Don’t Forget to Include Your Pet in Your Estate Plan
Everyone remembers their childhood pet. For me, it was my dog, Pal, who was given to me by my parents on my ninth birthday. Pal was my sidekick and loyal companion for thirteen years. As a child, I did not think about who would take care of her if something happened to me or my family.
Fast forward several years and now, as an adult, I realize how important it is to make sure you consider all of the members of your family – including those with four legs – when you are planning your estate.
The concept of providing for your pet in the event of your death was sensationalized when Leona Helmsley left $12 million dollars in trust to care for her beloved Maltese, Trouble, in 2007. Trouble’s trust provided for her care, including grooming, food, medical expenses, until her death in 2010.
As silly as it sounds to leave $12 million to your dog, it’s not a bad idea to consider the care of your pets in your estate planning.
Pets are considered property under the law, but for most pet owners they are treasured members of the family. So if you don’t have a Will, the intestacy laws of state in which you live will determine who receives your pet when you die. Alternatively, if you do have a Will but neglect to specifically provide for the care of your pet, it will pass to the person or persons who are to receive the remainder of your assets after any specific bequests are made. That might not be the best person to care for your pet.
There are three ways you can provide for a pet in the event of your incapacity or death. First, you can simply have an informal arrangement with a family member or friend to care for it. However, keep in mind that this person is not legally obligated to care for your pet and may not be able to financially afford to. Second, you can leave the care of your beloved pet to an organization that is dedicated to care of animals. Finally, you can create a trust for the benefit of your pet called a Pet Trust. This is a legal arrangement between you, the creator of the trust, and a person who agrees to care for your pet physically and financially by using the assets in the trust for the benefit of your pet.
All fifty states and the District of Columbia have pet trust laws, but the laws vary depending upon what state you live in.* Some states limit the amount of money that can be left to the trust. And some states give the court discretion to reduce the amount of funds left to the pet trust (such as in Trouble’s case, where the $12,000,000 left to the trust by Ms. Helmsley was reduced to $2,000,000 by the court based upon Trouble’s anticipated lifetime needs). The majority of the states provide that the trust will terminate upon the death of the animal who is the beneficiary of the trust. A handful of states limit the trust to a specified term of years like twenty one years. This may be a concern for you if you are the owner of an animal with a long life expectancy such as a turtle, parrot, or horse.
If a Pet Trust is the right choice for you and your pet, there are several factors you need to consider:
- Caretaker: Who is the best person to love and care for your pet in the event of your disability or death? Is this person willing to act in this role? Who should be named as back-up caretakers in case your first choice is not available?
- Funding: How much money will be needed to properly care for your pet? You should consider food, veterinary costs, dog walkers, kennel costs, grooming etc.
- Care instructions: You should write a detailed letter to the caretaker describing how your pet should be cared for (for example, a specific diet and exercise program). Also include any likes or dislikes (my dog, Pal, did not like thunder and would hide under the bed).
- Remainder beneficiary: Pet owners know too well that eventually our pet will cross over the rainbow bridge. It is important to specify in the trust how any remaining assets will be distributed upon the pet’s death, such as to a family member or a charity dedicated to animal rights.
Our four-legged companions are members of our families, so we need to remember to include for their care and affection when creating our estate plans.
*You should contact an estate planning attorney to learn about your state’s laws regarding pet trusts.
This post is for informational purposes only and should not be considered as specific financial, legal or tax advice. Depending on your individual circumstances, the strategies discussed in this presentation may not be appropriate for your situation. The information in this material is not intended as tax or legal advice. Always consult your legal or tax professionals for specific information regarding your individual situation.