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< ESTATE PLANNING FOR PETS

Pet Trust Law Has New Teeth
By Liza Horvath, CTFA, AIF


                                                         ESTATE PLANNING FOR PETS LAW NOW HAS TEETH
                                                                                                        By Liza Horvath

Estate planning for pets has been a topic of interest for many in the Monterey area. After all, we live in or near Carmel, one of the leading destinations for pet owners who love to travel with their pets.

After the estate of Leona Helmsley made a public splash with her trust of $12 million (since reduced) for her little Maltese “Trouble”, many people got busy including provisions in their estate planning for their pets. While the provisions are most likely are carried out by executors and trustees, they previously did not have the “teeth” (sorry – had to say it) to be fully enforceable under California law. Also, it was unclear who had standing to enforce the provisions of a pet trust.

On July 22, 2008, California Governor Arnold Schwarzenegger approved S.B 685 which replaces California's permissive pet trust statute with a modern statute with enforceable provisions.

 
Here are some of the highlights of this new statute:

           · A trust for the care of an animal is deemed to be for a "lawful non-charitable purpose."

           · "Animal" is broadly defined to include pets of any type as well as domestic animals.
 
           · The trust terminates when the last animal dies that was alive when the settlor died (unless the settlor
             provided otherwise in the trust instrument).
 
           · The court must liberally construe the trust.

           · The court must presume that the trust language is not precatory or honorary.

           · Extrinsic evidence is admissible to ascertain the settlor's intent.

           · Trust funds may be used only for the benefit of the animal unless the trust instrument provides otherwise.
 
           · When the trust ends, the balance of the trust property passes (1) according to the terms of the trust
             (i.e., to the remainder beneficiaries), (2) if none and the settlor created the trust in a non-residuary will
             clause, under the residuary clause, or (3) in other cases, to the settlor's heirs.

           · The settlor may name a trust enforcer in the trust.
 
           · The court may appoint a trust enforcer.

           · Anyone interested in the welfare of the animal and any nonprofit charitable organization that has as
             its  principal activity the care of animals may petition the court to enforce the trust.
 
           · If the settlor did not name a trust or if the named trust is unable or unwilling to serve, the court must appoint
             a trustee.

           · Accountings must be given to the remainder beneficiaries (or those who would take upon the death of
             the animal) as well as to any nonprofit charitable corporation that has as its principal activity the care
             of animals and has made a written request for accountings.

           · Trusts with property valued at $40,000 or less are exempt from accountings, filings, reportings, and
             other requirements which normally apply to trusts under California law.

           · Upon a reasonable request, the animal and the trust records may be inspected by any beneficiary, the
             trust enforcer, or a nonprofit charitable corporation that has as its principal activity the care of animals.

So, now organizations like the SPCA, Animal Friends Rescue, and other agencies dedicated to the protection of animals can not only act as a Trustee for pet trusts if they so choose, but can bring action against trustees who are not fulfilling their fiduciary responsibility with regard to established Pet Trusts.

Liza Horvath is a freelance writer living in Carmel.

SIDEBAR

TRUSTEES & TRUSTEE DUTIES

PLANNED GIVING & CHARITABLE BEQUESTS

ESTATE PLANNING FOR PETS

YOUR ESTATE PLAN

CRITICAL CHOICES FOR HEALTH CARE

FAMILY OFFICE

AGENCIES: WHO DOES WHAT



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