In North Carolina, under N.C.G.S. § 36C-4-408, pet trusts are a legally recognized means to ensure the care of one or more designated domestic animals or pets that are alive at the time the trust is created. Such trusts are valid and the assets in the trust must be used exclusively for the benefit of the designated animals. The statute explicitly prohibits the conversion of any portion of the principal or income of the trust for the use of the trustee or any other purpose that does not benefit the designated animals. Your first question may be: how are such trusts enforced since animals have no standing in the legal system? The trust instrument can designate a person to enforce the terms of the trust for the animals or, if none is provided, the clerk of superior court having jurisdiction over the trust must appoint someone to enforce the trust.
A pet trust terminates upon the death of the last surviving animal covered by the trust. Upon termination, the trustee is required to transfer any unexpended trust property according to the directions specified in the trust instrument. If the trust instrument does not provide specific directions, the property is transferred under the residuary clause of the settlor’s will or, if none, reverts to the settlor if living, and if the settlor is deceased, to the settlor’s heirs as determined by North Carolina’s intestacy laws. Additionally, the statute allows for liberal construction of the governing instrument to ensure the settlor’s intent is fulfilled, even permitting the use of extrinsic evidence to determine the settlor’s intent. The clerk of superior court has the authority to reduce the amount of property transferred to the trust if it is deemed substantially more than required for the care of the animals and the settlor’s intent. Any excess amount is then treated as unexpended trust property and distributed as previously described.
It is important to note that pet trusts and honorary trusts are excluded from the application of certain articles under North Carolina law that apply to other trusts, specifically N.C.G.S. § 36C-9-901, which outlines exceptions to the Uniform Prudent Investor’s Act. This exclusion highlights the unique nature of pet trusts and the specific statutory provisions that govern them. Pets are considered chattel property. Typically, a trust requires a definite beneficiary i.e. an individual or entity. However, charitable trusts, pet trusts, and other honorary trusts represent exceptions to the general rule in North Carolina that requires a trust to have a definite beneficiary. A pet trust is a subset of an honorary trust, which is a trust established to serve a non-charitable purpose without an ascertainable beneficiary.
Honorary trusts could be established for other types of chattel property, such as the preservation and protection of a family heirloom or the settlor’s prized Martin guitar. With the exception of pet trusts, which can be enforced until the death of the last surviving animal for which the trust was established, other honorary trusts in North Carolina may not be enforced for more than 21 years.
In summary, pet trusts in North Carolina provide a structured and legally enforceable way to ensure the care of pets after the owner’s death, with specific guidelines on the use and distribution of trust property to fulfill the settlor’s intent. Additionally, other honorary trusts may be established and enforced for non-charitable purposes, including the care of a family heirloom or other tangible property, for up to 21 years.