Estates & Wills & Trusts

Consider a 'purpose trust' to provide for your pet

If you want to provide for your pet in your will, Toronto trusts and estates lawyer Suzana Popovic-Montag tells Lawyers Weekly that trusts can be incredibly flexible devices that can provide more peace of mind.

The legal publication reports statistics that show almost 60 per cent of Canadian households owned pets — roughly 5.9 million dogs and 7.9 million cats.

“While those animals will bring joy and the occasional furball into their owners’ lives, the sad reality is that some owners will predecease their much-loved additions to the family,” says Lawyers Weekly. “In preparing for this potentiality, owners will discover the law can help them do this through their estate planning — and hinder them."

Pets are the equivalent of property under Canadian law, the article states, and in turn, property cannot own other property. As a result, pet owners are not legally able to leave money to their animal companions.

“Gifts in a will to a pet directly will probably fail and the gift may fall back into the residue of the estate, if a bequest fails, or may be distributed according to the rules for intestate succession,” Popovic-Montag tells the legal trade publication.

She notes that in most cases, a family member or friend will simply adopt the pet and continue to care for it. In some cases, this is arranged ahead of time. In others, the family will figure out what to do with the pet after the death.”

Popovic-Montag, managing partner of Hull & Hull LLP, says the simplest approach is to leave money in the will for an individual and complement that gift with a wish that the pet be taken care of. However, she says this approach has inherent risks.

“Wishes of this kind are probably not enforceable at law,” she says. “The owner will have to trust the person to do the right thing with the money.”

Lawyers Weekly reports that in most U.S. states, owners have the options of creating a pet trust that provides for the care and maintenance of their animals in the event of their owner’s disability or death. While this structure is not legal in Canada, owners can set up a “purpose trust” — money that is set aside with a specific intent attached. Under this purpose trust, one person is given the money as trustee to hold for the benefit of the person caring for the pet.

“As money is needed for the care of the pet, the trustee releases it to the caregiver,” Popovic-Montag tells the publication. “The trust will also stipulate what happens to any money left over on the death of the pet or after a certain period of time.”

Trusts may also give pet owners more peace of mind, the article says. If a trustee is not doing his or her job, or is putting the pet in jeopardy, the trustee can be removed and replaced by a court.

“Trusts are incredibly flexible devices,” says Popovic-Montag. “If there is a concern that the caregiver will not take good care of the animal, the trust can give the trustee the discretion to withhold payments and maybe even to transfer care of the pet to another person.”

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