Estate Planning For Pet Owners
Many people view their pets as valued members of their families. Sometimes, however, pets can be overlooked following a person’s unexpected death or disability. Pets that are not adopted by family members (or otherwise cared for) may be sent to animal shelters or worse. To prevent this from happening to your beloved pet, you may want to consider making specific arrangements in your estate plan that cover the care of your pets.
Pet Trust Basics
Legally, pets are considered personal property so money cannot be left outright to them. However, you can designate someone to receive your pet upon your death or, alternatively, you can create a special type of trust for the ongoing care of your pet, commonly known as a “pet trust.”
Leaving your pet to a friend or relative through informal arrangements, such as a verbal promise to care for the pet, can be a simple and inexpensive solution for disposing of your pet; however, this is not always the best way to provide for your pet. Circumstances may change and your friend or relative may decide that they no longer want your pet or cannot afford its upkeep. Also, there is no guarantee that the recipient will actually spend the money for its intended purpose.
Many of these potential problems are resolved by creating a pet trust. In most states, a pet trust allows an owner to set aside a specific amount of money for the pet’s care and to name a trustee who will manage the trust funds and spend them for your pet’s needs. Pet trusts are now recognized in all 50 states and Washington, D.C.
Nebraska’s pet trust law authorizes the creation of a trust to provide for the care of an animal that was alive when its owner died. The pet trust gives the owner the ability to provide specific instructions regarding the feeding, housing and veterinary care for the pet. Generally, the trust lasts as long as the animal lives. Any money left in the pet trust after the pet dies can be directed to a friend, relative, charity or other beneficiary.
Pet Trust Advantages
Many pet owners prefer setting up a pet trust because it allows them to dictate the pet’s care rather than relying on uncertain arrangements. Among other things, the owner may specify his or her wishes for the pet’s long-term care and comfort, including: (i) what expenses the trustee is allowed to pay on behalf of the pet, (ii) the type of veterinary care the animal should receive; and (iii) the final disposition of the pet after the pet dies.
Although it’s not required, many pet trusts designate both a trustee to manage the money and a separate caretaker to handle the day-to-day care of the pet. Having two parties involved helps to ensure that the pet receives the appropriate level of care because there is someone to make sure the caretaker is following through with his or her obligations. The pet trust should also describe the pet in enough detail so that it can be identified after the owner’s death.
With proper guidance, a pet trust can offer significant benefits to pets and pet owners alike. The owner gets peace of mind knowing that his or her pet will be provided for, and the pet will be more likely to experience a smooth transition to a new home if and when the time comes. Thus, with a little planning, you can be certain that your pet will be well cared for in your absence.
If you would like to discuss planning for your pets, please consult with a member of McGrath North’s Tax and Estate Planning Group.