Pet Trusts: Estate Planning for Your Large and Small Animals

Does your estate plan include instructions and financial provisions for who will care for your pets after you die or if you become disabled or seriously ill?

When you become incapacitated or pass away, the strategic planning that you put in place to provide for your loved ones goes to work. The important things will be taken care of. Your bills continue to get paid, your investments continue to grow for future generations, and any minor children are cared for by loving guardians.

It seems like you thought of everything – but what about your very dependant pets? Many people assume that a relative or good friend will take good care of them. That's poor assumption: According to the Humane Society of the United States, in a typical year 400,000 pets need to find new homes because their owners died. Once cared for and loved, these animals have no home. Many are put down.

Pet Trust

In the past, people made designations for ownership and care of their pets in a will, but their wishes were not enforceable. That is why pet trusts are gaining more ground in the courts and are becoming more prevalent with persons who have no adult children as beneficiaries of their estates. While a will does not apply until the owner dies, a pet trust can be applied if the owner becomes incapacitated; thus, pet trusts are becoming more common.

Though some animal welfare groups also have programs to care for pets who outlive their owners, those programs are not available in every state, and the owners wishes regarding the specific ways they want the pet to be cared for are not legally enforceable.

How a Pet Trust Works

In Arizona, A.R.S. § 14-2907 governs trusts for pets.

A pet trust ensures that a trustee will watch over the way the money is spent by the designated caretaker. We advise appointing separate people for these two roles so there is a check and balance. You should also designate a remainder beneficiary: a person or an organization to receive any leftover money after the pet dies. We advise against leaving it to a caretaker, in order to avoid incentivizing the pet's early demise.

Pet trusts are often more detailed than even those for children, specifying exactly how the pet is to be cared for - feeding schedules, grooming, exercise, and even specifying that pets who were living together not be separated after the owner's death.

There are multiple types of pet trusts that can be tailored to your situation and your pets'.

• A traditional trust requires that you designate a trustee who pays money to the beneficiary who cares for the pet.
• A statutory trust is a simpler plan in which the laws of your state dictate the details of how your pet trust is executed.

Making Better Plans for Pets

Here's a general checklist to help you plan for your pets' needs:

• Identify and designate someone (and at least one alternate) to assume ownership for the pets.
• Keep in touch with them to ensure that they are still willing, especially if a pet has special needs.
• Leave behind a list of instructions about how you would like your pet to be cared for in terms of food and routine, grooming and veterinary care.
• Carry a "pet alert" wallet card listing names and phone numbers of the pet's emergency caregivers.
• Authorize payments to provide food, veterinary care, grooming, exercise, socialization, etc.
• In any documents, use language that refers to "pets" rather than names. This will ensure that no newly added pets will be left out and that there is no need to update documents.
• Name a "trust protector" to oversee a pet's new owner and any funds set aside for the pet's care.
• Ask an attorney how to include estate planning document language that will protect the pet.
• There are additional planning decision to be made, including the criteria to be used to determine when it's time to euthanize a sick pet, who will make that difficult decision, and how that pet's remains should be disposed.

Funding Your Pet Trust

While you might have a well-meaning, animal-loving relative or friend who would be the best candidate for taking on the care of a beloved pet, you don't want to create a hardship for that person by not providing enough money to cover the animal's expenses for veterinary care, food and other recurring purchases (e.g., pet licenses, pet beds, grooming, and flea and heartworm preventatives). 

Large animals, such as horses, or long-lived ones (like parrots) can incur even greater expenses than a typical dog or cat. Have you taken this into account when creating a plan for their care? 

And have you considered that, if you devote too much of your estate to the care of your animals, you run the risk of having the trust contested in court by heirs and remainder beneficiaries, which could result in the court reducing the amount and quality of benefits the pet receives.

Legal Enforcement

Some states have enforceable pet trust laws, allowing people to petition the court if they have reason to believe that the animals' welfare is not being properly cared for. However, not all states have the same enforcement laws. The more specific you want to be about your wishes, the more likely that you will need an attorney to draft out a formal pet trust. If a designation regarding your pets' care has been made in your will, making a pet trust can help your wishes carry legal weight.

Adapted from the Daily Plan-It newsletter