Pet Trusts: Planning for Leaving Your Estate to Your Heirs…and the Dog.

Planning for Leaving Your Estate to Your Heirs…and the Dog.

By: W. Seth Todd

Everyone is told they are supposed to have some form of estate planning done before they pass to take care of their family. What if I told you that you could do that for your pet? That is right, you can now set up a pet trust in all fifty states for little Fido. According to a survey, 44% of pet owners have already made plans for their pets if they die or become disabled. [1] That same 44% has also arranged funding for that care.[2] It is kind of reassuring in a way knowing that if something was to happen to you, your pet wouldn’t be shipped off to a shelter or just given to an unloving family.

Pet trusts are actually not a new concept. One of the first cases every recorded was actually done so right here in Kentucky in 1923. In the case a woman gave a life estate to her sister, and after her sister died it would pass to her heirs, except for $1,000.00 given to a local church to take care of her dog. The heirs fought for the thousand dollars saying the bequest was indefinite and uncertain. However, the court held that the trust was valid. The court said that the trust would not be allowed to fail because of want for a trustee, since the purpose the trust sought to accomplish was a humane one. [3]

The old way of structuring pet trusts was made from the 1935 Restatement(Second) of Trusts. The way the drafters intended the trust to be set up was more of an honorary trust than a pet trust. Essentially you would carefully word the trust to where you would assign a certain amount of money to a party to take care of the pet, and if they failed to take care of the pet then the money would return to the grantor’s estate and the pet would pass to the normal heirs.[4] You also had to be very particular about how long the trust would last, you had to set it for a time where the money would out live the pet, but shorter as to not violate the rule of perpetuities.[5]

Major headway was managed for pet trusts in 1990 when the Uniform Probate Commission created a pet trust that was removed from other noncharitable trusts.[6] In 1993, the UPC revised the pet trust statute to remove the rule against perpetuities all together from pet trusts. However, they then limited the animal owners ability to plan ahead, and said that pet trusts could not be used to care for the offspring of the pets in the future. [7] With the adoption of the Uniform Trust Code in the 2000s that allowed for pet trusts, many states The most famous case of a pet trust was millionaire Leona Helmsley’s dog. Leona cut off her grandchildren, and left her children with $5 million dollars a piece.[9] The remaining $12 million went to her little Maltese, Trouble. A judge eventually lowered that inheritance to $2 million. Trouble was then flown to Florida where he lived a life of luxury, with expenses totaling around $100,000 dollars a year to care for the dog. Trouble finally passed away at the old age of 12 in 2011. [10]

Luckily for those of you looking to set up a multi-million dollar trust fund for your pet, Kentucky adopted the Uniform Trust Code in 2012, and along with it came a trust for the care of animal provision. The statute reads, ”  

(1)  A trust may be created to provide for the care of an animal alive during the settlor’s lifetime. The trust terminates on the death of the animal or, if the trust was created to provide for the care of more than one (1) animal alive during the settlor’s lifetime, on the death of the last surviving animal.

(2)  A trust authorized by this section 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. A person having an interest in the welfare of the animal may request the court to appoint a person to enforce the trust or to remove a person appointed.

(3)  Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Except as otherwise provided in the terms of the trust, property not required for the intended use shall be distributed to the settlor, if then living, otherwise to the settlor’s successors in interest.[11]

With that statute in mind, you now have all it takes to set up a pet trust for little Fido. Just remember that the highest threshold allowed was $2 million in the previously discussed case of Leona Helmsley and Trouble. While pet trusts are not likely to become a mainstay of the estate planning world, be aware they are out there. You can plan for everything in your life through estate planning, and now, you can even plan for your pets as well.

[1] Pet Heirs Providing for a Pet’s Future, Securian Financial Group  

[2] Id.

[3] Willett v. Willett, 247 S.W. 739 (1923)

[4] Gerry Beyer, PET ANIMALS: WHAT HAPPENS WHEN THEIR HUMANS DIE?, 40 Santa Clara L. Rev. 617 (2000).

[5] Id.

[6] Id.

[7] Id.

[8] Breahn Vokolek, America Gets What it Wants: Pet Trusts and a Future for its Companion Animals, 76 UMKC L. Rev. 1109 (2008).  

[9] Susan James, Leona Helmsley's Little Rich Dog Trouble Dies in Luxury, ABC News, (June 10, 2011)  

[10] Id.

[11] KRS 386B.4-080