Trusts For Pets - Fido's Fiduciary?

Article by John Brooks, Maureen McGinnity, Greg Monday and Michael Taylor

Summary

This article discusses the changing legal status of our pets as evidenced by various statutory enactments around the country. These new laws are sure to create not only new planning opportunities for our clients, but controversies as well.

As usual, the round-up of cases from around the country covers a broad range of issues. From Illinois, yet another case on the inheritance rights of adopted individuals, the interpretation of a one-line will and an interesting application of the Principal and Income Act. From Minnesota, a noteworthy case holding that other related documents executed contemporaneously with a will may not be considered extrinsic evidence and may be considered when construing the will. From New York, cases touching on issues related to a bigamous marriage, assignment of rights to an inheritance and the implied revocation of advance health care directives. Finally, from North Dakota, a case that exposes a drafting trap for the unwary related to testamentary powers of appointment.

Most pet owners view their animal companions as members of the family, and now, in a growing number of states, pet owners can establish trusts for their pets, just as they can for their human family members. Although pet owners have long attempted to leave money to their pets when they die, these attempts have often failed because, under the law, pets are considered property. However, as the legal status of pets advances, an increasing number of states are enacting "pet trust" statutes, which allow pet owners to create legally enforceable trusts naming their pets as beneficiaries. The statutes generally provide for enforcement of the trusts by an individual designated by the owner in the trust document (or, if none, by a person designated by the court). Pet trust statutes have been enacted in fifteen states, including: Alaska, Arizona, Colorado, Florida, Iowa, Michigan, Montana, Nevada, New Mexico, New Jersey, New York, North Carolina, Oregon, Utah, and Washington. Three states, California, Missouri, and Tennessee, recognize pet trusts as valid but do not provide for their enforcement in court.

Although most pet trust statutes are modeled after Uniform Probate Code 2-907 (as amended in 1993) which validates pet trusts, there are variations in the states' statutes. One such variation relates to the permitted duration of the trusts. Some states limit the duration of the trusts to twenty-one years (New Jersey, New York), while other states limit them to the life of the animal (Alaska, Arizona, Florida, Iowa, Michigan, Montana, Nevada, New Mexico, North Carolina, Oregon, Utah, Washington). Colorado's pet trust statute is unique in that it validates pet trusts for the life of the animal and the animal's "offspring in gestation" at the time of the owner's death. Another variation relates to the court's power to reduce the amount of property in the trust if it considers the amount to be unreasonably large. Some pet trust statutes give the court this power (Alaska, Arizona, Florida, Michigan, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Utah), while others do not.

Pet owners should consider several important issues when setting up pet trusts. They must carefully select the trustees and pet caretakers to ensure that their pets are cared for in a manner acceptable to them. Owners should consult with the individuals to be named before making a formal designation. Pet owners also must carefully compute the amount of money used to fund the trust. If too much money is left for the pet, it may create an impression of lack of capacity, and the gift may fail. Furthermore, leaving too much to a pet may increase the likelihood of litigation by human family members.

In states that have not adopted a pet trust statute, such as Illinois, pet owners must use an alternative method for caring for their pets after death, including making a conditional gift in trust to a caretaker for the pet or arranging for the care of the pet with an animal shelter, pet retirement home, or sanctuary. Moreover, in states which have not enacted a pet trust statute but which have a statute authorizing honorary trusts, pet owners may establish an honorary trust for the care of their pets, although such trusts are not enforceable in court.

Finally, another example of the changes in the legal status of pets is legislation recently introduced in Colorado which would...