Types of Sub-Trusts: What is a Pet Trust?

Estate planning is a way to care for our loved ones after we pass away. And for many of us, those loved ones include the pets who offer us companionship, comfort, and unconditional love. It only makes sense that we include them in our estate plan.

However, under the law, pets are considered property, and property cannot receive an inheritance. In other words, your pet cannot directly receive money or assets you leave behind, no matter how much you may want to provide for them.

So, what can you do to ensure your pet’s well-being when you’re no longer around? Set up a pet trust.

Continuing our sub-trust series, this blog explores the pet trust, a powerful estate planning tool designed to care for your furry (or feathered or scaly) companions long after you’re gone.

What is a Sub-Trust?

First, let’s define what a trust and sub-trust are: A trust is a legal arrangement where you, the trustor or grantor, assign a trustee to hold and manage assets on behalf of a beneficiary according to your terms. A sub-trust is a trust created as part of a larger, main trust structure. 

Sub-trusts serve specific purposes while remaining governed by the general terms and provisions of the main trust. You can learn more about sub-trusts in our comprehensive blog here.

Pet Trust Explained: How a Pet Sub-Trust Works

Just like any other sub-trust under a larger revocable living trust, a pet sub-trust is activated under certain conditions, such as your death or incapacity, and managed according to your instructions. The only difference is that this trust is created for the benefit of your pet, with specific roles and rules to ensure your pet receives proper care for the remainder of its life.

Here’s how a typical pet sub-trust works:

1. You name a caregiver.

This is the person who will take physical custody of your pet and provide daily care. Name the person you trust the most to care for your pet in your place. Make sure that they are capable and willing to fulfill this role upon your passing.

2. You appoint a trustee.

The trustee will manage the funds you allocate for your pet’s care. They will also be responsible for ensuring the caregiver is using these funds as intended and following your instructions as outlined in the trust.

3. You fund the sub-trust.

Fund your pet sub-trust by setting a specific amount of money within your main trust that will be transferred upon your death or incapacity. This amount can vary depending on your pet's needs, life expectancy, and other considerations.

4. You set care instructions.

Include detailed instructions on your pet’s care to guide the caregiver. Specify directions on diet, exercise, grooming, preferred veterinarian, medications, routines, and even preferences like favorite toys or treats. By doing so, you ensure continuity and comfort for your pet.

5. You name a remainder beneficiary.

Upon the death of your pet, any remaining funds will go to the remainder beneficiary. Often, this beneficiary is a family member or an animal welfare group, but it can be any person, charity, or organization of your choice. 

Types of Pet Trusts

While the core purpose of a pet trust remains the same, which is to ensure your pet’s care after your passing, the way it’s structured can vary. Just as every pet is unique, so too are the options for providing for them through your estate plan. Here are the three most common types of pet trusts:

Honorary 

An honorary pet sub-trust is the simplest form you can set up. However, it is also the riskiest because it offers minimal legal protection for your pet. 

In this arrangement, you leave a specific amount of money to the person who will take custody of your pet after your death. The idea is that they’ll use the funds to care for your pet, but there’s no legal obligation for them to do so. 

This type of trust relies entirely on the good faith of the caregiver. There is a significant risk that the funds could be misused, as courts in most jurisdictions do not enforce honorary trusts. While this approach may work in informal or low-risk situations, it offers minimal legal protection for your pet.

Traditional

A traditional pet trust offers the highest level of control, structure, and legal enforceability.

In this setup, you can:

• Name a caregiver 

• Appoint a trustee 

• Designate a remainder beneficiary

• Provide detailed care instructions 

The trustee is legally obligated to oversee and manage funds specifically for your pet’s benefit. This pet trust type is the most robust and legally enforceable option. If you want maximum control, accountability, and peace of mind, then this is for you.

Statutory

Many states, including Arizona, have passed laws that recognize statutory pet trusts, making this type a legally valid and accessible option.

In this setup, you create the pet trust under state statutes or legal framework. The trust remains valid, even in the case of missing details. Courts can fill in these details, designate caregivers, and interpret the trust in the pet’s best interest.

While it may offer less customization than a traditional pet trust, a statutory pet trust is a reliable fallback for those seeking basic legal protections without extensive planning.

Pet Sub-Trust FAQs

Q: Can I include more than one pet in one sub-trust?

A: Yes. A pet sub-trust can cover multiple pets, and you can include care instructions for each one. Be sure to allocate enough funds based on the collective needs of all animals named.

Q: What happens if the funds are not enough and run out?

A: If the funds are depleted within your pet’s lifetime, the caregiver is not legally required to continue providing care. They may volunteer to care out of their own expense. This is why it’s important to estimate your pet’s lifetime care costs carefully and possibly create a backup plan, like naming an alternate caregiver or animal rescue organization. Instruct your trustee to use their discretion and access other trust assets if needed.

Q: Is a pet trust only for traditional pets like cats or dogs?

A: No. Pet trusts can be created for any legally owned animal, including birds, horses, reptiles, or exotic pets. The key is to tailor the care instructions and funding to that pet’s specific needs.

Q: Is a pet sub-trust transferable if my pet has offspring, or if I get a new pet?

A: Generally, no. A pet sub-trust only covers the specific animals named or clearly identified in the trust document. Additional pets will not automatically be covered unless your trust is written to include them, stating “any current and future pets I own”. To ensure all intended pets are protected, it's best to review and update your estate plan regularly or include flexible language that allows the trust to apply to future or replacement pets.

Q: Do I need to file a pet sub-trust with the court?

A: No. As a part of a living trust, a pet sub-trust is a private document. As long as it’s properly set up, it becomes effective without needing court approval. It only becomes part of court proceedings if there’s a dispute or if the trust terms are challenged. 

Estate Plans that Protect Every Member of Your Family, Including Your Pets

Your pets are loyal companions and beloved members of your family. Just like your loved ones, they must be included in thoughtful estate planning to ensure they get the care, love, and stability they’re used to, no matter what happens in the future. 

Ready to take the next step? Let Rilus Law help you create an estate plan that looks after every member of your family. Contact us to schedule a free consultation today!