Many Pet Owners Use a Charitable Remainder Trust For Funding Their Pet Trusts
When you use charitable remainder trust to fund a pet trust, you set up a trust and transfer to it the property you want to donate to the charity of your choice.
The charity needs to have a tax-exempt status under the Internal Revenue Code and must be fully accepted and approved by the IRS.
The charity serves as trustee of the trust, and manages or invests the property so it will produce income for you
The charity then pays to your Trustee of your pet trust, a portion of the income generated for a certain number of years, or for the duration of your pet trust.
When the trust ends, the remainder of the property goes to the charity.
There can be some beneficial tax treatment and this is a very popular type of trust.
Consult your attorney and your accountant before you begin this process.
Alabama Code Protection for Pets Trusts
On January 1, 2007, Alabama became the 16th state to adopt the Uniform Trust Code. In doing so, the “Yellowhammer State”* adopted the Trust language of the Uniform Trust Code to allow for a Trust for the Care of an Animal.
The Comment to the Code states that the purpose is to validate so called honorary trusts. Unlike honorary trusts created pursuant to the common law of trusts, which are arguably no more than powers of appointment, the trusts created by this and the next section are valid and enforceable.
Additionally, the Code provides that a trust for the care of an animal may last for the life of the animal. While the animal will ordinarily be alive on the date the trust is created, an animal may be added as a beneficiary after that date as long as the addition is made prior to the Settlor’s death. Animals in gestation but not yet born at the time of the trust’s creation may also be covered by its terms. A trust authorized by this section may be created to benefit one designated animal or several designated animals.
We have recently discussed, here and here, the close relationship in the ongoing ever changing legal theories for treatments of pets as mere chattel or more akin to a family member.
It is interesting to note that additional Comments to the Alabama Code state in part…
Non-charitable trusts ordinarily may be enforced by their beneficiaries. Charitable trusts may be enforced by the state’s attorney general or by a person deemed to have a special interest. But at common law, a trust for the care of an animal or a trust without an ascertainable beneficiary created for a non-charitable purpose was unenforceable because there was no person authorized to enforce the trustee’s obligations…The intended use of a trust authorized by either section may be enforced by a person designated in the terms of the trust or, if none, by a person appointed by the court. ..If the trust is created for the care of an animal, then a person with an interest in the welfare of the animal has standing to petition for an appointment. The person appointed by the court to enforce the trust should also be a person who has exhibited an interest in the animal’s welfare. The concept of granting standing to a person with a demonstrated interest in the animal’s welfare is derived from the Uniform Guardianship and Protective Proceedings Act, which allows a person interested in the welfare of a ward or protected person to file petitions on behalf of the ward or protected person. See, e.g., UNIFORM PROBATE CODE §§ 5-210(b), 5-414(a)… (our emphasis)
We generally think of humans as seeking protection under a Guardianship or Protective Order proceeding.
In the Code the protection afforded a ward or protected person is also granted to an animal!
(Alabama has been known as the “Yellowhammer State” since the Civil War. The yellowhammer nickname was applied to the Confederate soldiers from Alabama when a company of young cavalry soldiers from Huntsville, under the command of Rev. D.C. Kelly, arrived at Hopkinsville, KY, where Gen. Forrest's troops were stationed. The officers and men of the Huntsville Company wore fine, new uniforms, whereas the soldiers who had long been on the battlefields were dressed in faded, worn uniforms. On the sleeves, collars and coattails of the new cavalry troop were bits of brilliant yellow cloth. As the company rode past Company A, Will Arnett cried out in greeting "Yellowhammer, Yellowhammer, flicker, flicker!" The greeting brought a roar of laughter from the men and from that moment the Huntsville soldiers were spoken of as the "yellowhammer company." The term quickly spread throughout the Confederate Army and all Alabama troops were referred to unofficially as the "Yellowhammers.")
The Comment to the Code states that the purpose is to validate so called honorary trusts. Unlike honorary trusts created pursuant to the common law of trusts, which are arguably no more than powers of appointment, the trusts created by this and the next section are valid and enforceable.
Additionally, the Code provides that a trust for the care of an animal may last for the life of the animal. While the animal will ordinarily be alive on the date the trust is created, an animal may be added as a beneficiary after that date as long as the addition is made prior to the Settlor’s death. Animals in gestation but not yet born at the time of the trust’s creation may also be covered by its terms. A trust authorized by this section may be created to benefit one designated animal or several designated animals.
We have recently discussed, here and here, the close relationship in the ongoing ever changing legal theories for treatments of pets as mere chattel or more akin to a family member.
It is interesting to note that additional Comments to the Alabama Code state in part…
Non-charitable trusts ordinarily may be enforced by their beneficiaries. Charitable trusts may be enforced by the state’s attorney general or by a person deemed to have a special interest. But at common law, a trust for the care of an animal or a trust without an ascertainable beneficiary created for a non-charitable purpose was unenforceable because there was no person authorized to enforce the trustee’s obligations…The intended use of a trust authorized by either section may be enforced by a person designated in the terms of the trust or, if none, by a person appointed by the court. ..If the trust is created for the care of an animal, then a person with an interest in the welfare of the animal has standing to petition for an appointment. The person appointed by the court to enforce the trust should also be a person who has exhibited an interest in the animal’s welfare. The concept of granting standing to a person with a demonstrated interest in the animal’s welfare is derived from the Uniform Guardianship and Protective Proceedings Act, which allows a person interested in the welfare of a ward or protected person to file petitions on behalf of the ward or protected person. See, e.g., UNIFORM PROBATE CODE §§ 5-210(b), 5-414(a)… (our emphasis)
We generally think of humans as seeking protection under a Guardianship or Protective Order proceeding.
In the Code the protection afforded a ward or protected person is also granted to an animal!
(Alabama has been known as the “Yellowhammer State” since the Civil War. The yellowhammer nickname was applied to the Confederate soldiers from Alabama when a company of young cavalry soldiers from Huntsville, under the command of Rev. D.C. Kelly, arrived at Hopkinsville, KY, where Gen. Forrest's troops were stationed. The officers and men of the Huntsville Company wore fine, new uniforms, whereas the soldiers who had long been on the battlefields were dressed in faded, worn uniforms. On the sleeves, collars and coattails of the new cavalry troop were bits of brilliant yellow cloth. As the company rode past Company A, Will Arnett cried out in greeting "Yellowhammer, Yellowhammer, flicker, flicker!" The greeting brought a roar of laughter from the men and from that moment the Huntsville soldiers were spoken of as the "yellowhammer company." The term quickly spread throughout the Confederate Army and all Alabama troops were referred to unofficially as the "Yellowhammers.")
