It raised eyebrows when hotel magnate Leona Helmsley left $12 million to take care of her dog. While most of us don't have $12 million to leave behind, pet trusts have nevertheless become increasingly popular as older pet owners look for ways to ensure their pets will be well cared for when theyre no longer able to do the caring.
Heres what you should know.
A pet trust is a legal instrument that allows you to designate a specific amount of money for your pets care and name a trustee to carry out your wishes. There are two main types of pet trusts you can set up.
One option is a traditional pet trust, which is effective in all states and is similar to a trust youd set up for a child, but its pricy -- costing around $1,500 to $2,000. Or you could opt for a statutory pet trust, which is a much cheaper option (under $100) and is currently allowed in 38 states and the District of Columbia (see www.estateplanningforpets.org).
To create a statutory pet trust you simply add a few lines to your will, instead of setting up a separate legal trust. But the drawback is it takes several months for the will to go through probate, so youll need to arrange care for the interim.
If you want to set up a pet trust, talk to an estate-planning attorney (see www.aaepa.com), preferably one who has experience with pet trusts. Or you can work with a company like Pet Guardian (www.petguardian.com; 888-843-4040) which creates living pet trust in any state for birds, cats, dogs and horses, and charges around $500.
Consider this
Some factors youll need to consider before setting up a pet trust include:
• The trustee and caretaker: Most pet trusts designate both a trustee to manage the money and a caretaker to handle the day-to-day care of the pet. The trustee can make sure the caregiver is doing what theyre supposed to do. Its also a good idea to name an alternate caregiver.
• Caregiving details: With a trust, you can specify the things you want your pet to receive like their favorite foods, how often they should be taken to the vet, their burial arrangements, etc.
• Funding the trust: You can set aside money from your estate to cover the costs, or if youre short on funds, another option is to buy or use an existing life insurance policy and name the trustee as the beneficiary.
• Leftover funds: What to do with unused funds when the pet dies. Some trusts direct leftover money to the caretaker, which is a nice way to reward the person whos cared for your pet. But it also gives the caregiver an incentive to skimp on your pets care in the meantime.
Other arrangements
If you dont want to spend the cash or time on a trust, there are other options to ensure your pets are cared for, including:
• Make an informal arrangement. This non-legal option is to simply find a trusted friend or relative to take care of your pet if something happens to you. In addition, you could set up a separate bank account to cover expenses and name the caretaker as the beneficiary.
• Leave a direct bequest in your will. Just like any other possession you would leave to your heirs you can also leave your pet and money to cover its care. But keep in mind, this doesnt offer the legal protection of a statutory pet trust.
• Leave your pet to a sanctuary, rescue, life-care program, humane society or other animal welfare group. If you have no one to name as a caregiver, these options find new homes for pets or offer lifetime care, but may require a fee or donation. Talk to your veterinarian about options in your area or see www.petfinder.com.
---Jim Miller is a contributor to the NBC Today show and author of The Savvy Senior books.
