Recent surveys have shown that over 95% of pet owners consider their pets to be family members. To add to the fact, a survey conducted by the APPA found that 70% or 90.5+ million of American households own a pet of some kind. This is a lot of “family” members that may be getting shafted in estate plans. A proper provision for pets in your Trust or Estate Plan is critical. Make sure to do some Estate Planning for your pets too… but only if you want to.
Have you ever thought about what might happen to your pet after your passing? Are you going to set aside some money to take care of them? Who is going to feed and take care of your pet, not just in the short-term, but over many years to come?
This can all be handled properly in your Will or Trust…AND affordably too!
Think of the peace of mind you’ll have taking care of this seemingly forgotten member of your family.
The Tragic Situation
People don’t realize what the consequences are for not dealing with this issue sooner.
Basically, if you don’t appoint a specific guardian for your pet upon your passing, family members are going to argue over who ‘has to’ or ‘should’ take care of your pet. Obviously, if things don’t go well your pet ends up at the shelter.
According to the National Cremation Society, approximately 3 to 4 million companion animals are euthanized each year after the death of their owners (60 percent of dogs and 70 percent of cats). However, these statistics seem largely overstated and difficult to verify.
Even according to the Human Society, getting accurate statistical data about pets in the United States isn’t easy and spotty due to a lack of reporting requirements. Most of the information is based on estimates derived from just two annual surveys. Be warned because even the various survey takers themselves don’t agree on the results.
What we do know is that according to the CDC approximately 3.3 million Americans (humans) died last year, and countless surveys indicate that close to 70% of American households own a pet. This puts over 2 million pets at risk of a shelter and ultimate euthanasia each year. This is devastating news to loving pet owners.
Bottom line, there isn’t a system or institution to specifically deal with the passing of a pet owner. It’s up to you to solve the problem for you and your pet.
The Easy Solution
Furthermore, if you’re worried about your pet being loaded up and taken to the local shelter upon your passing, there’s one simple solution: Leave someone money to take care of them. This is another reason why Estate Planning for your pets is important.
That may sound a little jaded or cold, but it’s a cold hard fact that money talks. It will be easier and more affordable to plan for than you think. The vehicle to do it: a Revocable Living Trust.
The Trust creates a structure that way the money is bestowed to the Guardian of your pet in a proper manner with rules and guidelines.
“A little bit of planning and allocating some of your money upon your death to someone you can trust will solve the unknowns of your Pet’s future.”
8 Steps for Estate Planning for Your Pets
Next, here are 8 simple steps you can take to plan for the future of your pet upon your passing:
- First, appoint a Pet Guardian in Your Revocable Living Trust. The Trust will give you flexibility and structure for the process. The big question is…Who do you trust to take care of the pet?
- Next, understand that the Trustee of your Trust isn’t the same person that will take care of your pet. The Trustee is the one that handles the money and distribution of your assets upon your passing. You’ll decide on this person when creating the Trust.
- Establish an annual financial reward for the caretaker of your pet. Think of a dollar amount to take care of food, housing, veterinarian costs, and sweeten the pot with extra cash. The Trustee will distribute this money monthly, or quarterly to the Guardian of your Pet. You choose the amount and frequency in advance.
- Where does the money come from you ask? Easy. This could be little money carved out of your life insurance, retirement accounts, or even leftover equity in your home. This is the ‘family’! All of your money doesn’t have to go to humans. You can set aside funds for your pet…the family member that truly loves you.
- DO NOT distribute a lump-sum payment upon your passing. I know this sounds morbid, but a word of caution. If you give the Pet Guardian all of the money upfront upon your death…where’s the ongoing incentive to do their job? It’s the truth.
- How much is the right amount? That’s up to you of course, but you want to think about how much longer your pet may live. Then set aside a chunk of money that should cover the annual distributions and then some.
- Consider a Trust Protector. This is a ‘watchdog’ of sorts (I’m sorry I couldn’t resist). If you’re nervous about the care the Guardian may provide for your pet, you can appoint a “Trust Protector”. The Protector will check in on the Guardian from time to time and make sure your pet is doing well. The Trustee could make a payment to the Protector as well, or even play this role themselves if you so desire.
- Have a charity in mind for whatever is left in the Trust. After the passing of your pet, where do the leftover trust funds go? Consider a local shelter or rescue charity that could really use the funds to help other pets. Again, if you name the Pet Guardian as the ultimate beneficiary of the trust, it could be a recipe for disaster.
Example:
I had a client set aside $50,000 in trust for her two cats. The Trustee was to give the Guardian $5,000 a year as long as the cats were to live. The owner wasn’t sure about their life expectancy but thought 10 years was plenty. After the death of both cats, any remaining trust funds set aside for their care were to be donated to a local shelter or charity for pets.
Implementing Estate Planning for Your Pets
In truth, let’s get real. Given that you need an Estate Plan anyway. This issue with your pet could just be the impetus to get the project you’ve been putting off completed.
A Revocable Living Trust is a perfect place to have a plan for your pet: the one that loves you unconditionally and doesn’t ask for money.
If you are new to what an estate plan is all about see “Do I need a Living Trust- What You Need to Know”.
Evidently, don’t think a Revocable Living Trust is expensive and just for the rich or old people. The Living Trust is becoming common for single AND married individuals. Even for those who are young or old, rich or poor, with or without children. An estate plan for the average American with provisions for pets, children, and all sorts of assets should average around $1,500.
Additional Questions to Consider
Comparatively, at our law firm, we now ask clients all sorts of questions about their pets. Along with the 8 Steps above, we address other issues such as these:
- Do you have horses, farm animals, or even unique reptiles or fish?
- Do you have special requirements regarding your Guardian and what to do for your pet on a regular basis?
- Who would be the ‘backup’ in case the primary caregiver wasn’t able to continue?
- Where do you want your pet ultimately buried?
In sum, these are all important and sensitive topics for a loving pet or animal ownerhould. They should be addressed in Estate Planning for your pets and designed into a Revocable Living Trust.
All in all, if you’re one of those millions of Americans with a furry little friend or a pet of any type, it’s time to quit putting off your Estate Plan. And the timing couldn’t be better to get your affairs in order…check out our Annual Estate Planning Special here, or give us a call at 435-586-9366.
