Inheritance ruling taxes surviving pets

in 2006 with the Pennsylvania Uniform Trust Act.

Until then, any trust fund created for an animal was considered an honorary trust, which meant the law could break the trust because animals are not humans.

People had the discretion to honor the animal trust or not honor it. But the 2006 law permitted trusts to be established for the benefit of animals, requiring that they be honored.

Inheritance tax is imposed as a percentage of the value of a decedent’s estate, and the tax rate depends on the relationship of the transferee to the decedent. Transfers to a surviving spouse or to a parent from a child aged 21 or younger are taxed at zero percent.

Transfers to direct descendants and lineal heirs are taxed at 4.5 percent; 12 percent on transfers to siblings; and 15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax.

The Legislature did not set a tax rate for non-human heirs.

The Chester County court set the animals’ tax rate at the highest level.

Dr. King, a resident of Coatesville, Chester County, was a veterinarian and founder of the critical care department at the University of Pennsylvania School of Veterinary Medicine. She had no children and was never married.

Under the terms of the trust she established, the trustee was to use the income and principal for the maintenance and welfare of the animals.

Upon the death of the last animal, the trust would terminate and any remaining principal and income would be distributed equally to her three siblings and their children in Dublin, Ireland.

Stacey McConnell, the attorney who argued for Dr. King’s estate, said she consulted with Mr. Magnuson from Monroeville prior to arguing the case and she used the same argument he did. It didn’t sway the judge in Chester County.

She would like to have appealed the case to Superior Court.

Her client — the trustee for the pets — did not want to litigate any further.

“The injured parties in this case are the animals,” said Ms. McConnell, a trusts and estates lawyer at Lamb McErlane in West Chester. “The pets are being hit with a 15 percent tax rate. The trust might not outlast them to the end of their lives. They are being taxed at a higher rate than a child or a grandchild.”

That doesn’t seem fair to her.

“I compare it to before same-sex marriage was legalized in Pennsylvania,” she said. “It was a 15 percent tax rate on partners inheriting from partners. Now the tax rate is zero if an inheritance is going to a spouse.”