Estate planning is about protecting what’s important to you. Although much of the traditional estate planning conversation focus is on surviving spouses, children, or grandchildren, many pet parents wonder about what could happen to their “furry children” after their death or if they become incapacitated and unable to care for their pets. Read on if you’ve ever thought, “What will happen to my cat, dog, or other pet if I pass away?” “What if I’m incapacitated and unable to care for them?”
Enter the pet trust. This tool is something that can easily be incorporated into a new or existing estate plan to provide a strategy for caring for your pets. Remember, estate planning is about protecting what’s important to you. So, even if you anticipate outliving your pets, it’s always better to be safe than sorry.
How a Pet Trust Works
Although these can be set up as standalone trusts, most pet trusts are incorporated into your overall estate plan.
- First, you determine an amount of money you want to leave for the care of your pet. When the pet trust becomes active (upon your death or incapacity) and while your pet is alive, the money you have set aside will be managed by a trustee for your pet’s benefit.
- Second, decide on a caretaker who will have custody and responsibility for the care of your pet.
- Lastly, after your pet’s death, the trust will terminate and any money that’s left will be distributed to the remainder of the beneficiaries you have chosen.
What a Pet Trust Avoids
Trusts may seem complicated, but it is a reasonably straightforward process to get your planning in order. A pet trust is a trust, so let’s start with a quick review of the case of characters in trusts. There’s a grantor, settlor, or trustmaker (the person who creates the pet trust – that’s you), the trustee (the person who will manage the assets of the trust – you select who that is), and then the beneficiaries (who will receive whatever assets are left after the pet passes away – you choose this as well).
In the case of a pet trust, there are three decisions you will need to make to make sure everything works as you intend:
- The selection of the remainder beneficiaries. These beneficiaries will receive the assets that remain, if any, after the pet passes away. Some people leave the remaining assets to a favorite charity, whereas others have whatever’s left pour into the children’s or grandchildren’s trust. The law is flexible, and we can tailor the plan to match your goals. It is entirely up to you!
- The selection of your pet’s caretaker. You can think of this role as similar to the guardian of your minor children. This will be the person who cares for your pet if you are no longer able to do so. You can leave detailed instructions or general recommendations for your pet’s care, whichever works best for your pet’s situation. The trustee will be authorized to distribute money to the caretaker for supplies, vet visits, vaccinations, medications, toys, or whatever else you specify in the agreement. You can even have some amount set aside for compensation for the caretaker if you wish.
- The amount you want to set aside. Some people estimate the expected cost of caring for their pet over the pet’s expected lifespan and leave that amount, plus a little margin for safety. With this approach, the goal is to provide for the care of the pet only. Others want to use the pet trust as a method for caring for their pet, but with an eventual charitable goal (perhaps a local animal shelter).
Many of these people will allocate a large sum of money with an expectation that there will be money left over upon the pet’s passing. Determining how much to set aside is really about what you are trying to achieve. We can help you come up with the right number. Moreover, since these plans are fully changeable, you can always update the amount as your and your pet’s circumstances change.
Planning for the Future
You might be thinking that you will outlive your pets, so there’s no reason to plan. But, what if you don’t? The entire purpose of estate planning is to ensure that you have left your wishes known and fully protected your whole family. Give us a call (505-883-1260) today so we can work with you to protect what’s important to you.