For many people, their pets are members of their families. As such, they want to make sure they are well taken care of if they are not there. As the law considers animals to be property, you cannot leave money directly to your pet. Also, critically, you must take appropriate action to ensure that your pet will receive the care you would produce if you were still here to take care of him or her.
There are three approaches you can use to safeguard the care of your pets. According to Vince Annable, CEO and founder of VFO Advisory Group and author of The Household Endowment Model: Wealth Planning for Affluent Families, “Which approach is best depends on your particular circumstances. Another consideration is funding for your pet’s care. If you seriously care about your pet, you need to make proper arrangements and plans. Failing to plan can result in your pet ending up in a shelter or some other situation you might abhor.”
A pet care agreement: A pet care agreement is a contract you make with another person who has agreed to care for your pet in case of your death.
Step 1: Identify a pet guardian: You need to select a person whom you believe will take care of your pet, as you would have. You need to ensure that person is able and willing to be the pet guardian—your pet’s caregiver.
Step 2: Communicate how you want your pet to be cared for and address any financial matters: If you want your pet to be cared for in particular ways, you need to make sure your pet guardian knows this and it is not a problem. How the care of your pet is to be financed needs to be made explicit.
Step 3: Create and sign a pet care agreement: By making this a formal agreement, it becomes enforceable. Included here are how monies you have arranged for the care of your pet are to be handled including what happens if there are excess funds after the pet dies,
A pet trust: A pet trust is a legally enforceable arrangement. Thus, having your wishes for your pet is highly likely to happen. You can decide the specifics of how your pet is to be cared for from the type of food the animal is fed to the level of medical care.
Step 1: Identify a trust beneficiary (the pet guardian) and a trustee: The beneficiary of the trust is the person you select to care for your pet—the pet guardian. You should probably have backup trust beneficiaries. You will also need someone to administer the trust—the trustee—who may or may not be the trust beneficiary. With the trustee and the pet guardian two different people, it is often worthwhile to have the trustee check on the well-being of your pet and that the funds are being used properly.
Step 2: Select a type of trust and its funding: According to xxx, xxx, “One type of trust is a stand-alone trust for your pet the other type is established through your will. Either way, you need to fund the trust for the care of your pet. This often entails coming up with some number to ensure a certain standard of living for your pet. It is worthwhile to think about medical care for your pet as it can costly and is most likely to be more significant later in your pet’s life. Also, determine where monies still in the trust will go after your pet dies.”
Step 3: Create your pet trust: The types and level of care can be detailed in the trust. How monies are to be dispersed from the trust for your pet and possibly to compensate your pet guardian are specified. You also need to decide what happens to monies in the trust. Your pet trust must comply with your state laws.
A will bequest: Your will determines how your assets are divided after you die and within your will, you can specify who becomes the guardian and what monies are set aside for the care of your pet can be stipulated in your will.
Step 1: Identify the pet guardian and provide instructions: Specify who will be responsible for your pet. Sometimes, pets are given to organizations that will take care of them.
Step 2: Determine the monetary arrangement: Included here are monies to take care of your pet and how they are provided. Also, you may want to provide funds for the guardian directly or, in the case of an organization, a donation can be given. It is also possible to set up a pet trust at your death.
Step 3: Make sure the pet provisions in your will work in your state: In some states, pet provisions are deemed “honorary.” The court will not necessarily enforce the provisions. Or, if you arranged for a pet trust, it must comply with your state laws. You want to make sure you do not run afoul of any laws.
Financing your pet’s care: It is often worthwhile and sometimes essential to provide the funding for the care of your pet. Thus, you need to calculate the monies needed for the care of your pet in the manner you prefer. Some considerations include:
• The cost of caring for your pet and the pet’s life expectancy.
• Take into account that as your pet ages medical costs can become a factor. So, it is probably a good idea to estimate future medical expenses.
• If you are going to compensate the guardian, how much becomes the question.
You might want to designate a person to oversee the money such as the trustee in the case of a pet trust. The logic is to ensure that your pet is getting the proper care and that the monies are being spent on behalf of your pet. If the pet dies and monies are left over, in the pet trust, for example, you probably want to specify where those funds go. There are several options from the guardian to an animal welfare organization.
Russ Alan Prince is the executive director of Private Wealth magazine and one of the leading authorities in the private wealth industry. He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals. Connect with him on LinkedIn.com.