BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 685| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 685 Author: Yee (D) et al Amended: 1/23/08 Vote: 21 SENATE JUDICIARY COMMITTEE : 5-0, 1/15/08 AYES: Corbett, Harman, Ackerman, Kuehl, Steinberg SUBJECT : Pet trusts SOURCE : San Francisco Society for the Prevention of Cruelty to Animals DIGEST : This bill repeals current law on trusts for domesticated or pet animals and enacts new, more detailed provisions for the creation and enforcement of pet trusts. ANALYSIS : Existing law provides that a trust for a noncharitable corporation or unincorporated society or for a lawful noncharitable purpose 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. Existing law also 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 CONTINUED SB 685 Page 2 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 bill deletes those provisions and instead provides that a trust for the care of a designated domestic or pet animal is a trust for a lawful noncharitable purpose. Unless expressly provided in the trust, and the trust terminates when no animal living on the date of the trustor's death is covered by the trust. The bill provides that the governing instrument of the animal trust shall be liberally construed to bring the trust within this section, to presume against the merely precatory or honorary nature of the disposition, and to carry out the general intent of the trustor. Extrinsic evidence is admissible in determining the trustor's intent. The bill provides that a trust for the care of a designated domestic or pet animal is subject to the following requirements: 1.Except as expressly provided otherwise in the trust instrument, the principal or income shall not be converted to the use of the trustee or to any use other than for the trust's purposes or for the benefit of a covered animal. 2.Upon termination of the trust, the trustee shall distribute the unexpended trust property in the following order: A. As directed in the trust instrument. B. If the trust was created in a nonresiduary clause in the trustor's will or in a codicil to the trustor's will, under the residuary clause in the transferor's will. C. If the application described above does not result in distribution of unexpended trust property, to the trustor's heirs under Section 21114. The bill provides that the provisions of the bill shall be CONTINUED SB 685 Page 3 treated as creating a future interest under the terms of a trust, as specified. The bill further provides that the intended use of the principal or income may be enforced by a person designated for that purpose in the trust instrument or, if none is designated, by a person appointed by a court upon application to the court. The bill provides that any person interested in the welfare of the pet animal or any nonprofit charitable organization whose principal activity is the care of animals may apply to the court for appointment as trustee to enforce the trust or for removal of a trustee for a violation of this section. The bill specifies that if a trustee is not designated or no designated trustee is willing or able to serve, a court shall name a trustee. A court may order the transfer of the trust property to a trustee if it is required to assure that the intended use is carried out and if a successor trustee is not designated in the trust instrument or if no designated successor trustee agrees to serve or is able to serve. A court may also make all other orders and determinations as it shall deem advisable to carry out the intent of the transferor and the purpose of this section. If the value of the assets in the pet trust does not exceed $5,000, no filing, report, registration, periodic accounting, separate maintenance of funds, appointment, or fee is required by reason of the existence of the fiduciary relationship of the trustee, unless ordered by the court or required by the trust instrument. If the value of the trust assets exceeds $5,000, the trustee shall submit to the court an accounting of the assets in the trust within 60 days of the trustee's appointment. Thereafter, the trustee shall submit to the court an accounting of the trust assets biennially. No hearing on the accounting shall be required. The court may, for cause and after reviewing the accounting submitted by the trustee, order a hearing on the accounting, with notice given to residuary beneficiaries of the trustor's will, to other named beneficiaries in the trust, and to the trustor's heirs under Section 21114. The court may, after the hearing, issue orders necessary to ensure that the CONTINUED SB 685 Page 4 purpose of the trust is carried out. The bill specifies that a trust for the care of the covered domestic or pet animal that has a life span of 21 years of age or greater shall terminate when that designated animal dies. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 1/23/08) The San Francisco Society for the Prevention of Cruelty to Animals (source) WildCare The Humane Society of the United States The Marin Humane Society The San Francisco Dog Owners Group (SFDOG) United Animal Nations 2nd Chance 4 Pets Action for Animals The American Society for Prevention of Cruelty to Animals Animal Switchboard California Federation for Animal Legislation ARGUMENTS IN SUPPORT : According to the author's office, "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 source 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 CONTINUED SB 685 Page 5 honorary and there are no cases interpreting the statute that would clarify whether or not it is honorary. Nevertheless, the source of this bill 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. RJG:nl 1/23/08 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED