According to a recent article in Forbes, a whopping 66% of U.S. households (86.9 million homes) own a companion pet. In the past three decades, pet ownership in the U.S. has increased significantly. A large part of the growth in pet ownership took place during the recent Covid 19 pandemic. [1]

It is rumored that the recently deceased former Golden Girl, Betty White’s estate plan included trusts for her beloved animals. All that unconditional love from your pet may have you thinking about your pet’s needs in the event of your incapacity or death. You may not have Betty White’s net worth, but you can still provide for your furry, feathered, and scaled friends, much in the same way it is rumored that Betty White may have provided for her beloved pets. For many people, planning for a pet is as important as planning for children.

In Texas, pets are considered personal property. Up until 2005 when Texas enacted its pet trust statute, only humans could inherit at a person’s death and the options available for planning for a pet were limited to those provided under common law. Prior to 2005, most Texas pet trust planning consisted of a monetary donation to a trusted friend or family member, along with the bequest of the pet. This common law planning had many faults and relied solely upon the trust of the beneficiary to ensure that the wishes of the deceased or incapacitated pet owner were followed through. Such common law trusts had no enforceability, meaning that there is no one who could legally sue to defend the rights of a tortoise if the beneficiary failed to follow through in caring for the gifted pet and absconded with the grantor’s gifted funds.

The underlying problem with Texas pet trusts up until 2005, had to do with something called the Rule Against Perpetuities. The Rule Against Perpetuities is a legal limitation for the period a trust can exist until it must terminate.

An interest in a Texas trust can only remain in trust no longer than 21 years after the selected “life in being” at the time of the creation of the interest.  If the interest in trust violates this rule, the trust is invalid. Well, what the heck is a life in being? A life in being is typically the life of a particular person (as a lineal descendant) in existence at the time of the creation of the trust or at the death of a testator. A life in being is based upon a human’s lifetime, thus, an animal cannot be the measuring life in being for a trust.

Texas Property Code Section 112.037 was enacted in 2005, became effective January 1, 2006, and provided the first permissible trust for the benefit of an animal. Section (a) of 112.037 provides: “A trust may be created to provide for the care of an animal alive during the settlor’s lifetime. The trust terminates on the death of the animal or, if the trust is created to provide for the care of more than one animal alive during the settlor’s lifetime, on the death of the last surviving animal.”[2] The caveat being that the trust is only for the benefit of those pets living at the death of the testator, and not for the future offspring of such pets. Any assets remaining in the trust at the death of the pet shall be distributed pursuant to the trust agreement, otherwise Section 112.037 provides for a standard terminating residual distribution, namely, the grantor, otherwise, as provide for the residual estate in the grantor’s will, or to the grantor’s heirs at law. The lives in being used to determine the maximum duration of pet trust, are the individual beneficiaries of the trust, the individuals named in the trust, and the grantor or the grantors living at the time the trust becomes irremovable, or if the grantors are not living at the time the trust becomes irrevocable, then the individuals who would inherit the grantor’s property under the law of the state had the grantor died intestate at the time the trust becomes irrevocable.

A pet trust is drafted similarly to a person’s trust instrument including administration of trust, care and custody planning, medical care, and other related instructions. Ideally, a pet trust is funded with enough assets to assist with the caretaking and expenses needed for the pet’s expected lifetime. Many grantors opt to name a pet charity as the residual distributee of the pet trust upon the death of the pet beneficiary.

As with revocable trust planning, a pet trust requires special attention to the Texas Property Code. Traditional pet trusts instruct the trustee to help the person caring for the pet by paying for the pet’s expenses according to the grantor’s directions for so long as the pet is being properly cared for. Pet trusts can be created at any time during the grantor’s life becoming effective immediately (inter vivos trust), or they can be a testamentary trust, which is effective upon the testator’s death. Both inter vivos and testamentary trusts have their advantages and disadvantages. Although an inter vivos trust may incur higher startup costs and administrative costs, the grantor has the comfort of knowing that their inter vivos trust can care for their pet in the event of their incapacity. As opposed to testamentary trusts which are less expensive because they are not effective until the grantor’s death. However, there may be a period between the grantor’s death and when the will is probated leaving a gap in the custody and care of the testator’s pet with the use of a testamentary trust.

As a pet owner, you have the right to do whatever you choose with your estate, including providing for your furry, feathered, and scaled companions. However, to navigate the unique issues surrounding a pet trust or other mechanisms to provide for your companion animals, you should seek a knowledgeable attorney to assist you.

[1] Pet Ownership Statistics 2023 by Michelle Megna, as published in Forbes Advisor April 10, 2023. https://www.forbes.com/advisor/pet-insurance/pet-ownership-statistics/#:~:text=to%20pet%20ownership%3A-,As%20of%202023%2C%2066%25%20of%20U.S.%20households%20(86.9%20million,acquired%20pets%20during%20the%20pandemic.

[2] Texas Property Code § 112.037(a)