All About Estates

Estate Planning for Pets

Today’s blog was written by K. Thomas Grozinger, LL.B, C.S., TEP[1]
Principal Trust Specialist, Professional Practice Group
RBC Estate & Trust Services

Will the holiday season bring a new pet into the family scene? Pets are often considered part of the family, with one survey suggesting that almost 20% of dog owners celebrate their pet’s birthday![2] So it’s no surprise that Canadians want to make sure that their pets are well cared for after they are gone.

Pets are Considered Personal Property at Common Law, but Quebec law considers animals to be sentient beings!

Canadian common law considers pets to be personal property. Consequently, they do not have capacity to receive gifts made in wills.

In Quebec, An Act to improve the legal situation of animals (Bill 54) introduced Article 898.1 into the Civil Code of Quebec: “Animals are not things. They are sentient beings and have biological needs.” However, it appears that this does not give animals in Quebec legal personality per se such that they can be the recipients of gifts. In fact, Article 898.1 continues: “…the provisions of this [Civil Code of Quebec] concerning property nonetheless apply to animals.” [emphasis added]

Testamentary Gift to a Trusted Family Member or Friend

One planning technique is to gift your pet to a trusted individual along with money to care for the animal during your pet’s life. This is a simple and effective solution, provided that your beneficiary does not die before your pet or becomes insolvent or bankrupt (with the result that the gifted money might benefit creditors instead).

Pet Trusts?

Canadian jurisdictions (other than Quebec)

Because animals are considered personal property, a trust designed to benefit a pet would, at common law, be considered a “purpose” trust. Such a trust would not be considered charitable, and is therefore described as a “non-charitable purpose trust.”

A non-charitable purpose trust for the maintenance of a specific pet is one of the very limited categories of non-charitable purpose trusts considered valid at common law, even though such trusts may not have a beneficiary who can enforce the trust. But, while such trusts may be validly created, they are still subject to the rule that they cannot last longer than the relevant perpetuity period.[3]

Such trusts can generally only exist for a period of 21 years from their creation (except in those provinces that have abolished the rules against perpetuities, namely, Manitoba, Nova Scotia and Saskatchewan, and those where the perpetuity period may be longer, e.g., 60 years in Prince Edward Island)[4]. With cats, horses, turtles, and some other pets having the potential to live beyond 21 years, a pet trust may not achieve your pet care objectives.

Since pets cannot enforce the terms of the trust, there is no guarantee that the trustee you appoint will carry out the trust’s terms. This risk may be mitigated with the appointment of a protector whose role is to supervise the trustee; naming an alternate trustee to take over in case your initial trustee dies is also prudent.

Not to be overlooked are tax considerations for validly created pet trusts, including the requirement for trustees to generally file annual tax returns under Canadian income tax rules.

Quebec

It appears that in Quebec “private trusts” could be used to benefit a specific pet.[5] Such trusts would be considered similar to the common law non-charitable purpose trusts described above,[6] except that Quebec law permits private trusts to be perpetual. [7]

Pet Foster Programs

Another option is to check with your local Humane Society as to whether it has a foster program. For example, the Ottawa Humane Society (OHS) offers the Ottawa Humane Society Pet Stewardship Program. This allows a pet owner to make a testamentary gift of the pet to the OHS. The OHS will take custody of the pet and search for an appropriate caregiver, having regard to the pet owner’s wishes, with whom to place the pet. The OHS will then monitor the pet and arrange to take the pet back if there are issues with the care being provided.

What if You Become Incapable?

Don’t forget to plan for your pet should you become incapacitated. Consider putting instructions in your enduring or continuing Power of Attorney for Property (Protection Mandate in Quebec), which enables your appointed attorney (mandatory in Quebec) to manage your assets and property, including care for your pet.

Another suggestion is to keep a card in your wallet that contains information about your pet and where it is located (e.g., your home address) so that first responders or medical staff can advise your attorney, family or friends that there is a pet who needs looking after!

Conclusion

There are many options to consider when it comes to planning for the care of pets after your death or incapacity. Since the law may differ between jurisdictions as to what is permissible (and how), it is important that you speak to your legal counsel and get his or her advice.

 

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[1] A version of this article was originally published by RBC in the Estate & Trust Insights, November 2018 edition: https://www.rbcwealthmanagement.com/estateandtrust/_assets-custom/pdf/ET_Insights_November_2018.pdf

[2] Source: “It’s puppy love for dog owners”, Ottawa Metro, Feb. 16, 2011, pg. 4 (results of a January 2011 poll).

[3]This is sometimes referred to as a rule against perpetuities, although perhaps better described as the “rule against perpetual trusts”, “rule against inalienability” or “rule against indestructibility”: see e.g., P.W. Hogg, Ontario’s Perpetuities Law, Estates and Trusts Quarterly, vol.2, 1975, pp.19-44, at p21; and Adam Parachin, Charities and the Rule Against Perpetuities, at footnote #117 found online February 27, 2018 at https://thephilanthropist.ca/original-pdfs/Philanthropist-21-3-370.pdf

Because non-charitable purpose trusts might last indefinitely, they could contravene the “rule against perpetual trusts” or the “rule against inalienability.”

Alberta, British Columbia, and Ontario have specific legislation that construes certain non-charitable purpose trusts as powers to appoint the income or capital which can only exist for 21 years: Alberta: Perpetuities Act, R.S.A., 2000, c.P-5, ss.20(1), (2); British Columbia: Perpetuity Act, RSBC 1996, c.358, s.24 ; Ontario: Perpetuities Act, R.S.O. 1990, c.P.9, ss.16(1),(2).

[4] In British Columbia, it is possible to select an 80-year perpetuity period for trusts, however, for non-charitable purpose trusts that create no enforceable equitable interest in a specific person, the British Columbia Perpetuity Act limits such trusts to 21 years (see note #3 above).

[5]Jacques Beaulne updated by Christine Morin, Droit des successions (d’après l’oeuvre originale de Germain Brière), 5e édition, 2016 (la collection Bleue, Série Précis) (Montreal: Wilson & Lafleur Ltée, 2016) at para.90, pp.36-37.

[6] Jacques Beaulne updated by André J. Barrette, Droits des Fiducies 3rd edition, 2015 (la collection Bleue) (Montréal: Wilson & Lafleur Ltée, 2015) at para.111 referencing footnote #376.

[7] See Art.1273 C.c.Q. which states: “A private or social trust may be perpetual.”

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