BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2007-2008 Regular Session
SB 685 S
Senator Yee B
As Amended January 9, 2008
Hearing Date: January 15, 2008 6
Probate Code 8
GMO:rm 5
SUBJECT
Pet Trusts
DESCRIPTION
This bill would repeal current law on trusts for
domesticated or pet animals and enact new, more detailed
provisions for the creation and enforcement of pet trusts.
BACKGROUND
This bill is sponsored by the San Francisco Society for the
Prevention of Cruelty to Animals (SFSPCA).
According to the SFSPCA, it is estimated that "well over
half of American households have at least one pet" and that
"most pet-owning households believe you should have more
than one pet, and 40% of dog-owning households have at
least one cat." The SFSPCA also asserts that increasingly,
pet owners are seeking to ensure that their pets are cared
for after the owner's death or disability. Thus, informal
arrangements with family or friends have been made for the
care of such animals. Some have ventured to include pets
in their wills, while others have created "pet trusts" that
set aside money for the care of the pets in the event of
the owner's death or disability.
For example, famed real estate and hotel mogul Leona
Helmsley left a trust of $12 million for the care of her
pet dog, Trouble. Another, lesser known pet owner from
(more)
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Maryland, willed some $400,000 plus a house to the three
stray dogs that he adopted. Of course, the trustee or
executor is expected to pay a caretaker to ensure that the
pets are housed, fed, and maintained as provided in the
trust or will.
CHANGES TO EXISTING LAW
Existing law 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. (Probate Code Sec. 15212.)
This bill would repeal Probate Code Sec. 15212. It would
instead provide that:
a. a trust for the care of a designated domestic or pet
animal is valid and terminates when no living animal is
covered by the trust;
b. the governing instrument shall be liberally construed
in order to bring the transfer within the normal rules
for trusts, to presume against the honorary nature of
the disposition, and to carry out the general intent of
the trustor;
c. the trust principal or income shall not be converted
to the trustee's use or for any purpose other than for
the benefit of the covered animal;
d. upon termination of the trust, the trustee shall
transfer the unexpended trust property as specified
(see Comment 3);
e. the intended purpose of the trust principal or income
may be enforced by a person designated by the trust or,
if none is designated, by a person appointed by the
court upon application;
f. except as ordered by the court or as required by the
trust instrument, no accounting, filing, separate
maintenance of funds, fees, or other report is required
by reason of the fiduciary relationship of the trustee;
g. if the trust instrument does not name a trustee or no
trustee or successor trustee is willing or able to
serve, the court would be required to appoint a trustee
to carry out the intended use of the trust property;
and
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h. a court may make all other orders necessary to carry
out the trustor's intent.
COMMENT
1. Need for the bill
The author states:
The changes set out in SB 685 create the basis for
oversight and enforcement of pet trusts. The
consequence of this oversight is that the trust
provisions would be legally protected. If it were seen
that pets covered by the trust were not being properly
cared for, legal action could be taken to ensure that
the pets are protected. Thus, a trustor's plans could
be enforced, and pets surviving their owners could not
be discarded with impunity, as is the case with present
pet trust law. This could then have positive effects
on shelters and animal care facilities, which are all
too often the destination and destiny of pets whose
owner/guardian has passed away.
The author and sponsor believe that current California
law treats pet trusts as honorary and therefore these
trusts are unenforceable. The statute (Probate Code Sec.
15212) does not contain any references to a pet trust
being honorary and there are no cases interpreting the
statute that would clarify whether or not it is honorary.
Nevertheless, the sponsor of SB 685 asserts that
California is one of only two states that have
unenforceable pet trust statutes, and that by adopting
the pet trust provisions of the Uniform Probate Code
(which this bill would do), California will finally join
37 other states that provide for the creation of pet
trusts and the means for their enforcement.
2. Express validation and condition of termination of a
pet trust; liberal construction to carry out trustee's
intent
a. Valid pet trust terminated when no living animal is
covered
SB 685 would expressly make valid a trust created for
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the care of a designated domestic or pet animal,
provided it meets several requirements. It would also
terminate the trust, automatically, "when no living
animal is covered by the trust." (Page 2, line 18 of
the bill.) Under this phrase, a trust could last into
perpetuity, if the trust expressly provided for the
care and maintenance of a pet animal and his or her
progeny.
In contrast, the condition for termination of the
trust would be different if the phrase were "when no
animal living when the trust became effective is
covered by the trust." Under this phrase, the trust
must necessarily designate an animal that was alive at
the time the trust became effective, and the trust
would terminate when that animal dies.
It is not clear which of the two scenarios the author
or the sponsor intend with SB 685. Assuming the
choice to use the first phrase was indeed correct, the
bill would clearly allow a pet trust to cover the
progeny of an animal who was alive at the time the
trust was created.
The use of the first phrase in the bill, rather than
the narrower second phrase, seems to allow for a
testator or trustor to intentionally and expressly
create a pet trust that would last through generations
of the designated domestic or pet animal, even into
perpetuity. If so, the testator or trustor should be
warned that the rule against perpetuities would make
such pet trusts voidable.
However, Probate Code Section 15211 limits the
duration of trusts for lawful noncharitable purposes
to 21 years, whether or not the terms of the trust
contemplated a longer duration. The Legislature
enacted the 21-year limit for this type of trust to
prevent the trust from becoming voidable because it
violates the rule against perpetuities. Thus, even if
Lassie's owner wanted Lassie's descendants to be
covered by a trust created upon the owner's death, the
trustee could only provide care to Lassie and Lassie's
descendants for a total of 21 years from the date of
owner's death.
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b. When animal has a life span longer than 21 years
Proponents point out that some animals have a life
span longer than 21 years. For these animals,
therefore, an exception to Section 15211 may be
necessary to prevent the trust from terminating
automatically at the end of 21 years, and leaving the
animal without care thereafter. Perhaps the author
can add language to extend the duration of the trust
until the death of those animals alive and covered by
the trust when the 21 year point is reached (assuming
the trustor's or testator's intent to cover Lassie's
progeny is clearly expressed in the trust instrument).
Suggested language: If the author wishes to cover
these animals with a life span of 21 years or longer,
the following language is suggested:
(c) Notwithstanding section 15211, a trust for the
care of a covered domestic or pet animal that has a
life span of 21 years or greater shall terminate when
that designated animal dies.
c. Pet trust not merely a precatory or honorary
disposition
The bill also contains language directing that the
governing instrument of the animal trust be liberally
construed to ensure it is validated as an enforceable
trust (i.e., that it is not merely a precatory or
honorary disposition of property) and to carry out the
general intent of the trustor (the pet owner who
created the trust and is deceased).
d. Suggested amendments
To make the proposed Section 15212 consistent with the
terminology of trusts, the following amendments should
be made:
On page 3, line 2, strike out "transfer" and
insert:trust
On page 3, line 4, strike out "transferor" and
insert:trustor
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On page 3, line 5, strike out "transferor's" and
insert:
trustor's
On page 3, line 16, strike out both "transferor's" and
insert:
trustor's
On page 3, line 17, strike out "transferor's" and
insert:
trustor's
On page 3, line 19, strike out "transferor's" and
insert:
trustor's
On page 3, line 39, strike out "transferor" and
insert: trustor
To ensure that the pet trust is characterized as a
trust for a lawful noncharitable purpose, the
following amendment is suggested:
On page 2, line 17, delete "valid" and insert:
a trust for a lawful noncharitable purpose
3. Requirements for a valid and enforceable trust
The bill specifies several conditions that the trust must
meet in order to be valid.
First, except as the governing instrument itself may
provide, a pet trust cannot be converted to the use of
the trustee or for any use other than the trust's purpose
or for the benefit of a covered animal.
Because the language of proposed Sec. 15212 does not
define what is a "covered animal," it would behoove the
person drafting the pet trust to be clear as to which
animals, living or to be born, will be covered by the pet
trust. (See Comment 2.)
This provision would ensure that a trustee does not
ignore the wishes of the deceased person (pet trustor)
for the care of the pet or pets.
Second, upon termination of the trust (see Comment 2) the
trustee must transfer the unexpended trust property
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either as directed by the trust or, if the trust was
created in a nonresiduary clause of a will, the trustee
must transfer the unexpended trust property under the
residuary clause of the will. If the trustee could not
transfer unexpended assets as described, the trust
property would be distributed to the trustor's heirs as
provided in other provisions of the Probate Code (Sec.
21114).
4. Other trust provisions
This bill would provide for the court's appointment of a
trustee if the pet trust does not designate a trustee or
no designated trustee is willing or able to serve. The
court may require the transfer of property to a trustee,
if necessary to carry out the trustor's intended use of
the property, as well as make other orders.
A significant deviation from the treatment of other,
similar trusts is that SB 685 would not require the
trustee to account for, file periodic accountings,
maintain separate funds for the trust, or make reports
unless the governing instrument requires it or the court
so orders. Thus, unless Leona Helmsley's pet trust
required periodic accounting of the $12 million set aside
for the care of her dog Trouble, other beneficiaries of
her general trust would have to obtain a court order to
monitor the expenditure of the funds by the trustee or
the person taking care of Trouble.
SHOULD THERE BE SOME ACCOUNTING MADE OF THE PET TRUST
WHERE THE TRUST ESTATE IS SUBSTANTIAL?
The period covered by the accounting may be much longer
in duration than that of other trusts, perhaps every four
years, and less detailed.
Finally, under SB 685, the intended use of the trust
principal or income may be enforced by a person
designated by the trust instrument or, if none is
designated, by a person designated by the court upon
application by that person. In other words, if Leona
Helmsley's trust did not designate her brother as the
person to see to it that the $12 million is set aside for
her dog Trouble, any other person could petition the
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court to be appointed to enforce the intended use of the
$12 million. In other words, a third party could
petition the court to be appointed like a "guardian ad
litem" for Trouble so that Trouble's interest in the $12
million could be protected.
SHOULD THIS THIRD PARTY HAVE SOME INTEREST OR CONNECTION
TO THE ANIMAL IN ORDER TO PETITION FOR DESIGNATION AS
ENFORCER OF THE INTENDED USE OF THE TRUST PROPERTY?
OR COULD THIS "PERSON" BE A NONPROFIT CHARITABLE
ORGANIZATION THAT HANDLES ANIMALS?
6. Effect of other existing trust provisions
Because a pet trust created under this bill would still
be a trust, it would be subject to all of the Probate
Code provisions that generally govern trusts. Thus, the
trust may sue and be sued, buy and sell stocks, and
conduct any activity that a trust where the beneficiary
is a person may do.
In fact, Trouble has been sued by a caretaker who claims
that he mauled her several times and caused her injury.
The question is whether a judgment against Trouble could
be paid out of the $12 million trust estate, if that was
not an "intended use" of the trust under the governing
instrument.
Support: WildCare; The Humane Society of the United
States; The Marin Humane Society; The San Francisco
Dog Owners Group (SFDOG)
Opposition: None Known
HISTORY
Source: The San Francisco Society for the Prevention of
Cruelty to Animals
Related Pending Legislation: None Known
Prior Legislation: None Known
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