Americans love their pets. They buy them special food and toys and throw them birthday parties. A recent Harris Poll found that 95 percent of pet owners consider their pets to be part of the family.
Sadly, the Humane Society estimates that about 500,000 of these four-legged friends are euthanized each year because the owners didn’t plan for what would happen to the pets in the event of an owner’s death or disability.
The American Pet Products Association (APPA) recently found that about half of dog and cat owners provide for their pets in their will. This is a good start, but wills have several problems. A will can specify who receives your pet, but cannot guarantee that that person will care for your pet. Adding a testamentary pet trust can help. However, during probate, a will’s terms may be disputed or delayed. Also, wills only go into effect at death and will not help your pet if you are incapacitated.
Pet trusts, now legal in all 50 states, are legal instruments wherein you can provide instructions and funding for the care of your animal after your death or in case of a prolonged illness, military deployment, or extended business trip.
Before creating a pet trust, it is important to identify at least two caretakers for your pet. A caretaker may be a family member, a friend, or an organization. Check with these people or organizations first. Make sure that they are willing and able to provide the care your pet requires.
You should also consider a separate trustee. The trustee is the individual or organization responsible for securing, investing, managing and distributing the pet trust assets. The trustee may serve as the caregiver, but choosing two separate people can help prevent misuse of funds. If your trustee is your caretaker you may want to appoint a trust director, who can ensure that the intent of your trust is followed.
Include a detailed description, photographs, or microchip identification information for your pet in your estate plan. This information can prevent a caregiver from fraudulently adopting another pet to receive trust funds after your pet’s death. Then outline your pet’s nutritional needs, health problems, and veterinary information in detail and provide directions for your pet’s burial or cremation.
Finally, determine the amount needed to care for your pet depending on your pet’s standard of living, life expectancy, and inflation. Costs vary but, as a starting point, the APPA survey found that the average dog owner spends $1,549 annually on veterinary bills, food, boarding, medication, grooming, and toys. The average cat owner spends $961. Also, remember trustee, attorney, and court fees (especially if you decide on a will).
You should designate a beneficiary, either a person or an organization, who will receive any remaining funds after your pet’s death. Many choose not to name the caretaker as the beneficiary (to prevent the temptation to skimp on care). Instead, the caretaker can be allotted an allowance during the pet’s lifetime.
This kind of thoughtful planning is important if you want your wishes fulfilled regarding your pet. Billionaire hotel operator Leona Helmsley famously had her pet’s trust reduced from $12 million to $2 million because the trust was overfunded based on the instructions she left for care. By contrast, the courts upheld New Yorker Lenore Abels’s $4.76 million trust for her two cats because she painstakingly outlined how she wanted her cats cared for including a salary for her caretaker.
Promises are not enforceable by law. Your friends or family members may have the best of intentions, but allergies, conflicts with other pets, or pet exclusions in rental agreements may keep them from following through. If you want to make sure that your fur babies are provided for, contact a trusted estate planning attorney about creating a pet trust today.