Estate Planning for Pets

Estate planning is vital to ensuring that your wishes are obeyed following your incapacity or death.  However, many people do not consider their pets when creating their estate plan.  Where will your dog, cat, horse, or bird go when you die?  Are you relying on your children to step in and take them in?  How will the new owner's care for your beloved pet?

These questions, and many others, abound when it comes to our furry (and feathered, scaly, etc.) friends.  The solution is to incorporate estate planning tools that will designate who will care for your pets and may even provide the financial resources to continue their care.

The first option you have is to designate someone in your will to take care of your pets once you are deceased.  You should also consider specifying someone in your Durable Power of Attorney or Living Will in the event that you become incapacitated.  Your bequest can be general - simply transferring ownership of your pets - or it can be specific as to how you want your pets to be cared for.  You should also consider specifying an alternate caretaker in the event that the new owner is unable to care for your pets (perhaps they live in an apartment or are on limited income).  

Within your will, you can create what is called a Testamentary Trust.  This type of trust arises upon your death to provide for the keeping of your animals (among other things).  

You will need to designate a Trustee, who will ensure that the trust's assets are only used according to the terms of the trust, thus only being used for the care and keeping of your pets.  It helps to ensure that the Trustee is not the person who will be caring for your pets, but it is possible to have the caretaker and the trustee be the same person.  Just be sure that you trust the people you are naming to serve your pet's interests.   Your attorney can help suggest terms of the trust if you have concerns about this.

You name your pets as the Beneficiary(ies) of the trust, so that all assets go to their care and keeping.  You then assign assets to the trust - either cash (typically in an investment or savings accounts) and non-cash assets (such as a life insurance policy which names the trust and/or your pets as its beneficiary).  

When your trust is activated, by your death, the probate court of your state of residence will ensure that the Trustee carries out the terms of the trust.   Your attorney can explain this in more detail, as rules regarding courts and court procedures vary by state.

An Inter Vivos Trust is similar to a Testamentary Trust. However, the Inter Vivos Trust is created - and can be utilized - during your lifetime. It does not have to wait until your death to be utilized. In fact, depending upon the structure of the trust, you may be able to utilize the trust to pay for expenses while you are still retain your mental capacity.

In the event that your mental capacity becomes compromised, such as in cases of Alzheimer's and dementia, the Inter Vivos Trust can then be utilized by your designated Trustee to care for you animals even though you are still alive. Typically, you will be one Trustee with either a co-Trustee (such as your spouse) and/or Successor Trustees (those who will take over all Trustee powers, or share powers with your co-Trustee, upon your incapacity). As with Testamentary Trusts, you name your pets as the beneficiaries and assign either cash or non-cash assets to the trust.

A final option is to bequest your pet to the care of an animal sanctuary. This is more common for non-household pets, such as parrots, horses, and other animals that can live for very long periods of time (typically over 20 years). This can also be helpful if you have a domestic pet - such as a dog or cat - with special needs. Typically, animal sanctuaries only accept pets with special needs or long lifespans, but each sanctuary has its own rules about this.

I suggest visiting the Best Friends Animal Society page on this for more information.  The author's of When Your Pet Outlives You provide some very important information on this topic, from choosing how to protect your pets to protecting the assets used in your pet trust from excessive taxation.  Very useful and informative guide!