One option for estate planning for pets involves:
- Creating a trust.
- Naming a trustee.
- Naming a designated guardian to care for the pet or pets.
- Funding the trust.
Of course, a pet owner can designate a guardian for a pet without establishing a trust fund. However, the pet owner should help the guardian by providing funds, e.g., a bequest in their will, to support the pet when the owner dies or becomes incapacitated. There are other options as well
How Much Money Should I Set Aside in My Pet Fund?
If a pet owner decides to set up a trust and fund it to care for their pet animals, the amount of money to put into a pet trust fund is up to the owner. The funds can come from a variety of sources, such as the following:
- A life insurance policy with the pet trust fund as the beneficiary;
- A bank account or other account, e.g., a rollover IRA, again with the pet trust fund as the beneficiary;
- Any real or personal property belonging to the pet owner that can be sold and the proceeds used to fund the trust.
What Factors Should I Consider When Deciding How Much to Put into My Pet’s Trust Fund?
A pet owner should consider several factors when deciding how much money to put into a pet fund, for example, the following:
- The expenses associated with the care of the pet: These are going to differ depending on the kind of animal at issue.
- Care of a horse will cost more than care of a cat. The owner must consider all their expenses in caring for their pet.
- They also want to consider whether expenses will increase or decrease as the pet grows older;
- The number of pets that the pet fund will cover;
- The type of pets funded;
- How long the pet can be expected to live.
The pet owner may also want to compensate the pet guardian for caring for the pet or pets. If they want to compensate the guardian, they would make a provision in the trust document and include funding for that purpose.
Are There Ways Other than a Pet Trust Fund to Provide for My Pet After My Death?
There are several methods by which pet owners can provide for their pets after their own death. Although creating a “pet trust” is one method, there are other options a person may choose depending on their wishes and circumstances.
Most involve a will, and the provision in a person’s will should be worded to include all pets. So, something like, “I give all of my animals living at the time of my death” and “including all animals acquired after the date of this will.”
A few of the other options are as follows:
- Bequest to a Named Person or Entity: This may be the easiest way to leave pets to a person or entity. The pet owner can leave them to a person designated in their will. The pet owner’s will might also include a monetary gift to the beneficiary to cover the cost of caring for the animal. The only drawback to this option is that there is no way to monitor how the beneficiary spends the money or cares for the pets. With a pet trust fund, there would be a trustee to monitor the caregiver;
- Conditional Bequest to a Charity: For this option, a pet owner would include a provision in their will bequeathing the pets to a designated charitable organization, presumably one that benefits animals. In addition, the pet owner would bequeath money or other property of value to the charity with the condition that the charity either accepts the animal as a caregiver or agrees to find an appropriate home for the pet.
- The pet owner’s estate executor could be authorized to inspect the home or facility where the pets are placed before distributing money to the charity. Of course, the pet owner would want to check with the charity before writing their will to make sure the arrangement is acceptable to it;
- Bequest to a Caretaker: For this option, the will would authorize the executor of the will to choose a caregiver and place the pets in suitable homes. The executor must be someone the pet owner can trust to be cautious about the welfare of their pets.
- Also, the will may authorize the executor to give the caretaker a reasonable sum of money to cover the expense of caring for the pet for their remaining lifetime. One possible disadvantage to this option is that there is no way to monitor how the beneficiary spends the money or cares for the pets. Once the bequest is made, the executor has no further involvement. With a trust, the trustee has a supervisory role until the trust ends;
- Bequest to Trustee of Pet Trust: This is usually the most reliable, although the more complicated, way of providing for pets after the pet owner’s death. As explained above, the pet owner designates a person to serve as the trustee of a trust established in the pet owner’s will to receive the pets in trust and a sum of money to fund the care of the animal as well as the expenses of trust administration.
- The will may also provide for payment of reasonable compensation to the trustee for their services. Of course, again, the pet owner wants to ensure that the person to serve as the trustee and the person to serve as the caretaker agrees to the arrangement and is prepared for their roles.
- The trustee should be required to inspect the facility where the caregiver houses the pets every year and should be authorized to remove the pets if the caretaker is not caring for the pet appropriately. When the trust ends, any funds that are left should pass to a person designated as the remainder beneficiary in the will;
- An Inter Vivos Trust: With this option, while still living, the pet owner transfers ownership of the pets and some funds to the designated trustee of a trust similar to the one described above, which may be either revocable or irrevocable. This, however, requires that the owner do bookkeeping for the trust during the pet owner’s lifetime. Also, the funds for the trust are tied up for that purpose and are not available for other needs.
Should My Pet Fund Include a Separate Emergency Fund?
An emergency fund is usually a bank account that the pet owner and a pet guardian would jointly own. The emergency fund’s purpose would be for any sudden issues not covered by the money used to care for the pet. This includes any emergency medical treatment. The pet guardian should be able to access the money immediately.
Is The Pet Fund Considered Pet Insurance?
Pet insurance is medical insurance for a pet, completely different from a pet trust fund. The insurance coverage can be purchased from an insurance company that offers medical insurance for pets or from a veterinarian.
Typically, the insurance only covers accident-related injuries, but it can cover treatment for illnesses and injuries sustained in accidents. It might be wise to require a caretaker to use trust funds to pay for medical insurance to cover the pet’s medical care needs.
Do I Need to Talk to an Attorney about Pet Funding?
If you are concerned about estate planning for your pet or pets, you want to consult an estate attorney. Your attorney can help you review the options and how you might provide the funds for each one. Your attorney can prepare the documentation for whichever option you select and ensure that your wishes for the care of your pet are realized after you pass away.