If you are interested in starting a pet trust in California for your beloved animal, you may want to think twice. Pet trusts can cost a lot of money that will not be spent on your dog or cat, due to operating costs and taxes. You should consider an alternative that will still provide for your pet’s care.
Significant Operating Costs for Pet Trusts
If you use a non-family member as the trustee for your pet trust, the fees will quickly eat up much of the money you place in the trust. Most California corporate trustees charge a minimum $10,000 annual fee for their services. Other private trustees such as lawyers may charge less, but they still cost money. If you use a family member as trustee, your trust may lose money if your family member does not wisely invest trust money. Most family members appointed as trustees have to seek out professional financial help to properly manage a trust – and that financial help costs money too.
In addition, trusts must file tax returns every year just like individuals. Your pet trust would need to pay around $700 to $1,200 for tax preparation fees. California law requires that all trusts have annual accountings, which cost around $2,000 to $5,000 for an accountant to prepare. The accounting for a pet trust goes to any beneficiaries who would be entitled to trust distributions if your pet died, and to any nonprofits that care for animals and request the accounting. (See Cal. Probate Code § 15212(e).)
Unless you plan to leave a significant amount of money to the pet trust, your trust could run out of money within a few years of your death. For example, after five years your trust could have paid $50,000 in trustee fees, $5,000 in tax preparation fees, and $10,000 in annual accounting fees – and your pet could live for many more years.
Alternatives to Pet Trusts
Instead of a traditional pet trust under California law, you can choose a different way. Consider choosing a trusted family member or friend to care for the pet. You can leave him or her money for the pet in your will,. Since you will not be around to make sure your pet is well-cared for, condition the gift of money on your relative or friend’s agreement to take care of your pet. If he or she does not agree, then the money goes to a “residual beneficiary” – a no-kill shelter or animal welfare organization. Also, leave some money to that organization that it can use to check on your pet at unannounced times, to make sure it has a happy home.
Planning your estate and thinking about forming a pet trust? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.