For animal lovers, pets can become the four-legged members of the family. With wealthy individuals, this can mean bestowing millions on their fur babies while leaving their children high and dry. Leona Helmsley, the late luxury hotelier, famously left $12 million in a trust for her pet Maltese named Trouble when she passed in 2007.

While trusts are a popular way to pass on wealth, you can’t name an animal as a beneficiary. Fortunately, there is a workaround: purpose trusts.

These trusts do not exist to benefit an individual or an entity but rather to serve a wide variety of purposes, such as taking care of a racehorse or maintaining luxury automobiles. Lawyers are even seeing more trusts dedicated to cryogenic freezing, the process of preserving bodies in the hope that modern science can resurrect them in the future, as the rich increasingly invest in longevity and immortality.

“The idea behind a purpose trust is what do you care about and how can you best try to plan for it if you are not yourself able to make those decisions,” explains trusts and estates lawyer Naomita Yadav, partner at Withersworldwide.

Trusts are well-known as a tool for saving millions on taxes, but purpose trusts are seldom used to pay less to Uncle Sam. There is no monetary value for trusts that are set up to, for instance, preserve frozen sperm or eggs and direct how the genetic material is used. For clients, the value of a purpose trust is reassurance that their wishes will be carried out even if their heirs disagree with them.

Pet trusts are relatively simple, typically allocating funds for caretaker pay, veterinarian bills, food, and other expenses, but other purpose trusts can require extensive work as they need to plan for decades in the future. 

Here is how purpose trusts work

Purpose trusts are not absolutely necessary to make sure your pets are cared for after you pass, Yadav told Insider. People with smaller estates can use wills or revocable trusts to allocate those funds. Purpose trusts come into play with larger estates and clients who have complex needs, such as wanting to take care of a stable of racehorses, according to Yadav, who typically works with centimillionaires.

Pet trusts are usually limited to the lifetime of the animal or animals specified, but other purpose trusts, such as those dedicated to maintaining a business or directing the use of intellectual property, can last decades or even in perpetuity if set up in the right jurisdiction. Lawyers must include procedures for trustees to appoint other trustees or specify a line of succession in the case of these long-lasting trusts.

In states with a rule against perpetuities, such as California, trusts must have an end date and a plan for allocating unused funds, such as donating to a charity or transferring to a limited liability corporation. Purpose trusts set up to maintain art collections usually include a timeline for liquidating or donating the artworks, according to lawyer Neil Solarz of Weinstock Manion. It can take many weeks to set up trusts for this purpose, as they can involve setting up commissions and consultants to decide how the artwork is secured, displayed, or sold.

Trusts for cryogenic freezing have a whole host of issues

Cryopreservation trusts can potentially last centuries, so a corporate trustee is needed, according to Yadav, who has set one up for a client. Allocating enough funds to pay for the freezing is just one part of the equation. Lawyers and clients have to prepare for a slew of hypothetical scenarios.

“What if the company goes bankrupt,” Yadav said. “What if there’s some kind of natural disaster and the facility gets damaged?”

Solarz has not drafted a cryopreservation trust, but he believes they will become more prevalent in addition to trusts regarding genetic material.

“People have always been interested in immortality and cheating death,” said Solarz, whose clients are worth $40 million on average. “The science, I would expect that to be more important in the future than it is today.”

Purpose trusts come in handy when you don’t trust your heirs

Yadav tries to direct clients to set up trusts for family members that will follow their wishes rather than setting up a purpose trust.

But when clients have strong and specific wishes, a purpose trust with professional trustees is the most surefire way to guarantee that they are honored, said Solarz.

“In a nuclear happy family, typically the surviving spouses is the trustee, followed by one or more children, but that’s not always possible,” he said. “Either because they’re troubled or they don’t know how to handle money, whatever the reason is.”

Typically purpose trusts dedicated to pets or collections are carve outs rather than the bulk of the estate, but Solarz has seen a client give her entire estate to her cats. He has dealt with litigation from disputes with unhappy would-be heirs. Lawsuits have made headlines, such as one woman suing her boyfriend’s estate for leaving nearly $6 million to his cocker spaniel, Samantha. That case was settled out of court, and these documents are generally upheld.

Purpose trusts are more robust when they include specific language that lays out how the funds will be spent and that any children or grandchildren are excluded from those funds. In the case of older clients, Solarz has them examined by a geriatric psychiatrist to ensure they are of sound mind and free from undue influence.

Deciding to bestow millions on a pet or a passion project can raise eyebrows.

“I’m not here to judge someone’s wishes and what is important to them,” Yadav said. “If somebody loves their dog or their collection of cars and wants to apply their estate to them rather than give it to their kids, they have a right to do that.”

Solarz has three dogs: a 16-year-old German Shepherd and two younger Siberian huskies. He is confident his kids will take care of the huskies after he and his wife pass away, but he told Insider that he would set up a pet trust if he felt it was necessary.

“My dogs are my best friends,” he said. “Call me crazy, but that’s what they are, unconditionally.”

Spectrum Wealth Counsel, doing business as Spectrum Wealth Management, LLC, is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Additional information about Spectrum’s investment advisory services is found in Form ADV Part 2, which is available upon request. The information presented is for educational and illustrative purposes only and does not constitute tax, legal, or investment advice. Tax and legal counsel should be engaged before taking any action. The opinions expressed and material provided are for general information and should not be considered a solicitation for purchasing or selling any security.