Have You Considered Estate Planning for Your Pet?
Companion animals, service animals, and pets play significant roles in many people’s lives. Pet owners can utilize estate planning tools to guarantee their animals receive appropriate care if the owner becomes incapacitated or passes away.
According to a Wealth Advisor article on this topic, pets are classified as tangible personal property – similar to vehicles, firearms, or jewelry. When a pet owner dies, pets transfer to beneficiaries through will provisions, trust directives, or state inheritance laws if no will or trust exists.
Pet owners should carefully select a willing caregiver and develop a care plan minimizing the pet’s stress during the transition period. Documenting your wishes helps heirs avoid complications regarding food costs, medical care, transportation, and other expenses.
A trust serves as an effective planning mechanism. Pet trusts can be inter vivos (effective immediately during your lifetime) or testamentary (activated upon death). The owner designates a caregiver and alternates as the trust beneficiary with enforcement authority. The owner also names a trustee and alternates to administer funds and manage trust assets for the pet’s benefit.
Several funding options exist for pet trusts. Payable-on-death designations on financial accounts can benefit the pet trust. Transfer-on-death registrations for stocks, bonds, mutual funds, and annuities offer another approach. Alternatively, trustees can sell assets like vehicles, homes, or boats, placing proceeds into the trust.
Life insurance represents another funding possibility. Since most states don’t recognize pets as “persons,” they cannot directly receive life insurance benefits. However, owners can name the pet trust’s trustee as the policy beneficiary or allocate a percentage of existing coverage to the trust.
Pet owners should consult an experienced estate planning attorney regarding optimal strategies for naming trust trustees as life insurance beneficiaries.
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