As much as we may view our pets like family, legally, they’re considered property. That means you can’t leave any money directly to your pet—though it’s not like Fido would know exactly how to spend it, anyway.
So, how do you make sure your pets are provided for after you’re gone? We spoke to David Roer, CPA, MST and Partner at Raich, Ende, & Malter, Co. to get the lowdown.
“The first step in the process is to identify an individual you would want to care for your pet. Then, be sure to communicate with them to make sure they’re on board,” he says.
From there, you have a few options: an informal agreement, a clause in your will or a trust.
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The most ideal path is to formalize things in your will or with a trust, “to make sure everything is legally documented and communicated,” Roer says.
An Informal Agreement
Though an informal agreement may seem like the easiest route, it doesn’t guarantee anything. You can ask a close friend or relative to take care of your pet after you’re gone, but this kind of agreement likely won’t be legally binding. Plus, if there’s someone else out there who loves your four-legged (or non-legged) friend and wants to look after them, things could get complicated.
To make sure there are no questions of ownership—and to ensure your pet goes to a good home—it’s more ideal to formalize things in your will, or by setting up a trust.
If you do decide to enter into an informal agreement with a friend or loved one, you may still want to consider leaving them a bit of money to help cover pet-related expenses.
A Clause in Your Will
Though the specifics vary by state, in most places, you can formalize your agreement via a clause in your last will and testament. “This clause would contain clear verbiage indicating who you’re bequeathing your pet to,” Roer explains.
You may also want to name alternate caregivers in your will, in case your first choice is not willing or able to care for your pet when the time comes. Be sure to discuss the responsibility with your chosen caregiver and any alternates, to make sure they are theoretically willing to take care of your pet.
Though the specifics will vary depending on your wishes and your agreement, “often, it’s important to set aside money to the caretaker to help ensure all costs are covered,” Roer says.
To determine how much a caregiver might need, calculate how much you spend on your pet per year, multiply that number by your pet’s life expectancy, and add in a little extra for medical care, bearing in mind that medical bills might pile up more as your pet gets older. You may also want to revise this number as you and your pet age. (Note that there may be tax implications for any caretaker who is receiving funds left in your will.)
Be aware that, though you can ask that this money be used for the care of your pet, your request will most likely not be enforceable. Your chosen caretaker could probably put the cash toward something else entirely if they wanted to.
To help prevent this, you may want to consider putting that money in a pet trust, which can give you more control over how the money is spent.
A Pet Trust
The option that will give you the most peace of mind—but which will involve the most legwork—is to work with a trust and estate attorney to set up a trust fund for your pet.
Though specific regulations vary by state, in most areas a pet trust will create a binding, legally enforceable plan for your pet’s continued care. You may even be able to direct proceeds from your life insurance policy to fund your pet trust after you’re gone. Pet trusts can be expensive, though, and they’re not valid in Minnesota (they are valid in other states).
When setting up a trust, you’ll generally designate (1) a trustee, who will handle the financial end of things, and (2) a caretaker, who will be the one housing, feeding—and hopefully, loving—your little critter.
“Think of the trustee as the person calling the shots,” Roer says. “They will be in charge of the money in the trust and will have a legal responsibility to make sure that the money is used appropriately.”
Selecting both a trustee and a caregiver creates a set of checks and balances, which adds an extra layer of protection to help ensure that any money left in a pet trust will go toward your pet’s care. Trustees are also often paid professionals, so selecting a trustee will likely be more about selecting someone reputable and capable than someone who’s close to you on a personal level.
Not only that, you usually can, and should, get specific about how the money is to be used. As Roer explains, “It’s important for the agreement to outline what specific items the money should be used for. In general, the more detail, the better. Not only might it help avoid controversies, nobody knows what your pet likes more than you.”
That’s right: Generally speaking, you could specify exactly which brand of kibble should be in your pup’s bowl, or how many times a month he should visit the groomer. Still, you may want to go easy on the instructions—your caretaker is doing you and your pet a huge favor, so you probably don’t want to ask them to scour the internet for your pet’s favorite treats.
Depending on state regulations and the particularities of your arrangement, your pet trust may also need to include money to cover the ongoing expenses associated with administering it. Initial fees may be in the low thousands, but costs can vary, so you’ll have to check with your lawyer to get an accurate estimate. You might also need to provide identifying details about your pet or pets, like photos or microchip information. These identifiers will help prevent fraud.
In some states, a pet trust has a maximum duration, often 21 years. In other places, the trust will continue until the end of your pet’s life.
Either way, you’ll need to specify what should be done in the event of your pet’s death, including your wishes for their burial or cremation, and a “remainder beneficiary” who should receive any funds remaining in the trust.
What if I Can’t Find a Good Caretaker?
If you can’t find someone to care for your pet, it’s best to reach out to local shelters to identify one that can look after them, and indicate that in your will. Otherwise, there’s no guarantee that your pet will find a home after you’re gone.
“This is all extremely important to think about,” Roer cautions. “If no proper planning is done—if there is nothing in your will and no trust is set up—your pet could be turned over to the state or your local animal control shelter.”
This article originally appeared on MeetFabric.com and was syndicated by MediaFeed.org.
Featured Image Credit: gpointstudio/iStock.