When I read that Leona Helmsley (who recently died) left $12 million to take care of her dog, it got me thinking about my own pets. While I don’t have millions to leave my furry family, I want to make sure they’re well taken care of after I’m gone. What can you tell me about “pet trusts” and how do I set one up?
Pet Loving Lucy
Dear Lucy,
Pet trusts have become increasingly popular in recent years as older pet owners are looking for ways to ensure their pets will be well cared for when they’re no longer able to do the caring. Here’s what you should know.
Pet Trust
A pet trust is a legal instrument that allows you to designate a specific amount of money for your pet’s care and name a trustee to carry out your wishes. There are two main types of pet trusts you can set up. One option is a “traditional pet trust,” which is effective in all states and is similar to a trust you’d set up for a child, but it’s pricy costing around $1,500 to $2,000. Or you could opt for a “statutory pet trust,” which is a much cheaper option (under $100) and is currently allowed in 38 states and the District of Columbia (see www.estateplanningforpets.org). To create a statutory pet trust you simply add a few lines to your will, instead of setting up a separate legal trust. But the drawback is it takes several months for the will to go through probate, so you’ll need to arrange care for the interim.
If you want to set up a pet trust, talk to an estate-planning attorney (see www.aaepa.com), preferably one who has experience with pet trusts. Or you can work with a company like Pet Guardian (www.petguardian.com; 888-843-4040) which creates living pet trust in any state for birds, cats, dogs and horses, and charges around $500. Some factors you’ll need to consider before setting up a pet trust include:
• The trustee and caretaker: Most pet trusts designate both a trustee to manage the money and a caretaker to handle the day-to-day care of the pet. The trustee can make sure the caregiver is doing what they’re supposed to do. It’s also a good idea to name an alternate caregiver.
• Caregiving details: With a trust, you can specify the things you want your pet to receive like their favorite foods, how often they should be taken to the vet, their burial arrangements, etc.
• Funding the trust: You can set aside money from your estate to cover the costs, or if you’re short on funds, another option is to buy or use an existing life insurance policy and name the trustee as the beneficiary.
• Leftover funds: What to do with unused funds when the pet dies. Some trusts direct leftover money to the caretaker, which is a nice way to reward the person who’s cared for your pet. But it also gives the caregiver an incentive to skimp on your pet’s care in the meantime.
Other arrangements
If you don’t want to spend the cash or time on a trust, there are other options to ensure your pets are cared for, including:
• Make an informal arrangement. This non-legal option is to simply find a trusted friend or relative to take care of your pet if something happens to you. In addition, you could set up a separate bank account to cover expenses and name the caretaker as the beneficiary.
• Leave a direct bequest in your will. Just like any other possession you would leave to your heirs you can also leave your pet and money to cover its care. But keep in mind, this doesn’t offer the legal protection of a statutory pet trust.
• Leave your pet to a sanctuary, rescue, life-care program, humane society or other animal welfare group. If you have no one to name as a caregiver, these options find new homes for pets or offer lifetime care, but may require a fee or donation. Talk to your veterinarian about options in your area or see www.petfinder.com.
