California's New Pet Trust Statute: Maybe the Legislature Will Get it Right Eventually

• Publication year: 2009

CALIFORNIA'S NEW PET TRUST STATUTE: MAYBE THE LEGISLATURE WILL GET IT RIGHT EVENTUALLY

By Kenneth W. Kossoff^*

I. INTRODUCTION

In a 1994 majority opinion, California Supreme Court Justice Joyce Kennard spoke of the "wonderful companionship and affection" that dogs and cats provide to those of us who have them.¹ And in a recent dissent she expressed doubt as to whether "Jaws the goldfish, Tweety the canary and Hank the hamster . . . would strike fear in a probation officer."² But while pets may not be new to the hallowed hallways of the California Supreme Court, they have not regularly appeared in lowly probate courts (though, to be sure, parties and their attorneys may sometimes behave like animals).

With new Probate Code³ section 15212, which took effect on January 1, 2009, California finally joins the nearly forty other states which have enacted legislation enabling the creation of legally enforceable trusts for the care of the trustor's pets after the trustor's incapacity or death.⁴ Of course California, being California, added certain unique provisions. Regrettably, some of these may discourage people from agreeing to act as caregivers for the pets of friends or relatives, and thereby undermine the purpose of the law, which is to enable pet owners to ensure that their pets are properly cared for and do not end up euthanized after their owners die or become incapacitated.

The primary purpose of this article is to introduce the estate planning community to the new law, so estate planners can spread the word to pet owner clients that there is a legally enforceable structure they can create to provide for the care and/or housing of their pets after the client's incapacity or death. After setting out the provisions of the law, some potential problems will be identified, which some planners may feel can be addressed by drafting around them, and others may feel need to be addressed in the Legislature.

II. A BRIEF HISTORY

Before this year, California estate planners had few ways to help clients create a legally enforceable structure to care for their pets upon their incapacity or death. They could create a trust for a pet, but it was unclear whether courts would enforce it. Former Section 15212 provided that "[a] trust for the care of a designated domestic animal or pet may be performed by the trustee for the life of the animal," which created concern that the trustee's duty was permissive rather than mandatory.⁵ In addition, there was concern that Section 15211 effectively limited pet trusts to a term of 21 years, even though a longer trust term might be necessary for some pets, such as some horses and parrots. Some lawyers tried to draft around the enforceability problem by making the pet's caregiver, rather than the animal itself, the beneficiary, and appointing an independent trustee to ensure that the caregiver was in fact caring for the pet. However, uncertainty remained, making it hard to recommend such a structure to a client.

Some courts attempted to work around the limitations of the law to save gifts to pets, but others have been less sympathetic. For example, one of the early important cases on the admissibility of extrinsic evidence to interpret testamentary instruments, Estate of Russell,⁶ involved a will that provided that the estate was to be divided equally between a certain Mr. Quinn and "Roxy Russell," who turned out to be the testatrix's Airedale Terrier.⁷ The probate court attempted to save the will from the attack by the testatrix's niece by finding that the testatrix intended to leave her entire estate to Mr. Quinn, with the hope that he would take care of Roxy.⁸ The Supreme Court rejected that interpretation, and held that because a dog was not a permissible beneficiary former Section 27, "the attempted gift to Roxy Russell [was] void,"⁹ and the gift passed instead to the niece by intestate succession.¹⁰

By virtue of SB 685, which became effective January 1, 2009, California has a new "animal trust"¹¹ law. Pets like Roxy Russell can now be provided for through fully enforceable pet trusts. Indeed, the new law not only puts animal trusts on par with trusts for humans, in several respects it provides more protection for animal beneficiaries. How various provisions of this well-intentioned law will integrate with one another and with other provisions of the Probate Code (and whether the law will turn probate courts into more of a menagerie than they already are) remain to be seen.

III. NEW SECTION 15212

A. General Provisions

Subdivision (a) of new Section 15212 provides that "a trust for the care of an animal is a trust for a lawful noncharitable purpose." The term "animal" is defined in subdivision (i) as the "domestic or pet animal for the benefit of which a trust has been established." Subdivision (a) provides that unless otherwise set forth in the trust instrument, the trust will terminate "when no animal living on the date of the settlor's death remains alive."

Subdivision (a) instructs courts to construe pet trusts liberally, "to presume against the merely precatory or honorary nature of the disposition," and to carry out the "general intent" of the settlor. It also allows for the admission of extrinsic evidence of the settlor's intent.

The Assembly Judiciary Committee's Analysis described this "non-controversial bill" as follows:¹²

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The pet trust created under this bill would be subject to all of the Probate Code provisions that generally govern trusts. As a result, 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 conduct.¹³

Subdivision (b)(1) provides that "principal or income shall not be converted to the benefit of the trustee or any use other than for the benefit of the animal," unless the trust provides otherwise. Presumably, the Legislature meant that neither the principal nor income may be converted to the benefit of the trustee. In addition, the Legislature presumably did not mean to suggest that trustee compensation violates the proscription on converting principal or income to the trustee's benefit. Nevertheless, as in all trusts, planners should ensure that the trustee's right to compensation in a pet trust is addressed explicitly.

Subdivision (c) provides that on the termination of the trust, the remaining trust assets will be distributed (A) as provided in the trust instrument; (B) pursuant to the residuary clause of a will, if the trust was created in a non residuary clause of a will or codicil; or, if neither (A) nor (B) applies, to the settlor's heirs under Section 21114. Since the anti-lapse provisions of Section 21110 do not apply to Section 21114,¹⁴ only heirs who are alive at the time the pet trust is terminated will take in this circumstance. To the extent a settlor wants a different result, the planner must make sure the trust instrument provides for the result the settlor wishes to achieve.

Before reviewing subdivisions (c), (d), (e) and (f), which are the more...