When Karl Lagerfeld, fashion royalty and longtime creative engine behind Chanel died on February 19th, the media rushed to speculate who would inherit the heir-less designer’s vast fortune. Choupette, his beloved Birman cat, quickly became the top contender.

The German designer mentioned his intentions to leave Choupette at least part of his estate multiple times over the years. In an interview in the French Numero magazine, he said that Choupette would be his heir, “among others”. He added: “Don’t worry, there is enough for everyone.”

A twitter account run on behalf of Choupette with the bio “Daddy @KarlLagerfeld’s spoiled pussy whose maids pamper her every need” has since retweeted several stories reporting that she could inherit his millions.

Rich pets capture the public imagination, but their reality is much more straightforward. A search for “rich pets” online sees Choupette rank alongside Blackie, an English black cat reportedly worth $13m and a $40m miniature poodle named Toby who allegedly inherited his fortune from a Gilded Age heiress in 1931, beating out the 2,300 people who claimed to be her heirs after her death. Gunther IV, a German Shepard the Miami Herald was duped into reporting had inherited a fictitious fortune from a German Countess, still consistently tops the rich pet rankings.

For the most part, rich pets are red herrings, arising from rumours about the eccentricities of the uber wealthy spun into fact by the press over decades. And while rich pets do exist, what constitutes pet affluence is a more complicated question, resting on structures determined by the owner and their asset managers and estate lawyers.

How the super-rich care for their pets after they die is a growing, and very discreet, area of estate law, says Valerie Wu, a partner specialising in tax, trust and fund law at Pinsent Masons, the law firm, in Singapore. Pets, she says, have become an established class of beneficiary.

The wealth of her clients, Wu says, “is evolving to the extent, that affluence is an understatement. The fact that the dogs are beneficiaries means that they could be much wealthier than any common folk.”

Even Gunther’s fictional reputation as the richest dog in the world is partly a question of definition: dogs cannot hold bank accounts, so all of Gunther’s purchases would be made by a trust.

It is a common misconception in the lore of rich pets that animals can be asset-holders; in fact, they are assets themselves under the law. Dogs cannot inherit money directly, because they cannot legally acknowledge the wealth transfer nor sign bank account paperwork. Paw prints, it turns out, will not suffice legally.

Instead, clients looking to provide for their animals can use trusts, either fixed or discretionary. Trusts can be created for people, says Jon Conder, a partner at law firm Macfarlanes in London, or they can be created for purpose. “Trust law allows for a trust for purpose where the trust’s purpose is looking after animals. It’s not just a hope [for owners] — it’s legally binding.”

A fixed trust is defined by specific instructions for the financial gift — for example, £15m that is in trust is to be used by a best human friend for the care of a beloved animal. A discretionary trust, on the other hand, requires the trustee to make decisions about how the trust’s money is allocated, and over what period.

For this reason, it is important for the wealthy and their wealth managers to decide the language of a trust’s mandate: whether they want it to cover their whole family, how they define family (to include pets), and for how many generations. They must also decide if they would like it to be invested to grow, and decide to whom or what, at the end of its purpose, the trust’s funds should be given, explains Wu. If a pet is left an inheritance in a will and no trust has been established, it is the executor’s responsibility to set one up and appoint a trustee to manage the funds.

Wu had a client who put one-sixth of a “particularly large” estate in trust for his 17 dogs. “He was very specific how he wanted the dogs to be taken care of,” Wu says. He didn’t just want to ensure that the dogs should receive wet or dry dog food, but instead to ensure that they would have the best of everything for the rest of their lives.

The trust was created in Singapore because of the city state’s tax incentives for income on trusts, while the dogs resided in Canada. Because animals cannot take ownership of funds, Wu says, “they will always need a trustee to ensure they benefit from the trust”.

Finding a trustee willing to take responsibility for a dog’s care for the rest of its life can be a challenge for wealth managers. The owner of the 17 dogs wanted the trustee of his pets’ wealth to demonstrate that he had the right administrative team to attend to the dogs’ needs, including a groomer and a veterinarian (one of the dogs had a medical condition). Finding the right person to hire for the role was an exhausting process, Wu says.

What happens if the pets have heirs? “A trust is a fixed instrument,” Wu explains, “so it needs to be specified.” If the trust is designed to support the family indefinitely, Wu says, it is reasonable that the trustee would decide that this definition includes offspring.

Conder says most of his clients prefer to give the money outright to a custodian for their pet, so that their estate can be wound up soon after their death. But Conder suggests that those looking to give or leave money in trust estimate a figure for annual expenses over the lifetime of the pet “and double it”.

“Wealthy people do have particular tastes,” Conder adds of his experience. “They don’t just say, I want Jon to look after my cat or my trustees to look after my dog. It gets quite specific, like requesting a lifetime’s supply of a dog’s favourite food.”

He says people are often anxious about leaving animals behind when preparing their estates. “They worry that there might be a problem or that someone won’t be around, but there are solutions to this worry,” he says. “They’re not alone in having wishes for their animals and no one will think badly of them.”

There are three “certainties” required for a trust, Wu explains: certainty of subject matter, certainty of object and certainty of trust. So when an animal cared for by the trust dies, the object no longer exists, and the trust is terminated.

In cases where the funds for a pet were a part of a trust but not its sole purpose, the money designated for the pet will either be drawn back into the trust or will go to a designated “final repository”, such as a charity or family member.

To prevent abuse — parakeets and kittens cannot easily stand up for themselves — trustees may also consider assigning a protector, or someone to act as a “watchdog” for the beneficiary. This holds the trustees accountable and prevents, say, the quiet replacement of an aged black cat with a new one in order to keep a trust alive past its intended expiration — which advisers in this field say is often a concern.

Ultimately, the growth in trusts for pets is a result of an evolving definition of family around the world. “There is an interesting evolution from what is a classic concept of what a trust should benefit, which is usually family members. It’s a ‘more than family’ concept,” says Wu.

Still, pet inheritance can be extremely contentious. In a New York Times obituary to Trouble, a dog who received $12m in 2007 after the death of her owner, Leona Helmsley, a woman emblematic of 1980s excess, the dog is described as “the world’s most hated Maltese”. Two of Helmsley’s grandsons were cut out of the will in favour of the pooch, though many of her remaining substantial assets were directed towards animal welfare causes.

Because rich animals are evergreen fodder for news reporters, scandalised rumours of wealthy pets can be woven into fact by the press, overshadowing the real legacy of the deceased. Such is the urban myth of Gigoo, a chicken that reportedly inherited £15m from the late Miles Blackwell, the British publishing mogul, and his wife, Briony. Gigoo now features on dozens of lists of “wealthy pets”, despite the chicken inheritance being a fabrication, according to a trustee of the Blackwell estate.

“It is a silly rumour that doesn’t do credit to the memory of Miles and Briony,” says Jonathan Burchfield, a lawyer at Stone King and a trustee of the Blackwells’ Tubney Charitable Trust. The Blackwells were animal lovers, and their trust distributed close to £70m to charitable causes in the 10 years following their death in 2001. Much of this was directed to animal welfare charities around the world, says Burchfield. “They established a charity with millions of pounds that was used to create tremendous benefit for the welfare of animals.

“They shouldn’t be remembered for giving millions to a chicken or something daft like that.”

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