by Morgan Wiener
While Trouble, Leona Helmsley’s dog who was left a $12 million trust fund in the late hotelier’s will, may be the most famous four-legged multi-millionaire, Colorado canines can also benefit from trusts created by their owners. An owner concerned about what will happen to his pets after his death or incapacity may, under Colorado law, provide for his pets by trust or will.
Historically, trusts for the benefit of animals were deemed invalid; however, they are now valid in a majority of states. Section 15-11-901 of the Colorado Probate Code specifically recognizes the validity of a trust created for the benefit of the settlor’s pets. This section states that “a trust for the care of designated domestic or pet animals and the animals’ offspring in gestation [at the time the animal becomes a present beneficiary of the trust] is valid.” Consistent with other sections of the Colorado Probate Code, this section places primary importance on the settlor’s intent and provides that “[a] governing instrument shall be liberally construed to bring the transfer within this subsection…, to presume against the merely precatory or honorary nature of the disposition, and to carry out the general intent of the transferor. Extrinsic evidence is admissible in determining the transferor’s intent.”
One of the issues that used to militate against the validity of pet trusts (other than the fact that the beneficiaries were not human) was the rule against perpetuities. The concepts of lives in being and measuring lives were difficult to apply to a trust whose main focus was animal lives. For example, should a dog who outlived the settlor by a number of years count as a measuring life for determining the trust termination date? Section 15-11-901 addresses this problem by providing both that pet trusts are an exception to statutory and common law rules against perpetuities and that, unless the trust provides for an earlier termination, the trust shall terminate when there is no living animal covered by the trust.
The statue also provides guidance on the administration of the trust. For example, § 15-11-901(3)(b) provides for distribution of the trust upon termination, and § 15-11-901(3)(a) cautions that except for (1) reasonable trustee fees, (2) expenses of administration, or (3) as expressly provided in the trust, no portion of principal or income may be used for anything other than the benefit of the animal. Section 15-11-901(3) also addresses the designation of trustees and other persons to enforce the trust. In these ways, the Colorado Probate Code treats pet trusts very similarly to more traditional trusts and suggests that, if a dispute were to arise regarding a pet trust, standard principles and rules governing trusts would apply.
In addition to using trusts, a pet owner may also provide for the care of his pets in a will. Although there is no section similar to 15-11-901 addressing bequests to and of pets in a will, there is also no provision of the Colorado Probate Code that suggests such bequests would be invalid.
In addition to being part of the estate planning process, pets can also have a part in estate litigation. For example, in connection with a will contest, our office has used the inclusion of provisions for the care of the decedent’s pets as evidence that the decedent intended a holographic will to be his will. We have also litigated issues about the ownership of animals in formal estate proceedings.
Although there are no reported decisions on § 15-11-901, pet trusts have been the subject of estate proceedings in other jurisdictions. The executors of Leona Helmsley’s estate, for instance, petitioned the court to reduce the size of Trouble’s trust fund. New York law governing pet trusts allows the court to reduce the amount of principal in a pet trust if it is determined that the amount substantially exceeds what is required for the care of the pet. What is considered excessive can certainly vary, as Trouble’s annual expenses were estimated to be around $200,000. Not to worry though, the New York court left $2 million in Trouble’s trust, ensuring that he could continue to live in luxury and would not spend the rest of his days as a paw-per.