Canine Care & Feline Finances: Smart Pet Estate Planning Strategies

Although the law generally regards our furry friends no differently than a beloved piece of jewelry that we may want to leave to our cousin Larry, our pets often mean much more to us than mere objects to be passed on at our death.

How can we better ensure that resources are available to take care of our four-legged family members when we pass or when we can no longer take care of them, and how can we make sure they end up in good hands?

There are basically two ways that a pet can be cared for upon your passing: through a will or through a trust.

Using a Will

Your pets, just like anything else, can simply be bequeathed to a specific person in your will. You can name a succession of recipients just in case the primary person is not able or willing to accept the gift. You can even add a cash gift with any animal, so there are resources available for its care.

The simplicity of using a will, however, is a double-edged sword. Because your pet is owned by the recipient upon your death, and because you cannot leave an inheritance to an animal, the simplicity of will comes with a host of issues.

For instance, what if the new owner is not willing to handle the medical needs of your pet? What if they refuse to provide a forever home? Because your pet is now owned by the person you named in your will, they can do whatever they want. They can give your pet away, turn her into a shelter, and even euthanize or abandon her. And of course, they can keep the money you willed for the pet’s care.

Similarly, will the cash gift you leave for your pet’s care be sufficient? What happens if the funds run out and the new owner is unwilling to spend their own resources to take care of your pet? Conversely, what happens if the pet dies early, or the new owner gives your pet away and there are funds left over? Again, the person you bequeathed your pet to can do whatever they want.

And what happens if you simply become incapacitated? A will, of course, only goes into effect on your death. If you cannot take care of your pet, it is ineffective to manage your pet’s needs. A set of “rules of engagement” would have to be added in yet another document - like in a power of attorney - in case you become incapacitated.

So, what is the alternative?

Using a Living Trust

Trusts by their very nature allow us to set nuanced rules and standards by which our gifts are made at our death. In addition, they are effective tools to manage our assets when we are merely incapacitated. These inherent characteristics of trusts make them perfect tools to better ensure our pets are taken care of when we are not able to do so ourselves. California law even specifically provides a statutory framework to govern trusts that are aimed at protecting our pets, making the provisions we write legally enforceable. These trusts are affectionately known as “doggie trusts”.

Doggie trust provisions are often simply a part of your overall trust – essentially added language in your existing estate plan. Provisions in trusts for pets can be as simple or as complicated as you want and can take care of just about every eventuality you can imagine. Our clients often pick and choose the provisions that are important to them.

For example:

• You can require that different rules apply if you are incapacitated, versus at your death.

• You can name a recipient for your pet outright, or you can name a caretaker for your pet and then have your successor trustee (the person who manages your trust overall if you are incapacitated or on your death) keep a watchful eye over the caretaker’s care of your pet.

• If your caretaker no longer wishes to provide for your pet, or the care is ineffective, your pet can be placed with a new caretaker.

• You can leave it completely up to the caretaker to decide how to take care of your pets, or alternatively you can state specific instructions. For instance, you can require specific exercise routines and that certain dietary rules be followed. You can name a veterinarian for medical care and require a set grooming schedule. You can also lay out your wishes for disposition of your pet’s remains at their death.

• If you have several pets, you can direct the pets be housed together, decide if each pet should have their own/different funding amount, and you can set different instructions for different pets.

• You can stipulate how the trust will pay for the care of your pet. It can range from a fixed monthly allotment paid to the caretaker, or it can be through reimbursement against receipts from the caretaker.

• You can provide a gift or compensation to the caretaker for their time. This needs to be carefully done if your desire is to avoid the caretaker getting taxed on this amount as income.

• The funds you leave for the care of your pet can remain in trust and be either accessible to the caretaker outright (with no extra oversight) or can be overseen by your trustee and doled out to the caretaker for actual expenses and pet care needs.

• If your pet is placed with a new caretaker, the funds can support that new custodian. If funds remain at your pet’s death, they can be directed back to your heirs or beneficiaries.

As you can probably tell, a trust provides better assurance that your beloved pets will be taken care not only at death, but also if you simply are not able to provide care yourself. As always, if you need specific advice as to your own circumstances, speak with a trusted lawyer.