In 2018, roughly 85 million American families own a pet. What’s more, 95% of owners consider their pets to be members of the family. Despite these numbers, many owners overlook their family pet when it comes to drafting their estate plans. How can you properly plan for and protect pets in your estate plan?
Planning for your pet Fido or Fluffy is actually very similar to planning for a minor child. However, in most cases children grow up to be independent adults who can take care of themselves. That is not the case with animals, which is why planning is so critical.
An Animal Care Trust
The central component of many estate plans is the Revocable Living Trust, and planning for a pet can typically be incorporated with additional provisions for an Animal Care Trust. And if you have an existing trust, it is very easy to amend the trust to add the Animal Care Trust provisions.
In planning for a pet, you should not rely on a Will for various reasons. First, animals do not have time for Probate as their care needs to continue uninterrupted and without delay. Second, a Will does not protect the animal in the event of your incapacity.
Finally, because pets are considered property under the law, any conditions on their transfer via a Will are generally unenforceable.
The Animal Care Trust provisions are tailored to suit your specific needs, but they generally name and describe the animal, and the estate, or a certain portion thereof, is set aside to be used to for its care. In addition, a caretaker is appointed who is responsible for the day-to-day care of the animal; however, the trust itself legally owns the animal. The named trustee oversees the money and the caretaker, and has the ability to remove and replace the caretaker. The money is available to compensate the caretaker, and when the animal passes away, the remaining money is distributed to the final beneficiaries of the trust.
In most cases, planning for your pet will be a very simple and straightforward process
Choosing Appropriate Caretakers
In planning for your pet, decide who is going to take care of them in the event something happens to you. The caretaker will be responsible for the day-to-day care of the animal. Although the animal will be legally owned by the trust, for practical purposes, the caretaker will be the animal’s new family.
It is important to select a caretaker who loves animals, and has experience taking care of them. It is recommended that you name an initial caretaker and potentially two back-up caretakers to serve consecutively. Do not appoint more than one caretaker at a time because you may be unintentionally setting the stage for conflict over the animal. In addition, consider selecting an organization of last resort, such as reputable rescue or no-kill shelter, to take the animal in the unlikely event that none of the individuals selected as caretaker are willing or able to take on the responsibility of caring for the animal.
In planning for your pets, be sure to discuss your plans with the successor trustees as well. It is important to make sure these individuals understand your desires and are comfortable administering an Animal Care Trust. While the trustee does not necessarily need to be a huge “animal person,” it is important that they at least like animals and are committed to carrying out your wishes.
A trust protector can provide a bit of a safety net, creating a mechanism for dealing with an unresponsive or abusive trustee. Without a trust protector, an expensive, time-consuming, trust-exhausting lawsuit will be the only option, which leaves the animal’s future, and possibly even life, in jeopardy.
Your trustee instructions need to address matters such as how and when to apply trust funds, how much to compensate the caretaker, and what type of oversight is needed. Caretaker instructions should address the type of care the animal is to receive, and any special information that the caretaker should know.
The amount of money to be set aside in the animal’s trust depends on the type of care you want to provide. For example, if you are planning for a dog or cat, you may consider setting aside $10,000 per animal. If the animal has extraordinary medical needs or you want to provide a uniquely high level of care, then the amount placed in trust should reflect that. Keep in mind that any money set aside does not have to be used, but it is available for use if the situation calls for it.
The continuing care of animals is one of the most commonly overlooked aspects of an estate plan that can have heartbreaking consequences. Pets are a responsibility requiring love, time, attention, and money. Your estate plan needs to provide for your pets and pet trust provisions usually comprise only a few additional pages to a revocable living trust. The strategy is simple and straightforward, but it adds tremendous value to your estate plan and makes it truly complete.Read More