When it comes right down to it, many people are interested in the welfare of animals. And because the potential herd of litigants has expanded, serving as trustee of a pet trust can be much more perilous than running a trust benefiting humans. With pets, one never knows who will jump the fence and attempt to bite the trustee. Many animal welfare groups are finding that combating trusts in order to commandeer them is quite lucrative.
But why would anybody want to sue a pet trust? An animal-care agency, for example, might well complain about the way trust assets are used. There are strict statutory requirements that trust funds be dedicated to the pet beneficiary and to no one (human or animal) else. The law states that neither the pet trust principal nor income shall be converted to the use of the trustee or to any use other than for the benefit of the animal.
This language is sweeping and its meaning is ambiguous. Existing laws already prohibit self-dealing and require trustees to exercise discretionary powers reasonably. It could be argued that the trustee is not even entitled to compensation unless specified within the trust. Such a result would be harsh indeed, considering that trustees normally are entitled to reasonable compensation when the trust instrument is silent on the issue.
Accountings are required for a pet trust unless the value of its assets is less than $40,000 and the trust instrument does not require an accounting. But, considering that the cost of maintaining a couple of horses can exceed $40,000 annually, attorneys can expect substantial funding of pet trusts.
So here is the real problem: Who’s entitled to the accountings? The answer is the beneficiaries who would be entitled to distribution if the animal were then deceased and to any nonprofit charitable corporation that has as its principal activity the care of animals and that has requested these accountings in writing. Therefore, one can anticipate a rush from organizations interested in animal welfare to regularly request such accountings, to ensure that caretakers for animals are using the trust assets for the benefit the pet involved. It should be noted, as well, that even if the trust instrument itself waives an accounting, a court can still compel one.
Accountings aren’t the only thing a pet trustee has to worry about. The remainder beneficiary, an enforcer named in the trust, and nonprofit charitable animal-care corporations have the right to “inspect the animal, the premises where the animal is maintained, or the books and records of the trust.”
The right of an animal-care corporation to inspect any pet as well as the premises where the pet is maintained is not further defined by the statute. It’s possible that if a person accepts the job of caring for a beneficiary animal and then boards the animal at his or her residence, the right of inspection may well extend to that person’s entire home. Once again, Pet Trusts are a fine target for any alleged animal care group in order to rifle funds for themselves.