California Joins 37 Other States To Enforce Horse Trusts

By James P. Harrison, Esq.

On Tuesday July 22, 2008, Governor Schwarzenegger signed into law California legislation, that provides for the judicial enforcement of trusts created by owners for the continued care of their horses after the owner dies.  SB685, sponsored by the San Francisco Society for the Prevention of Cruelty to Animals (SFSPCA), enacts detailed provisions for the creation and enforcement of trusts for domesticated or pet animals. [i]

Human beneficiaries to a trust can go to court to enforce its written terms.  However, non-human beneficiaries to a trust require an advocate, and this California legislation provided for just that.  The trust document can name, or the court can now appoint, an “enforcer” to compel the terms of the trust.  Other roles in these trusts involve a “trustee” who handles the money, and the “caretaker” who provides for the animal’s day-to-day needs.

Owners are increasingly seeking to ensure that their animals are cared for after the owner's death or disability. While informal arrangements with family or friends may be made, some create detailed trusts that set aside money for their care. While leaving an animal, along with the funds for its care, in a will to someone is a possibility, concerns involving enforceability, the clarity of instructions, and nagging “what if” questions, like what if the person I pick can’t do it or their heirs don’t continue to do so, is a concern to many.[ii] The sponsor states that this bill ensures that those designated within the trust are protected and cared for as the owner intended and are not sent unnecessarily into the shelter system.  Funds left over after the animal’s life are often donated, using the trust’s instructions, to animal related charities.

Horses are expensive to keep and live relatively long lives.  One way to fund horse trusts has been to make the trust the recipient of life insurance proceeds.  A typical 20 year fixed term $200,000 policy for a healthy 40 year old woman costs roughly $200 a year in fixed premiums.  This also generally allows the plan for an animal’s care to exist outside the owner’s estate, and therefore not be included in probate proceedings should there be any.

Currently, these sorts of trusts are enforceable in 37 states including: Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Massachusetts, Michigan, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, and Wyoming.[iii]

With over 700,000 horses in California, some of them are bound to see the grazing ahead as just a bit more worry free.[iv] Horse rescue organizations, named as “remainder beneficiaries” to these trusts, see this change in the law as facilitating a new source of donations.  All around, SB 685 was a great idea and enjoyed universal support.