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Animal Law: Research Problem #2

Research Problem #2

Multi-millionare heiress Paris Hilton comes to your law office in Dallas, Texas to draft a pet trust for her beloved chihuahua Tinkerbell. How do you advise her?

Research Strategy

To answer this research question, I used "A Guide to Texas Pet Trusts" by Gerry W. Beyer. You can download the PDF document with the entire guide for free via the Social Science Research Network here. Though the guide covers Texas pet trust law, the appendix at the end contains all of the statutory trust provisions of other states that have enacted them.

Like many other states, Texas has enacted a statutory pet trust codified in V.T.C.A., Property Code § 112.037. (Citation from Westlaw). 

Sample Traditional Trust

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A.

ARTICLE [] [name of animal] TRUST

Conditions of Creation

This trust is to be created upon the conditions stated in Article []. 

B. Governing Law

This trust is to be governed by [name of state] law unless this Article provides to the contrary. 

C. Trustees

I appoint [primary trustee] as the trustee of this trust. If [primary trustee] is unwilling or unable to serve, I appoint [alternate trustee] as trustee. 

D. Bond

No bond shall be required of any trustee named in this Article. 

E. Trustee Compensation

The trustee shall be entitled to reasonable compensation from the trust for serving as trustee.

[or]

No trustee shall be entitled to compensation for serving as trustee. 

F. Beneficiaries of Trust

[Caregiver] is the beneficiary of this trust provided [Caregiver] receives [name of animal] into [his] [her] home and provides [animal] with proper care as defined in Section G of this Article. The trustee shall deliver [animal] into [Caregiver’s] possession after securing a written promise from [Caregiver] to provide [animal] with proper care. If [Caregiver] (1) dies, (2) is unable to provide [animal] with proper care, or (3) is not providing [animal] with proper care, [alternate beneficiary] will then become the beneficiary of this trust provided [alternate beneficiary] provides [animal] with proper care. [continue in like manner for additional alternates]

If there is no qualified alternate beneficiary, [allow the trustee to select caregiver, other than the trustee] [create animal care panel to select caregiver] [donate animal]. 

G. Proper Care

Proper care means [description of care including, for example, requirement of regular visits to a veterinarian].

The trustee shall visit [caregiver]’s home at least [monthly] [quarterly] [annually] to make certain [animal] is receiving proper care. If in the trustee’s sole discretion [animal] is not receiving proper care as defined above, trustee shall immediately remove [animal] from the beneficiary’s possession and deliver the animal to the alternate beneficiary. 

H.

Distribution of Trust Property While [Animal] is Alive

1. Care of [Animal]

The trustee shall distribute [amount] to the beneficiary each [month] [year] provided the beneficiary is taking proper care of [animal] as defined in Section G of this Article.

[or]

The trustee shall reimburse [caregiver] for all reasonable expenses [caregiver] incurs in the proper care of [animal] as defined in Section G of this Article. Reasonable expenses include, but are not limited to, [food, housing, grooming, medical care, and burial or cremation fees.]

[2. Caregiver Compensation]

The trustee [shall] [may] pay [dollar amount] to trustee on a [monthly] [annual] basis provided [caregiver] is taking proper care of [animal] as defined in Section G of this Article.

[3. Liability Insurance]

The trustee [shall] [may] use trust property to purchase liability insurance to protect the trust, the trustee, and [caregiver] from damage [animal] causes to property or persons.]

[4. Offspring of [Animal]]

The trustee [shall] [may] [shall not] use trust property to reimburse [caregiver] for

expenses associated with any offspring of [animal]. 

[5. Excess Principal]

If a court determines that this trust contains excess property and orders the trustee to distribute that property other than as described above, then that excess shall be distributed under Subsection (I) as if this trust were terminating] [to [name of beneficiary]]. 

I.Termination of Trust

This trust terminates on the earlier of (a) 21 years after [testator’s] death, or (b) upon the death of [animal].

[consider including how death of animal is to be proved, e.g., death certificate from a vet]

[consider having trust also terminate when animal is deemed “lost” – require evidence to prove loss of pet, e.g., copies of police reports, ads in newspapers seeking the pet’s return, copies of posters placed in the community, etc.] 

J. Distribution of Property Upon Trust Termination

The trustee shall not be liable for any loss, cost, damage, or expense sustained through any error of judgment or in any other manner except for, and as a result of, a trustee’s own bad faith or gross negligence.

[Note: Additional provisions will be necessary if the animal and its offspring are valuable from a monetary standpoint.]

K. Spendthrift Provision

This is a spendthrift trust, that is, to the fullest extent permitted by law, no interest in the income or principal of this trust may be voluntarily or involuntarily transferred by any beneficiary before payment or delivery of the interest by the trustee. 

L. Principal and Income

The trustee shall have the discretion to credit a receipt or charge an expenditure to income or principal or partly to each in any manner which the trustee determines to be reasonable and equitable. 

M. Trustee Powers

The trustee shall have [all powers granted to trustees under [name of state] law.

[or]

The trustee shall have the following powers: [enumerate trustee powers] 

N.

Exculpatory Clause

The trustee shall not be liable for any loss, cost, damage, or expense sustained through any error of judgment or in any other manner except for, and as a result of, a trustee’s own bad faith or gross negligence.

[Note: Additional provisions will be necessary if the animal and its offspring are valuable from a monetary standpoint.] 

Answer

The sample provided in the guide is a useful starting point. Additional clauses could be discussed, but this would cover some of the basic cocnerns mentioned in a pet trust. Ms. Hilton would have to determine who she would want to serve as a trustee to the trust as well as who the beneficiary, or caregiver of the animal should be. If Ms. Hilton would not want to make all of these decisions or concern herself with going through the process entailed in the sample trust, because Texas has a statutory pet trust law that could fill in the gaps and a simple provision such as "I leave $5,000* to the care of my dog, Tinkerbell" could be enforceable. However, because Ms. Hilton is so concerned about the care of Tinkerbell, she may want to utilize the traditional pet trust to exercise more control over the process. Based on her visit with you today as well as the infinite amount of funds she has, Ms. Hilton will likely want to choose an inter vivos pet trust (in effect immediately as opposed to upon her death and during the probating of her will). Inter vivos trusts do have start up costs associated with them, so advise Ms. Hilton accordingly. You would also want to discuss funding options for the trust such as direct transfers while she is alive, a pour over will provision, or naming the trustee, in trust, as the beneficiary of a life insurance policy. The types of care the client will want to include in the trust will be of utmost importance as well. Things such as food and diet, cages, grooming, socialization, medical care (name the veterinarian), how to identify the animal, and what to do with the animal's remains when it passes away should all be among the many variables to consider. Ask Ms. Hilton to name alternate trustees and beneficiaries as well, and to check with the primary trustee and beneficiary before moving forward with the execution and creation of the trust. 

 

*Note: Though Ms. Hilton is wealthy, it is not wise to put too much money into the trust. The more the money, the higher the likelihood the trust will be contested and courts have lowered excessive amounts in pet trusts. Advise her accordingly and discuss pragmatic financing options for Tinkerbell's continued care in the event of Ms. Hilton's death or incapacity.