Do you have a dog, cat, or other pet you consider part of the family? If the answer is “yes,” you probably spend a considerable amount of time and money on your pet. You may even include your pet in major decisions that impact the family. But is your pet protected if something happens to you?
Pet Ownership Facts and Figures
In the United States we have a unique relationship with animals. We domesticate them to an extent not equaled elsewhere in the world. We have twice as many dogs as pets (70-80 million) as the next closest country (Brazil) and almost 50 percent more cats (75-95 million) as the next closest country (China). We also keep four million birds and two million horses as pets. We don’t just own more pets though. We also spend more money on the pets own. Each year, Americans spend $50 billion on their pets. One in three pet owners buys their dog a birthday present and one in four has paid for professional photographs of their furry family member.
Planning for Your Pet in Your Estate Plan
Are you relying on nothing more than a verbal agreement with a family member or friend to care for your pet in the event of your death or disability? If so, you may want to rethink that strategy. To begin with, your intended caregiver may be unwilling or unable to care for your pet when the time comes. In addition, enforcing such a verbal agreement is virtually impossible. Moreover, while you may not consider your pet to be your legal property, the law does which means ownership of your dog must be legally transferred before your intended caregiver can take over in your absence. Finally, a verbal agreement does not allow you to leave funds to the intended caregiver so he or she can pay for your pet’s care and maintenance.
Another option is to “gift” your pet to a designated caregiver in your Last Will and Testament. That resolves the legal transfer of ownership, but it fails to obligate your caregiver to care for your pet. And it fails to provide the necessary funds. You could include a gift of cash or other assets to be used to care for your pet; however, once gifted in a Will, the funds become the property of the beneficiary to do with as he or she pleases. This means you have to trust that the funds will be used as intended. Of equal concern is the fact that gifting a pet in a Will does not help if you become incapacitated as the terms of your Will only apply in the event of your death.
Including a Pet Trust in Your Estate Plan
Using a pet trust to protect and provide for your pet is by far the best option. As with any trust, you appoint someone as the Trustee of the trust. Then you fund the trust with sufficient funds to care for your pet if you are incapacitated or after you are gone. The Trustee is legally obligated to use utmost care managing the trust assets and to follow the trust terms as you wrote them. These terms can dictate how you wish for your pet to be cared for in detail. A pet trust provides the legal oversight you need to ensure that the funds you leave behind will be used exclusively for your pet and that your pet’s care will be continued in the manner to which your pet is accustomed. The Trustee can provide for the care of your pet until you recover, or forever if your incapacity continues or you pass. Creating a pet trust ensures your pet will be well cared for if you cannot provide that care yourself.
You can appoint the same person as the Trustee and the caregiver; however, it may be better to choose a professional Trustee to avoid a conflict of interest and/or misuse of trust assets.
The Trustee of the trust is entitled to a fee for administering the trust and there will be some administrative costs; however, the costs should be minimal given the nature and purpose of the trust.
As the creator of the trust, you can specify who you want to receive the remaining trust assets after your pet is gone.
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