1st Mar 2019
Renowned fashion designer, Karl Lagerfeld, died on February 19, 2019, at the age of 85. Lagerfeld was not married and did not have any children, but he is survived by his cat, “Choupette.” With nearly 300,000 Instagram followers (@choupettesdiary), Choupette is a celebrity in her own right, but it was clear from Lagerfeld’s comments during his life that he intended to leave at least some of his sizable estate to her. In a 2015 interview with Le Figaro, Lagerfeld indicated that revenue from advertisements in which Choupette had participated had been put aside for her: “She has her own little fortune, she is an heiress. If something happens to me, the person who will take care of her will not be in misery. Choupette is a rich girl” (translated).
According to Fortune, Lagerfeld’s estate is worth between $200 million and $300 million. However, as a resident of France at the time of his death, Lagerfeld is subject to French law and thus could not leave his estate to Choupette as a direct beneficiary. Unlike many states in the United States, French law does not allow for a pet to inherit directly. However, there were plenty of estate planning options available to Lagerfeld in order to ensure that Choupette was taken care of after his death.
First, Lagerfeld could have left Choupette’s inheritance to a non-profit corporate entity, organized for the sole purpose of caring for the cat. This would allow the entity to hold the funds while requiring management to abide by the terms set forth by Lagerfeld in the corporation’s operating documents. Lagerfeld could also use this structure to provide for the dissolution of the entity and distribution of remaining funds after Choupette’s death.
Second, Lagerfeld could have simply left the inheritance to a trusted caretaker for Choupette. However, since this is a single transaction without a corporate structure, management or oversight, Lagerfeld would have to trust that the caretaker would not abuse his or her authority and would use the funds only for Choupette’s benefit during her life rather than his or her own.
Pet Trusts in Illinois
State laws in the United States vary in terms of amounts and limitations on inheritances left to a pet. At death, a pet is still treated as the personal property of the owner, allowing it to pass to a beneficiary with other personal property. However, two recent Illinois laws do allow pets to be treated more like children than property. As of 2005, Illinois pet owners are permitted to set aside funds and name caretakers for their pets by establishing a trust specifically for the benefit of one or more pets (760 ILCS 5/15.2). In 2018, Illinois also passed a law allowing for a court to allocate sole or joint custody of a couple’s pet in the event of a divorce (750 ILCS 5/503(n)).
A Pet Trust allows the owner to provide for the pet’s care in the event of the owner’s disability or death. In order to establish a Pet Trust, it is important to carefully consider the individuals who will be named as the caretaker of the pets, the trustee of such trust and the amount to be contributed to the trust.
The caretaker is the individual who will provide day-to-day care for the pet or pets. The trustee’s responsibilities will include collection of the assets allocated to the trust, management and investment of the trust assets, payment of the debts and taxes and the distribution of the remaining trust assets to the designated beneficiaries as provided in the trust document. It is also important that the value of the assets allocated to a Pet Trust is a reasonable amount for the care of the pets, based on the life expectancy, living expenses and medical care of the pets. An amount that is deemed to be excessive may be reduced by a court, distributing the excess to the remainder beneficiaries of the trust.
Alternatively, leaving a combined gift consisting of your pet and a fixed amount of money for its care outright to an individual can be a less burdensome option. However, the funds left as an outright gift would be entrusted to the individual without oversight and the recipient would not be required to return unused funds to the trust after the pet’s death.
These are valuable tools for Illinois residents who have pets that they wish to provide for in case of the owner’s death. If you fall into this category, make sure that your pet is provided for in your estate planning documents.