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Financial Planning > Trusts and Estates > Trust Planning

Pets Can Be Beneficiaries Too

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What happens to Max or Fluffy when their owner dies? The Humane Society of the United States, Humane Society Legislative Fund, and Doris Day Animal League have called on Congress to pass legislation that would allow animal guardians to provide lifelong care for their pets who survive them. In response, U.S. Representatives Earl Blumenauer (D-Oregon) and Jim Ramstad (R-Minnesota) introduced legislation that would help dog and cat owners prepare for their pets’ future.

If passed, the Charitable Remainder Pet Trust Act would revise the Internal Revenue Code so that a companion animal may be the beneficiary of a charitable remainder annuity trust. When the animal beneficiary of this trust dies, the remainder interest goes to the charity of choice as indicated in the trust, such as a humane society or animal shelter.

“Sixty-three percent of American households have pets, and up to a quarter of those families include pets in their wills,” said Blumenauer in a statement. “While 39 states and the District of Columbia allow pet trusts, the federal tax code does not recognize them.”

Pet trust provisions differ by state, but the federal tax code does not currently recognize the validity of these trusts. The Internal Revenue Code views companion animals as “property” and one piece of property cannot hold title to another. Therefore the federal government does not allow a companion animal to be the sole beneficiary of either a will or a trust.

The bill will recognize valid pet trusts under existing state laws as potential charitable remainder annuity trusts (CRATs), assuming all other IRS rules regarding such instruments are satisfied.


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