Some of our clients ask us if we can do pet trusts for their beloved pets. The quick answer is yes, we can. Of course, we have to understand the nature of the pet and the client’s plans, but, generally, this is possible. Establishing an actual separate pet trust will usually be a little more expensive.
We write wills with pet provisions included, if desired by our clients. Using this approach, your will gives the specific pets to named persons, and includes a sum of money to go along with that pet. To protect your pets, we add language that includes all pets you own. This will usually work, but if you adopt new pets after you draw up the will, they might not be covered. And, a will may take considerable time to probate, which means that funds might not be readily available to your caretaker. Most importantly, a will does not provide for incapacity planning … which is another way to ask who will care for your pet if you are unable to do so? A pet trust can be a better solution, and it can be created while you are alive and can work with your trustee.
Legally, pets are property. They can’t inherit anything. To allow the use of a trust for pets, North Carolina has taken the step to add guidelines about pet trusts to our body of laws. Specifically, NCGS 36C-4-408 addresses the use of pet trusts. The law provides that a trust for the care of designated pet animals alive at the time of creation of the trust is valid. This law includes “pet animals” so it reasonably includes more than just dogs and cats. As long as the pet is legal (endangered species probably won’t be covered), a trust can be established. But, your trust cannot cover animals you do not have when you die, nor animals that have died before you. They have to be specifically identified in the trust document.
The law also states that no portion of the principal or income may be converted to the use of the trustee or to any use other than for the benefit of the designated animal or animals. That means that the money has to be used for the pet, and that a trustee can’t just decide to vacation with your pet’s funds. On the other hand, you do have the right to name a trustee, who should be a person you trust to care for your animals.
Although most pet trusts are created when a person (the “settlor”) dies, in their will, it is possible to create a trust for a pet while you are still living. Then, you can add pets and funds to care for them at any time up to your death.
The trust terminates upon the death of the animal named or the last surviving animal named in the trust. And, the law defines how funds remaining are to be distributed. This means that if you leave more money than necessary to care for your pet before it dies, there is a way for the remaining funds to be distributed without a court fight.
When you come to see us about estate planning, we always ask about pets and your wishes for them. When appropriate, a pet trust can be just the right solution for you and your beloved pets.