Navigating the intricacies of your financial legacy can be a daunting task. Understanding the nuances…
Currently, 67% of American households own at least one pet, and many people now consider long-term planning for them just as important as they would for two-legged family members, says The Atlanta Journal Constitution in the article “When you’re gone, what happens to your pets?” Pet trusts are a great solution.
If you think about it, our animal companions are completely vulnerable. They can’t take care of themselves. If something happens to their owners, it is possible that they could be taken to a shelter and euthanized. If you don’t want to be kept up at night worrying about this, a pet trust should be part of your conversation with an estate planning attorney.
Pets are viewed as valued members of the family in many homes. They provide companionship, and there have been studies showing that their presence helps to reduce stress. They often sleep in the same bed as their owners and go on vacations with their human family.
A 2018 Realtor.com survey found that 79% of millennials who purchased a home, said that they would pass on a home, no matter how perfect, if it did not meet the needs of their pets.
How can you protect your pets?
Understand that pets are considered property and have no legal rights. It’s entirely up to their owners to plan for their care. Some questions to consider:
- What’s the difference between a pet trust and a will?
- Do pet trust laws vary by state?
- Is a trust independent from a will?
- What happens to any funds left over, when the pet dies?
- Can you tap 401(k) or other retirement funds to care for a pet?
To begin, look at the life expectancy of each pet and factor the average vet bill, food bill and any additional money in case of an emergency. The ASPCA says that the annual cost to care for a dog is between $737 to $1,404. Caring for a cat averages about $800. Of course, caring for cats or dogs depends upon the age, breed, weight and whether the animal has any medical needs. Some pets can live a very long time, like horses, and certain birds can live more than seventy years.
Next, identify caregivers who will commit to caring for your pets. You should then talk with your estate planning attorney. If you rely on an informal plan, your pet may be out of luck, if something happens to the caregivers, or if they have a change of heart.
A pet trust allows you to leave money to a loved one or friend to care for the pet in a trust that is legally binding. That means the money must be used for the pet’s care. It can be very specific, including how often the pet should go to the vet and what its standard of living should be. The executor or lawyer could go to court to enforce the contract.
Typically, the trustee holds property “in trust” for the benefit of the pet. Payments to a designated caregiver are made on a regular basis. The trust, depending upon the state in which it is established, continues for the life of the pet or 21 years, whichever comes first. Some states allow the pet trusts to continue beyond 21 years.
Speak with your estate planning attorney about protecting your pet. You’ll feel better knowing that you’ve put a plan into place for your beloved furry friends.
Reference: The Atlanta Journal Constitution (September 24, 2019) “When you’re gone, what happens to your pets?”