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Inheritance Dog

 

How Do Animals Inherit A Fortune?

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This week we saw a dog called Lulu received an inheritance of C$5 million following the death of her owner, Bill Dorris (BBC). When Karl Lagerfeld died a couple of years ago, he left part of his US$195 million fortune to his famous cat, Choupette (CNBC).  In 2004, billionaire hotelier Leona Helmsley left US$12 million to her dog called Trouble (The Guardian). Large financial bequests to animals happen quite regularly. But how does this work? After all, animals cannot own the assets or make decisions for themselves.

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In the case of Lulu, a friend of her owner is now responsible for meeting her needs. However, any money spent must be for Lulu’s direct benefit, not her new carer. Enforcing this could be tricky, Lulu is probably unaware of her rights and cannot complain if she feels the money is not being spent correctly. One potential solution is a trust. Using a trust, Lulu’s owner could retain some control over the use of his fortune – even from beyond the grave. This is how it would work:

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Controlling an Inheritance via a Trust

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On Bill’s death, money passes to the trust. The trust would have at least 1, but probably 2 trustees. The trustees are the legal owners of the money from Bill’s estate. They should be different people to the person who looks after Lulu (the dog). This is to ensure there are checks and balances on how the money gifted to Lulu is used. Lulu is the beneficial owner, everything the Trustees do must be for the benefit of the beneficial owner. Under the terms of the Trust, Bill can provide guidance on how he would want Lulu cared for or he may just leave it to the discretion of Lulu’s new carer.

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In the case of Leona Helmsley, she left all of her US$4 billion estate for “the care of dogs” and cut off all her grandchildren. Given the level of money involved this was a contentious estate and the grandchildren managed to get the inheritance of Leona’s own dog, Trouble, reduced from US$12 million to US$2 million.

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Of course, it is not just pets who can receive money via a trust. Anyone who wants to exercise a degree of control over the management of an inheritance after their death can use a trust. This could be for young children or older children with problems such as difficult marriages or businesses with financial problems.

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If you would like to learn more about how a trust may help you with your estate planning, please contact me or book a call here.

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