The Private Client team at Cyril Amarchand Mangaldas shares their comments and opinions shared in an article in the following Q&A which was published by the Mint Newspaper on 18th February, 2020 and the online edition of the same can be found at: https://www.livemint.com/money/personal-finance/you-can-t-name-your-pets-as-beneficiaries-of-a-trust-or-will-11582011911565.html
I am 61 years old and widowed. I have two dogs and a cat. Can I create a trust in their names to ensure that they are taken care of after my demise? What other options can I explore while planning my estate? Also, what will happen to the trust or any such entity after my pets die?
—Name withheld on request
Unfortunately, while many of us wish this was possible, the law prevents someone from leaving wealth or assets to pets directly or via a trust.
As per Indian law, it is not possible to create a trust with pets as beneficiaries. This is so because a pet is not recognized as a person who is capable of inheriting an estate of another person. In India, pets are deemed to be personal property, and one piece of property cannot hold the title to another piece of property.
Additionally, trust law provides the requirement that the beneficiaries of the trust must be capable of enforcing it against the trustees. Animals cannot take a trustee to court and, hence, they cannot enforce the terms of the trust deed. You may have seen news reports in 2019 about Karl Lagerfeld, who left $300 million to his cat, Choupette—this is possible in some countries, but unfortunately not in India.
In similar cases, two options can be considered. One is that the person makes a bequest under his Will to a trusted (human) person, with clear instructions that the person should apply for the specific benefit of the deceased’s pet. Obviously, you should pick this person very carefully, and be sure that the money will actually be used for the pet’s welfare, and not for the legatee’s own interest. Perhaps, you could choose a close friend.
The more realistic option is to use the services of a reliable NGO engaged in the care of animals—bequeath the money to them and entrust your pet into its care. Such NGOs may not be able to use the money fully for only your pet’s benefit but, hopefully, a few other animals may also benefit from it. You should explore contacting suitable NGOs in India and explore their legacy programmes.
What is Terrorem clause in a Will? For what purposes can I use this clause?
In Terrorem is a Latin term which means “in fear”. This clause is usually added to a Will to prevent someone named in the Will from challenging the same. A typical In Terrorem clause says that if any of the beneficiaries named in the Will challenges or contests the Will or any part of the same, such beneficiary would automatically forfeit his entire interest in the estate mentioned in the Will. When a testator is fearing an attack from a disgruntled family member or beneficiary, usually because the Will may not provide what the beneficiary hoped for, the testator adds this to reduce the chance of a challenge to the probate.
To be clear, just by having such a clause does not completely prevent a legatee from successfully attacking an estate. Unless specifically given up, the right is always available to a legal heir to challenge an estate. For instance, suppose your Will has an In Terrorem preventing your son from contesting the Will (saying that if he does, he loses whatever little was given to him). However, he may still go ahead and file a challenge to your probate petition, saying that you lacked testamentary capacity to make a Will. If he wins the case on merit, your Will would be held as void and he would receive a portion of your estate in the capacity of a Class 1 heir (assuming you are a Hindu).
Overall, this is a high-risk strategy, and if you are fearful of a challenge to your estate, you should take whatever steps you can in your life itself to overcome this. If possible, a lifetime transfer of your wealth into a trust is the safest option and will minimize the need for a Will which contains such dramatic clauses. Otherwise, a family settlement with the concerned family member, saying that he or she is giving up the right to challenge your Will in return for a settlement, is also viable.