Provision for pets in Wills

Hello everyone,

My clients would like to provide for their dog in their Will or such other dog/ pet that they might own at the date of death of the survivor.

They originally were looking at setting up a trust fund with about £100,000 and for the executors to become Trustees of that trust.

The survivor’s Will does set up a discretionary trust anyway for the whole of the residue. I was thinking it would be fine to use that rather than set up a trust. My concern is that all of the beneficiaries of the trust are charities apart from whoever it is that will re-home their dog.

They do not currently have a person in mind to look after their dog and are hoping the local vet will help re-home when the time comes.

Can the name of whoever re-homes her be added to by deed by the Trustees (the Will Trust has the express power to do so).

And if so is it going to cause a problem adding a non charitable beneficiary when all the others are charitable- presumably not if the charitable distributions are made within two years of death and so the amount for the dog is left in trust and is quantifiable and is under the nil rate band.

Many thanks in advance.

Deborah Wise

If, as proposed, the discretionary trust of residue is not exclusively charitable, IHT will be payable on the grant application, etc., and will then need to be reclaimed when appointments are made to the charities. This could have cash-flow implications, and create extra work.

An alternative might be to create the discretionary trust of the intended sum (£100,000) with power to the trustees to add beneficiaries and a default gift over to the residuary estate. The testators can then provide a letter of wishes setting out their intentions for the application of the fund, confirming that on the death of their pet(s), the trust fund should be terminated and fall into residue. In such an arrangement, the trustees should also have power to bring forward the end of the trust period, thus triggering the default gift before expiry of the usual perpetuity date.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

Hi Deborah

As your clients do not have anyone in mind for accepting their pet, they should check out these pet charity schemes rather than relying on the vet only.

Pet charity schemes

RSPCA Home for life www.homeforlife.org

The Cinnamon Trust www.cinnamon.org.uk

The Dogs Trust Canine Care Card www.dogstrust.org.uk

This may be a better option with perhaps a small bequest to the chosen charity.

Andre Davidson
Finantium

Hi Deborah

I see no issues with your thinking. Possibly a detailed letter of wishes would help the trustees.

The class of beneficiaries can include charities and named persons.

Bring descrtionary in nature allows for such class types.

Richard Bishop
PFEP

Thank you Paul. So the clients will end up with two discretionary trusts - one “pet” one with a trust fund of £100,000 and the other for residue.

In the Will itself will I have to name any objects of the trust fund because of course we don’t know who these will be. Is it fine just to give the express power to the Trustees to appoint objects? I’m concerned there is insufficient certainty of object and as such the trust will fail. Hopefully not?

Deborah Wise

Thank you everyone, all really helpful advice

Deborah Wise

Provided that you name the default beneficiaries, entitled at the end of the trust period, it should be sufficient for the trustees to have the power to add beneficiaries during the trust period as this prevents the default beneficiaries’ entitlement vesting in possession. As previously suggested, the default beneficiaries might be the same as those named in the residuary gift and, in any event, the trustees should have power to bring forward the end of the trust period.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

Hi Deborah, I have only just read this in self- isolation!

Reading Paul’s comment, I think what he is suggesting is that there needs only to be one discretionary trust namely that for the pet provision. The remainder of the estate can then be given to the charities without the need for a discretionary trust. As the amount of the discretionary trust would be well below the nil rate band and presumably transferable nil rate band, no tax should be payable.

Patrick Moroney

Thank you Patrick but the clients would like residue to be held on discretionary trust because they want to leave distribution at the discretion of the trustees subject to their letter of wishes which they anticipate will be updated regularly by them.

Deborah Wise

If the clients insist on residue being held on discretionary trusts, so that they can change their mind as to which charities should benefit from their largesse, unless the class of possible beneficiaries is exclusively charitable IHT will be payable, and only repaid if s.144 IHTA applies to a distribution to charity. To avoid the inconvenience (and potential cash-flow issues) consideration should be given to ensuring the will includes a restriction to the effect that residue can only be applied for charitable purposes.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

In view of that requirement, an IHT liability would arise on the death of the survivor of them. However if the trustees were then to immediately appoint residue to charities and submit a copy of the deed of appointment with the IHT 400, in the same way as one does for DOVs, I would think that there would be no liability.

Patrick Moroney
BWL Solicitors