The purpose of this article is to advise our clients that they can provide for their pets within their estate plan and to assist our clients with carrying out their wishes with respect to their pets.

Over thirty million individuals own dogs in the United States and over twenty eight million individuals own cats. However, a study in 1999 showed that only 12% to 27% of pet owners remember to include their pets in their estate plan. Since many of these pets are treated as family members, it is important to include them in your estate plan.

Historically, trusts could not be enforced in favor of animals because there was no human beneficiary to enforce the trust. These were considered "honorary trusts" because the trustee could not be compelled to provide for the animal. However, the California legislature responded and clarified by enacting Probate Code Sections 15211 and 15212 in 1991.

Probate Code Section 15211 provides that a trust for a lawful noncharitable purpose (such as care of a pet) may be performed by the trustee for only 21 years, whether or not there is a beneficiary who can seek enforcement or termination of the trust and whether or not the terms of the trust contemplate a longer duration.

Probate Code Section 15212 provides that a trust for the care of a designated domestic or pet animal may be performed by the trustee for the life of the animal, whether or not there is a beneficiary who can seek enforcement or termination of the trust and whether or not the terms of the trust contemplate a longer duration. This section allows you to create a trust for the duration of your pet’s lifetime.

The first step to providing for your pet is to compute the amount of property necessary to care for the pet. You should take into consideration the type of animal, the life expectancy, veterinary care, and funds for boarding the pet while the caretaker is on vacation or otherwise unable to care for the pet.

The second step is selecting the person to care for the pet. You must find a caretaker who is willing and able to care for the pet much in the same way as you would. Clearly, it is necessary to obtain the caretaker’s consent to act in this regard, prior to naming him or her. It is also recommended that you name several alternates, and give your executor or trustee the authority to select a good home for the pet if the named caretakers are unable or unwilling to take the pet.

The third step is deciding whether to give an outright gift of the pet to the caretaker with a reasonable sum to care for the animal, which is conditioned on the caretaker taking proper care of the animal, or to create a trust in favor of your pet within your revocable living trust or your will. Both options go into effect upon your death and accordingly, are irrevocable at that time. With the second option, the trustee distributes funds to the caretaker to cover the pet’s expenses, provided that the caretaker is taking good care of the pet. Oftentimes, having one person care for the pet and another person manage the money avoids any potential conflict of interest.

The outright gift of the pet to the caretaker is the preferred method when the amount gifted is relatively nominal, such as $20,000 or less. The advantage to this method is that it is simple, and there are less administrative costs which should preserve the maximum amount of funds for the pet. The downside of this method is that there is no one to make sure that the pet is receiving good care, no one can force your caretaker to use the funds on your pet, and this would be taxed as an inheritance, which may deplete the amount left for the animal’s care.

If you intend to set aside an amount larger than $20,000 for your pet, the Trust is the preferred method. This method is preferable because your intent is more likely to be carried out because the Trustee makes sure that the animal is being cared for, and the caretaker makes sure that the Trustee is properly distributing funds for the benefit of the pet. To that end, you should direct that your trustee regularly make unannounced visits to make sure that the animal is in good condition. In sum, this method is more predictable and creates a system of checks and balances.

It is important to specify the type of care that the trust is being held for, such as food, housing, grooming, veterinary care, and burial or cremation. There was one extreme case wherein the Trustee purchased a vehicle for the transport of the animal and a washing machine to launder the pet’s bed. The court found these to be inappropriate expenses of the Trust and that they benefitted the trustee more than the pet. In order to avoid this type of confusion, you can specify the type of care that you intend to cover. There is also the method in which the distributions will be made to the caretaker. You can direct that the Trustee distribute a fixed sum each month to the caretaker, or you can state that the caretaker is reimbursed once a month for out-of-pocket expenses. Of course, the second option is more burdensome on the caretaker who will have to spend their own money first, and keep record of expenses. Within the Trust, you may provide additional distributions for the caretaker if you feel it is appropriate or beneficial to compensate the caretaker.

Under California law, the duration of this Trust is limited to the lifetime of your pet or pets. You must clearly state to whom you want the remaining funds distributed. It is not wise to name the caretaker as the remainder beneficiary since this creates a disincentive to extend the life of the animal.

A trust is taxed on the income it accumulates and your pet is not a beneficiary recognized by the Internal Revenue Service ("IRS") and therefore it cannot be taxed. The trustee cannot be taxed either since he does not hold beneficial title. In jurisdictions, such as California, where pet trusts are enforceable, the IRS has held that the trust will not be credited with the distribution, but is liable for the distribution as if the distribute were not made. The good news is that the pet trust is taxed at a lower rate than the average trust.

In every instance, you must clearly identify the animal in your will or trust so as to prevent fraud. There is at least one reported instance where an unscrupulous caretaker has replaced a deceased animal three times so as to continue receiving distributions from a trust. You can and should describe your animal in detail and get a microchip placed in your pet so that your trustee can have a veterinarian scan your pet.

A final alternative, to setting up a trust or leaving an outright gift to a caretaker, is to take advantage of a program through the Sacramento Society for the Prevention of Cruelty to Animals or a similar organization. The Sacramento SPCA has the Guardian Care Program, in which it will foster your pet until it finds your pet a permanent home. Please contact the Sacramento SPCA at 916-383-7387 ext. 9105, or a similar organization for more information to determine if your pet would qualify for such a program.

The Sacramento SPCA also has a program in which you can leave your house to the SPCA upon your death and they will have a volunteer move into your home with your pets for the balance of the pet’s lifetime and you can specify whether you wish the home to be sold on your death with the proceeds distributed to the SPCA, or to be continued for the use of the SPCA.

Similarly, the UC Davis School of Veterinary Medicine has a program known as The Tender Loving Care for Pets Program (TLC) in which they provide lifetime veterinary services and pet care monitoring to pets that are predeceased by their owners. Please contact UC Davis School of Veterinary Medicine at 530-752-7024 for more information.