorney, which permits an appointed “agent” (or “attorney-in-fact”) to conduct certain transactions and attend to financial affairs on behalf of the “principal”, regardless of whether the principal is incapacitated. The appropriate terms of a durable power of attorney vary with the circumstances involved, and a sufficient discussion of all of the potential issues surrounding the use of durable powers of attorney is beyond the scope of this series of articles. Suffice to say, the drafter should begin the process of preparing a durable power of attorney by consulting the law of the jurisdiction where the individual principal lives.

In any event, if a durable power of attorney is used in the estate plan, the document should include provisions directing the agent to care for the principal’s pet and expend amounts necessary to provide such care. Including an express provision to this effect is entirely appropriate because the pet itself is legally classified as tangible personal property of the principal, and in some jurisdictions, making such expenditures for the benefit of the pet might be construed as violating the presumptive duty of the agent to expend sums only for the benefit of the principal.

This series of articles includes sample language for a durable power of attorney that could also be modified for inclusion in a revocable trust, as discussed below.

2. Revocable living trust

One of the benefits of a funded, revocable living trust is that it may include provisions for a successor trustee to take over management of trust assets for the care of an incapacitated settlor without the necessity of instituting conservatorship proceedings. Ideally, portions of the trust dedicated to this contingency should also include provisions for the care of the settlor’s pet.

If, for one reason or another, the pet owner does not desire to establish and fund a revocable living trust to hold all the assets of his or her estate, he or she should still consider establishing and funding a more narrow revocable trust for the benefit of the pet that includes provisions to take effect upon incapacity. The terms of such a trust would include a declaration that the pet is owned by the trustee of the trust and opening an account in the name of the trust to hold the trust funds.


Articles in this series:

Part 1 - Introduction and Legal Issues
Part 2 - Statutory Pet Trust
Part 3 - Traditional Legal Trusts and Tax Considerations
Part 4 - Drafting Estate Planning Documents
Part 5 - Sample Language
Part 6 - Resources and Further Reading

Estate Planning for Pets - Part 3

This series of articles was originally published online by The Estate Planning for Pets Foundation, copyright © 2003. The Foundation appears to be now defunct and the website where these articles were published is now owned by a private legal firm in southern California. The articles were reprinted with permission in the Michigan Boxer Club newsletter, The ChatterBoxer, from June - August 2004 and are being revived here, with a few updates to applicable tax issues and website links, under that same reprint permission.

Traditional Legal Trusts for the Care of Pets


If the degree of trust in the designated caretaker is not sufficient to warrant the broad authority granted to the caretaker-trustee under a statutory pet trust, then the pet owner should consider establishing a traditional legally-enforceable trust that will accomplish the same objectives and eliminate some of the uncertainties associated with the statutory pet trust, as discussed above.[1] Under the traditional legal trust, the caretaker is considered a contingent beneficiary of the trust – as long as the pet is living and the caretaker is taking adequate care of the pet, he or she is a considered a beneficiary entitled to distributions. The “enforcer” actually serves as a trustee, with the power of management over the caretaking funds and the power to take possession of the pet from one caretaker and switch it to another person (other than the trustee). All this may be accomplished without the necessity of judicial intervention


[1] Under a traditional legal trust, unlike a statutory pet trust, the other beneficiaries of the trust would presumably have no right to challenge the amount passing to the trust. Because the caretaker is not the trustee and is only a contingent beneficiary of a present interest – i.e., his or her interest during the life of the pet may always be divested. (It is also possible for the caretaker to be the remainder beneficiary without a merger of title, although for practical reasons, this is probably not recommended.) Furthermore, because only humans are beneficiaries, the trust would generally be enforceable in every jurisdiction if accompanied by the appropriate perpetuities savings clause.

Tax Considerations

A. Federal taxation of transfer of pet and caretaking funds to caretaker or trustee

1. Federal income taxation:

In general, the receipt of funds and other property (i.e., pet animal) by gift, bequest, devise, or inheritance is not subject to federal income taxation. In other words, there is no income taxable event merely because the pet and/or certain caretaking funds pass to a caretaker or a trust for the care of an animal. A separate question is what happens when the caretaking funds earn interest or dividends within the trust (discussed below).

2. Federal estate and gift taxation

Under current federal uniform transfer tax law, a decedent may, through a combination of taxable gifts made during the decedent’s lifetime or passing at death through the decedent’s “gross estate”, transfer up to $5.49 million to nonspouse/noncharitable beneficiaries without incurred federal estate or gift taxes.

Within this general framework, it should be noted that any amount passing to a pet trust by reason of the settlor’s death will generally be included in the gross estate. Under Revenue Ruling 78-105, 1978-1 CB 295, the IRS has ruled that no portion of the amount passing to a valid trust for the lifetime benefit of a pet qualifies for the charitable estate tax deduction, even if the remainder beneficiary is a qualifying charity.[3] That said, the relatively wealthy pet owner should consider how the taxes attributable to such a trust should be paid under the federal and state apportionment rules.

B. Federal income taxation of trust for pet

Revenue Ruling 76-486, 1976-2 CB 192 provides that if a trust for the benefit of an animal is valid under state law, then the trust itself will be subject to income taxation – not the caretaker-trustee or the pet animal. If the net taxable income from the pet trust exceeds $100, the trustee is generally required to file a fiduciary income tax return (IRS Form 1041) and pay any income taxes.

1.    Who pays the income taxes

Under the federal income tax law, if the caretaker is considered the beneficiary of the trust (which is the case with a traditional legal trust for pets), then under IRC §661, the trust is entitled to deduct the amount of “distributable net income” paid out to the caretaker, and the caretaker is required to recognize this amount on his or her own income tax return. Effectively, either the trustee or the caretaker pay the income taxes, depending on whether the income is accumulated or distributed each year. As a result, any trust provisions intending to make the caretaker whole should also take into account potential tax consequences.

Of course, a pet animal is not required to file or pay income taxes. Thus, Revenue Ruling 76-486 provides that if the pet is considered the beneficiary of the trust (which appears to be an implicit assumption under the pet trust statutes), the trust receives no income distribution deduction for such distributions and would be required to pay income taxes. Nor would the trust qualify as a charitable trust, even if the remainder beneficiary is a qualifying charitable organization.[1]

2.    Deductibility of payments for the care of the pet

If the pet is considered property of the trust, an argument could be made that any expenditures made for care of a pet represent deductible trust administration expenses – reducing the amount of taxable income to either the trust or the caretaker-beneficiary. IRC §212 allows a deduction for ordinary and necessary expenses incurred: (a) for the production of income; (b) for the management, conservation, or maintenance of property held for the production of income; or (c) in connection with the determination, collection, or refund of any tax. The accompanying regulations also state that a trustee may deduct expenses incurred “in con- June 2004 Page 11 nection with the performance of the duties of administration.”[2] In practice, trustee fees and professional fees (e.g., attorneys, accountants, tax return preparation) are clearly deductible; but expenditures incurred for the care of a pet, which is not an incomeproducing asset and is not inextricably related to the normal business of administering a trust, would not likely be deductible.


[1] See IRC §§170, 664, and 7701(a)(1); Reg. §§1.664-2(a)(3), 1.664-3(a)(3).

[2] Reg. § 1.212-1(i).

[3] The trust provided for an annual payment for the benefit of the pet during its lifetime with the remainder passing to the charity. The IRS concluded that the trust would have been classified as a statutory charitable remainder trust, qualifying for a partial estate tax deduction under IRC §2055(a), if the annuity had been payable to a “person” and not a pet. See IRC §7701(a)(1) (definition of “person”) and Regs. §§1.664-2(a)(3) and 1.664.3(a)(3) (requiring that term payments be made to a designated person or persons to qualify as a statutory charitable remainder trust).


Articles in this series:

Part 1 - Introduction and Legal Issues
Part 2 - Statutory Pet Trust
Part 3 - Traditional Legal Trusts and Tax Considerations
Part 4 - Drafting Estate Planning Documents
Part 5 - Sample Language
Part 6 - Resources and Further Reading

Estate Planning for Pets - Part 2

This series of articles was originally published online by The Estate Planning for Pets Foundation, copyright © 2003. The Foundation appears to be now defunct and the website where these articles were published is now owned by a private legal firm in southern California. The articles were reprinted with permission in the Michigan Boxer Club newsletter, The ChatterBoxer, from June - August 2004 and are being revived here, with a few updates to applicable tax issues and website links, under that same reprint permission.

Statutory Pet Trusts

Several states have enacted statutes recognizing “valid” pet trusts, as opposed to mere honorary trusts. Seven states (Alaska, Arizona,[1] Colorado, Michigan, Montana, North Carolina, and Utah have enacted the 1993 version of the Uniform Probate Code (UPC) §2-907, and the Illinois legislature is currently considering enactment.[2] Six states have enacted the recently promulgated Uniform Trust Code (UTC) §408 (Arizona, Kansas, Nebraska, Nevada, New Mexico, and Wyoming), and the legislatures in three other states (District of Columbia, Maine, and Tennessee) are currently considering enactment. Six other states (Florida, Iowa, New Jersey, New York, Oregon, and Washington) have enacted independent statutory schemes.

Nonetheless, in addition to the statutory provisions discussed dealing with the duration of pet trusts and the rule against perpetuities, the following is a discussion of several common features to most (if not all) of these statutes:

  1. If there is no caretaker-trustee willing or able to serve, the court may appoint a successor. The pet trust statutes expressly provide for the appointment of an alternative caretaker-trustee in the event that the settlor has not designated one.[3] However, the statute requires court action and does not address the practical issue of who would be willing to step forward to take on this role. 
  2. The terms of the pet trust and/or its intended uses may be enforced against the caretaker-trustee by any individual designated in the instrument, or if none, by any individual appointed by a court.[4] Of course, as discussed above, the pet trust statutes do not address the issue of determining who may be willing to take action against the caretaker-trustee. This potential problem is aggravated by use of the term “individual” (in some statutes) to describe potential enforcers. In these states, it would appear that the ability of a settlor or a court to designate an animal welfare organization to watch over a caretaker-trustee is restricted.[5] 
  3. The court may reduce the amount of caretaking funds initially passing to the pet trust if it substantially exceeds the amount reasonably required for the intended use.[6] The drafters of the June 2004 Page 9 pet trust statutes intended to protect the human heirs from a presumably improvident bequest to an animal. However, from another point of view, this statutory provision gives any disgruntled heir additional subject matter for litigation that apparently cannot be drafted around.
  4. Except as expressly provided in the terms of the pet trust, no portion of the pet trust funds may be used for any purpose other than the care of the pet. The pet trust statutes attempt to tie the hands of the caretaker-trustee. That said, many of these statutes appear to preclude the use of one important incentive for ensuring that the caretaker-trustee will take adequate care of the pet - the payment of reasonable compensation. In this regard, only two states (Oregon and Washington) expressly provide that the caretaker-trustee is entitled to compensation. Therefore, if the settlor intends to allow for compensation, an express provision must be included in the terms of the pet trust.
  5. Except as required by a court or the terms of the pet trust, the caretaker-trustee is excused from making filings, reports, registration, periodic accountings, separate maintenance of funds, appointments, or fees normally associated with a fiduciary relationship.[ 7] The pet trust statutes place more trust in the caretaker- trustee than a trustee of a traditional trust, perhaps based on the assumption that pet trusts will be modest in amount and should not be burdened with the expense of meeting such duties. Nonetheless, whether this statutory relief is appropriate depends on the settlor’s intent – i.e., how much the settlor trusts the designated caretaker-trustee.  
  6. Except as expressly provided in the terms of the pet trust, any assets remaining after termination of the trust are to pass to the beneficiaries of the estate of the settlor.[8] As noted above, this provision gives disgruntled heirs an opportunity and standing to reduce the amount passing to the pet trust and make any other challenges to the trust. To close this door to litigation, the settlor should consider expressly designating a remainder beneficiary of the pet trust with interests that would not be adverse to expending monies for the care of the pet, such as an appropriate nonprofit organization. 
  7. Instruments are to be liberally construed to find a valid pet trust, as opposed to an honorary trust or precatory language. One of the primary purposes of these statutes is to bring poorly drafted bequests within the statutory pet trust regime based on the rebuttable presumption that the settlor’s primary intent in gifting the pet and any funds to an individual is to provide for the care of the animal. UPC §2-907, as well as statutes in several other states, go so far as to render extrinsic evidence admissible to determine the settlor’s intent.[9] What this means is that if the pet owner intends to make an outright bequest of a pet and a sum of money to a beneficiary within a jurisdiction that has a pet trust statute, then the provision should expressly state that a statutory pet trust is not intended.
Even in the jurisdictions with the most elaborate and contemplative statutes, the statutory pet trust schemes leave several issues unaddressed. Specifically, the drafter should consider the following:

  • Who owns the pet? The pet trust statutes do not address the question of who owns the pet – the caretaker as trustee or the caretaker as beneficiary? This ambiguity could create sticky legal issues if the need arises for a third party to take physical possession and custody of the pet away from the designated caretaker-beneficiary.[10]
  • How much money can be transferred to the pet trust? Under most of the pet trust statutes, the courts are authorized to reduce the amount of the property transferred if its determines that amount substantially exceeds the amount required for the intended use, and the amount of this reduction, if any, passes in the same manner as if the pet trust terminated. As noted above, if disgruntled beneficiaries (who could be heirs) and the court do not agree that the pet should have as high a standard of living as the settlor, then the amount passing to the pet trust may be reduced. The drafter should be cognizant of this possibility and the potential for litigation by disgruntled heirs and, if advisable, insert a clause providing that if a court determines that the designated amount is too much, then the excess will be distributed such that the challenging parties would not benefit (e.g., to a nonprofit organization).
  • Can the statutory pet trust be enforced if the caretaker-trustee moves into a jurisdiction that does not recognize such trusts? This is a question that deals with the complex issues of conflict of laws and trust situs. Without going into the potential outcomes in detail, it should be noted that the sample language for a statutory pet trust includes a governing law provision and a provision expressly stating that by accepting the benefits, the caretaker-beneficiary consents to the application of the desirable pet trust statute regardless of the trust situs.

The statutory pet trust statutes are intended to make the best of a poorly-drafted instrument. As such, relying upon these statutes in creating well-drafted documents may not be the best course of action under the circumstances.

[1] Note that although Arizona has adopted UTC §408, effective on January 1, 2004, the corresponding provision of the UPC has not yet been repealed by the Arizona legislature.

[2] Note that the original 1990 version of UPC §2-907 was promulgated in 1990, but revisions were made in 1993, and it is the amended version that has been enacted by the state legislatures listed above with minor modifications.

[3] Note, however, that the statutes in Florida and Iowa do not contain an express provision to this effect. Although UTC §408 does not expressly address this issue, UTC §708 provides for the appointment of successor trustees to fill any vacancy.

[4] Some statutes, including UTC §408, allow any person “having an interest in the welfare of the animal” to make such a request to the court.

[5] The term “individual” is used in the New York statute and the statutes in states (other than Arizona) that have adopted the 1993 version of the UPC §2-907. However, the other pet trust statutes use the term “person”, which, in the case of the Uniform Trust Code, includes a “corporation” or “association”. UTC §103(9).

[6] Note, however, that the statutes in Oregon and Washington do not contain this express limitation.

[7] Note, however, that under the Florida statute, the third party designated to enforce the pet trust is treated as a beneficiary entitled to receive accountings, notices, and other information from the caretaker-trustee.

[8] Under UPC §2-907, if the residue of an estate or trust was left to the pet without any provision for a remainder beneficiary, the intestate heirs would receive the excess over the amount needed for the pet. By contrast, UTC §408 merely refers to the settlor’s “successors in interest.” UTC §408(c).

[9] Note, however, that the UTC §408 does not include a provision for liberal construction. Furthermore, UTC §112 provides that the same rules of construction that apply to wills also apply to trusts, which, in most states, would preclude the admissibility of extrinsic evidence to contradict the plain language of the document.

[10] This concern may be academic since most of the pet trust statutes permit the court to order the transfer of property to another trustee if required to assure that the intended use is carried out.


Articles in this series:

Part 1 - Introduction and Legal Issues
Part 2 - Statutory Pet Trust
Part 3 - Traditional Legal Trusts and Tax Considerations
Part 4 - Drafting Estate Planning Documents
Part 5 - Sample Language
Part 6 - Resources and Further Reading

A Legal Primer on Estate Planning for Pets - Part 1

This series of articles was originally published online by The Estate Planning for Pets Foundation, copyright © 2003. The Foundation appears to be now defunct and the website where these articles were published is now owned by a private legal firm in southern California. The articles were reprinted with permission in the Michigan Boxer Club newsletter, The ChatterBoxer, from June - August 2004 and are being revived here, with a few updates to applicable tax issues and website links, under that same reprint permission.

Pets in the Estate Planning Process

Drafting estate planning documents to provide for the care of a pet first involves designating a party who is willing and able to take care of the pet when the owner dies or becomes incapacitated. For this reason, the clause delineating the beneficiary to receive the pet may resemble a clause appointing a trustee or other fiduciary. In any case, in drafting language designating the “caretaker” for the pet, remember that a pet animal is considered tangible personal property, which can be disposed of in a person’s estate plan in the same manner as a car, furniture, jewelry, and the like.

The second issue concerns how the pet will be financially provided for after the pet owner dies. The most common approach is to place the burden upon the caretaker, either explicitly or implicitly. Practically speaking, this is an acceptable alternative if the caretaker also receives a significant portion of the estate and is completely trustworthy. However, if the caretaker is a specific individual or organization who would not otherwise be a beneficiary of the estate, then the pet owner should also consider gifting an additional amount of money for caretaking expenses and/or compensation of the caretaker (referred to herein as the “caretaking funds”). Depending on the circumstances, an outright gift or bequest may not be appropriate. What if the primary caretaker is rendered unable or unwilling to take care of that pet? What if the primary caretaker is a spendthrift? Worse still, what happens if it becomes apparent only after the owner’s death that the primary caretaker was incompatible with the pet? The only legal mechanism that can adequately address these issues is a trust, as discussed in the next section.

The Law of Trusts for the Care of Pets

There are several legal issues that must be considered in drafting a trust for the benefit of a pet animal. The following is a general discussion of the two problems most often associated with attempts to establish such trusts under the common law and how recent statutory changes in some states have addressed these issues.

A.    Enforceability of pet trusts

The primary practical problem with establishing a valid and enforceable trust solely for the benefit of a pet is that no human beneficiary exists with standing to enforce the terms against the trustee. That is, who could step into court to stop the trustee from simply expending the pet trust funds for his or her own benefit?[1]

1.    Common law solution
One way to avoid the enforceability problem under the common law is to simply designate a human being or organization as beneficiary of the trust and provide that party with a proper incentive to enforce the terms of the trust.

2.    Statutory solutions
Over the last decade, several states have enacted statutes expressly addressing the problem of enforceability. These statutes tend to fall into one of two categories.

(a)    Honorary trust statutes
An “honorary trust” may arise whenever a gift or bequest of funds or other property is made for a specified purpose, but there is no human beneficiary to enforce the terms against the donee or devisee, who is, in this context, the “trustee”. The legal effect of a so-called honorary trust is that if the trustee does not use the funds for the specified purpose, then a “resulting trust” This means that if the trustee fails to use the trust funds for the intended purposes (i.e., the care of the pet), the trust funds would pass to the person who would have received such assets if no trust had been established to begin with.

Under the common law, an honorary trust could arise in a number of different contexts, such as the maintenance of a monument. Over the last few decades, California, Missouri, and Tennessee have all enacted statutes providing that a pet trust will be considered a honorary trust – i.e., the trustee must either use the funds to carry out the terms of the trust as intended or distribute the funds to the remainder beneficiary. In addition, Wisconsin has a very general honorary trust statute that would presumably cover pet trusts.

Relying on the existence of an honorary trust for the benefit of a pet has its shortcomings. Obviously, if the designated caretaker-trustee is also the remainder beneficiary after the pet dies, then this type of trust offers no protection at all. Even if there is a third-party remainder beneficiary of the trust, it is unlikely that such a beneficiary would compel the caretaker-trustee to spend more of the trust funds on the pet.[2]

(b)    Third party enforcement
The modern statutory trend is manifested in the Uniform Probate Code (UPC), and more recently, the Uniform Trust Code (UTC). Section 2-907 of the UPC, provides that a “pet trust” may be enforced by “an individual designated for that purpose in the trust instrument or, if none, by an individual appointed by a court upon application to is by an individual.”[3] Section 408 of the UTC, promulgated by the National Conference of Commissioners on Uniform State Laws in 2000, similarly provides that a pet trust may be enforced by “a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court.”[4] The same is true even in states such as Florida, Iowa, New Jersey, New York,[5] Oregon, and Washington, which have not adopted either of these uniform laws.

In essence, such statutes add a level of protection for the pet that a true honorary trust does not have – i.e., virtually anyone has standing to enforce the terms of the trust against the caretaker trustee. Query whether a person designated to enforce the trust under the terms of the governing instrument has an affirmative fiduciary duty to do so.

B.    Validity under rule against perpetuities

The majority of states retain the infamous “rule against perpetuities”, which was originally intended to keep property from being tied up too long in trust. Several jurisdictions retain the common law rule against perpetuities – a beneficial interest in a trust must vest or fail within 21 years after the death of a human being living at the time the trust is created and is irrevocable. Many states have enacted an alternative statutory rule against perpetuities – e.g., all interests must vest or fail within 90 years after establishment of the trust. Some statutes have provisions for implied construction to avoid a violation of the rule or have adopted a “wait-and-see” scheme. Generally speaking, however, if the rule against perpetuities could be violated, within the realms of logic (as opposed to reality), at the time a beneficial interest in a trust is established, then the interest is invalid from its inception. In this regard, the life of a pet animal is not a measurable life in being for purposes of applying the rule, and as such, a trust for the life of a pet logically violates the rule against perpetuities.

For example, consider a bequest of caretaking funds “to X for the life of the pet, remainder to Y”. Depending on the particular application of the common law rule against perpetuities, either the remainder interest to Y or the entire bequest would be invalid because Y’s interest might not vest within 21 years after the death of some human life in being. To be sure, this is an extreme example, but it does illustrate the need for the drafter to be familiar with the applicable rule against perpetuities in preparing documents.

1.    Common law solution
In reality, the problem with the rule against perpetuities can be easily addressed within the terms of a trust. That is, most trust agreements contain a so-called “perpetuities savings clause” providing that, regardless of what the rest of the trust agreement says, all beneficial interests in the trust must terminate or be distributable no later than some designated period in compliance with the applicable rule against perpetuities. If carefully drafted, such a provision would not practically effect the duration of the trust. For example, if the settlor has a large family, the trust agreement contains a provision requiring all beneficial interests to be distributed within 21 years after the death of the last living descendant of the settlor’s grandparents.

2.    Statutory solutions
States with pet trust statutes directly address this problem by simply providing that the pet trust is valid notwithstanding the existence of a common law and/or statutory rule against perpetuities. Of course, this only begs the question of how long the pet trust is permitted to last, and in this regard, the various statutes take different approaches.

The original 1990 version of UPC §2-907 simply placed the pet trust within the common law perpetuities period and provided that a pet trust terminates upon the earlier of: (a) the death of the last animal covered by the pet trust; or (b) 21 years after the establishment of the pet trust. While this statutory accommodation may be sufficient for a dog or cat, it would clearly create problems in trusts for pets with longer life expectancies, such as parrots and certain reptiles. In the Official Comment, the drafters of the original version of the UPC Code provision recognized this issue and suggested that if a state intended to remove the 21-year limit, it could do so by changing the wording. Although no state has modeled its statute on the original Uniform Probate Code provision, the same approach is reflected in statutes enacted in Missouri, New York, and Tennessee.

In 1993, UPC §2-907(b) was amended to simply provide that a pet trust terminates when no living animal is covered by the trust. This approach is also reflected in the recently-enacted statutes of several other states that have not expressly adopted the amended version of the Uniform Probate Code.


[1] Note that this legal issue regarding the right to enforce the trust is independent of the equally important practical issue of determining who has the willingness to police the caretaker of the pet.

[2] This issue of counterproductive incentives could be addressed by designating a remainder beneficiary that is a nonprofit organization that already has a legal duty to provide shelter and prevent cruelty to animals.

[3] UPC §2-907(c)(4) (as amended in 1993); UPC §2-907(b)(5) (before 1993 amendment).

[4] UTC § 408(b) (2000).

[5] Note that although the New York statute is entitled “Honorary trusts for pets”, it provides that the pet trust may be enforced by an individual designated in the trust instrument or appointed by the court upon petition.



Articles in this series:

Part 1 - Introduction and Legal Issues
Part 2 - Statutory Pet Trust
Part 3 - Traditional Legal Trusts and Tax Considerations
Part 4 - Drafting Estate Planning Documents
Part 5 - Sample Language
Part 6 - Resources and Further Reading