Dear Savvy Senior: How does one go about creating a trust for their pets? I have a dog and two cats that mean the world to me, and I want to make sure they'll be well taken care of after I'm gone.
Dear Ellen: Pet trusts have become more and more popular over the years as senior pet owners are looking for ways to ensure their pets will be well cared for when they're no longer able to do the caring. Here are some tips to help you get started.
Types of Trusts
A pet trust is a legal instrument that allows you to designate a specific amount of money for your pet's 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 you'd set up for a child, but it's expensive costing anywhere from $500 to $1,500.
Or, you could opt for a "statutory pet trust" which is a much cheaper option and is currently allowed in more than 40 states and the District of Columbia. To create a statutory pet trust you simply add a few lines to your will, such as, "I leave $5,000 in trust for the care of my dog and two cats." State law will fill in the gaps, so that the simple provision may be effective.
If you want to set up a pet trust, talk to an estate-planning attorney, preferably one who has experience with pet trusts. Or, you can work with a company like Peace of Mind Pet Trust or Trusted Pet Partners. Some factors you'll 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 they're supposed to do. It's also a good idea to name an alternate trustee and caregiver in case your first choice is unable or unwilling to serve.
• Caregiving details: With a traditional trust, you can specify the things you want your pets 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 you're short on funds, another option is to buy or use an existing life insurance policy and name the trustee as the beneficiary.
Another legal option to consider is a "pet protection agreement," which is much less complex than a formal pet trust. This allows you to name a guardian to take care of your pets, and gives you the ability to leave funds to care for them. You can make a pet protection agreement online at legalzoom.com or (800-962-7490) for $39.
If, however, you don't want to create a legal tool, you should make informal arrangements by asking a trusted friend or relative to take care of your pets 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.
Or, if you don't have anyone who would be willing to take care of your pets after you're gone, you can make arrangements to leave it to a rescue, humane society, pet care program or other animal welfare group. Many of these organizations 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.
Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of "The Savvy Senior" book.