January 1st, 2020
As we continue our series on trusts, we focus on a very special part of your family – your pets! Pets can be great companions, especially later in life. While there are some outrageous stories regarding large inheritances some celebrities left to their pampered pets, pet trusts are actually valuable tools for us regular folks too. These trusts name a caregiver for your pets, set aside funds for their care, and leave specific instructions to give you peace of mind.
First, you will need a trusted person who is able to care for your pet and manage the funds for their care after your death. They can be compensated from the trust as a caregiver. This could be a friend or relative, but pet sanctuaries are also an option. If you go this route, be sure to research which is a good fit for your pets and what the requirements are to establish this in your estate plan.
Next, you’ll want to think about how much of your overall estate you will set aside for your pets. As pets age, they may have special health concerns that require medical attention and expensive medications. You’ll want to take any special concerns into consideration along with the standard cost of living items your pet needs.
If you have multiple pets, separate trusts may be established as the cost of care can vary depending on the animal. For instance, the care and upkeep of horses likely costs much more than your cats’ average needs. If you do own larger animals like horses, you may need to consider professional hired help for maintenance of the horses as well. Each pet is identified by name and breed so that your wishes for each trust are clear.
Generally, pet trusts are established after you pass away. You might remember in a previous article, we discussed testamentary trusts. These trusts are established by a will or existing trust your death. A critical difference between a testamentary trust created by a will and one created by an existing trust, is a will must be probated which takes at least several months thus delaying the creation of the testamentary trust.
A revocable living trust, as we have previously discussed, is a great way to ensure your testamentary trusts, like pet trusts, are established smoothly and quickly without the added time and expense of probate. Testamentary trusts are preferable to an outright distribution in instances where a beneficiary cannot manage their own finances, as is the case with pets.
When you adopt a pet, it is a great time to revisit your estate plan to make sure you include your new companion. If the thought of outliving your pet is holding you back from adding a furry friend to your family, a pet trust could be a good fit for you. If a pet passes away before you, the funds designated for their care will go back in to your residuary estate to be distributed according to your wishes. Likewise, if a pet passes away after your death but with funds remaining in their trust, your estate plan will designate if the funds will go to the pet caregiver, your favorite pet charity or shelter, or a loved one.
We know all of these decisions for your estate plan can be overwhelming. Our next articles will help you with the decisions you’ll face as you establish your estate plan. Stay tuned as we delve in to our trust management portion of our trust series, starting with how to choose your trustee and beneficiaries!