Animal shelters often become the last refuge for pets that no longer have homes because their owners became incapacitated or died. While you may believe that family members or friends would be happy to step in and care for Fido after you’re gone, they are not legally obligated to do so. By creating a pet trust, however, you will have peace of mind knowing that your faithful companion’s needs will be met when you are no longer around.
Why should I create a pet trust?
Because pets are not considered property, you cannot bequeath your pet to someone in a will. While it may be possible to name a caretaker and set aside funds in a will for the continued care of a pet, a will must go through the probate process. So this approach may not be practical since your beloved pet will require immediate care. This is why many states allow you to create a legally enforceable pet trust. Nonetheless, establishing a pet trust can be complicated, which makes it wise to consult an experienced estate planning attorney.
How does a pet trust work?
Like other trust arrangements, a pet trust is a legal entity that is recognized under the laws of many states. Generally, there are two types of pet trusts, “statutory pet trusts” and “traditional pet trusts.”
A statutory pet trust is one authorized by state law which establishes how the pet trust will operate and the conditions for its use. However, the preferred method to provide for the well-being of your beloved cat, dog, horse, reptile, or other animal is to set up a traditional legal trust into which you transfer ownership of the pet as well as funds to provide for its care.
To be valid, a pet trust must be in writing, much like other types of trusts. As the owner of the pet, you are considered the “settlor” of the trust. You can designate a trustee to manage the trust and oversee the person you name as caretaker, who is also considered the beneficiary.
The trustee has an obligation to carry out the terms of the pet trust and must also manage the trust assets for the benefit of your pet. As such, it is important to name someone who is dependable and financially responsible. Of course, the person you name as caregiver should be an animal lover or at least be willing to care for your pet and able to provide it with a safe home.
In any event, it is important to leave special instructions in the trust or the care of your pet, such as dietary and exercise needs, grooming, boarding, and veterinary care. In addition, a pet trust must be adequately funded, just like any other legally enforceable trust. To do so, you can either transfer a specific sum of money into the trust or purchase a life insurance policy which names the trust as the policy’s beneficiary.
The trustee is responsible for managing the funds and making payments to the caregiver, typically on a regular basis. The amount of money you need to set aside depends on a number of factors, not the least of which is the type of animal. Obviously, caring for a horse is far more costly that caring for a dog or a cat. Other factors include your pet’s age and life expectancy (reptiles in particular can live a long time), as well the need for veterinary care. The trust should also include funds to compensate the trustee and the caregiver, trust administration expenses, and end of life costs, such as burial or cremation of your pet.
What are the benefits of creating a pet trust?
A pet trust will put your mind at ease knowing that your beloved pet will receive proper care when you die or if you become incapacitated. A properly structured pet trust can also prevent disputes over the care of your pet that may arise among surviving family members.
While estate planning is the responsible way to protect your assets and provide for your loved ones, it is also important to consider your pet(s) in an estate plan. By creating a pet trust, you can rest assured that your faithful friend will be well-cared for when you are no longer able to do so.