PETs & Purpose Trusts

When you think about making provisions for your estate after your death, what will often come to your mind is who should be your executor, trustee, whether there are any money gifts or specific gifts you want to make to family and friends and for those of you with minor children, the appointment of guardians.

We always talk about PETs (Potentially Exempt Transfers), but we should always consider Pets (the furry, scaly, feathered type). You may be pleased to know you can make provisions for them in your Will.

You may decide you want your best friend to look after your three dogs, two cats, two rabbits and your guinea pig on your death. However, you may not have spoken to your friend about your intentions, and your friend may decide the responsibility is too much. It is best to talk to your chosen person during your lifetime to ask if they would be willing to take on the role rather than assuming they will accept this responsibility. Remember, liking dogs is not the same as wanting to have them in their home.

A good idea is also to appoint a substitute beneficiary if the original beneficiary predeceases you or decides at the time that they can no longer look after your pets due to illness or a change of circumstances. Change of circumstances may include moving house, having their own pets, or having young children. Some pets may need to go to different people. Your sister may be willing to take the cat and Cockerpoo but not the lizard, tarantula, or lobster.

The second point to consider is whether you want to make any financial provisions in your Will to care for your pets. Pets can be expensive, including insurance, vet bills (especially as they get older), and feeding (especially where your pet is on a particular diet). This is something to consider when deciding who should inherit your pets. You may, therefore, choose to make a monetary gift to the beneficiary to assist them with the financial expenses of caring for your pets. We would advise that any money gift be made conditional on the basis that the beneficiary chooses to take care of your pets.

As a pet owner, you may have specific wishes regarding how you would like your pets to be cared for. You can set these out in a Memorandum of wishes, but please remember that this is not legally binding.

If no one is suitable to care for your pets, you should consider leaving your pets to a charity instead. The RSPCA runs a well-known ‘home for life’ scheme that people may register their pets with during their lifetime. The executors will notify the RSPCA of your death, and the charity will aim to rehome the pet suitably. This gives you the peace of mind that your pets will be cared for after your death.

Purpose Trust

An alternative to making a monetary gift to your chosen beneficiary is to create an animal purpose trust, a particular type of trust created for the upkeep of specific animals.

It is a well-established principle of law that all non-charitable English trusts must have a beneficiary to enforce the trust and hold the trustee to his obligations. This concept is referred to as the beneficiary principle. A trust that does not have defined beneficiaries and sets out to benefit a specific purpose will be void unless that purpose is solely charitable.

As with most rules, there are exceptions. The two key exceptions to this rule are trusts created for the maintenance of specific animals and trusts created for the upkeep or maintenance of a grave. These purpose trusts are known as ‘trusts of imperfect obligation’ as the objects of the trust are incapable of enforcing them. Harley's puppy dog eyes may be convincing, but not enough to compel a trust performance via court action.

A trust for the maintenance of specific animals is valid. As a trust of imperfect obligation, it must be limited to a maximum period of 21 years. These types of trust are usually drafted to end on the earlier event of the end of the 21 years or the death of the animal. This 21-year period is suitable for the most common household pets, with dogs and cats rarely living past 18. If the testator keeps exotic birds (some live to over 60), tortoises, or other long-lived animals, then this type of trust will not be suitable, and alternative arrangements will need to be made.

A trust for the maintenance and upkeep of a grave is another type of trust of imperfect obligation. In these cases, the purpose is to erect and maintain a grave or monument, so again, there is no beneficiary. If the trust is worded to last indefinitely, it will be void, but if it is limited to 21 years, it is valid.

In both cases, the trusts should be worded so that any remaining funds pass somewhere at the end of the trust. This may be to charity, a specific beneficiary, or the residuary estate. A testator should also be encouraged to write a supporting Letter Of Wishes (LOW) to guide their trustees on how they would like the funds to be used or, in the case of animals, some instructions on how they should be cared for.

The article was written thanks to Manisha Chauhan & Siobhan Rattigan-Smith of the SWW Technical Team.

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