Did you know that 67% of American households own at least one pet? Even though the majority of families take care of a pet, we often don’t think about their futures. After all, who wants to imagine dying before their pet? Unfortunately, this is a necessary reality for many individuals.
The sad fact is that even if our pets feel like family members, in the eyes of the law they’re property. This means that if we don’t stipulate what happens to them in a legal document, like a pet trust, then they’ll end up in a shelter or worse. But what exactly is a pet trust? And is it always necessary?
If you want to know the answer to these questions and more, then you’re in the right place. In this guide, we’ll be walking you through everything you need about ensuring the quality of your pet in the event of the unforeseen. Let’s get started!
Why Are Trusts Important for Pets?
Oftentimes the thought of leaving money to our pets in the event of an unexpected death seems ridiculous. After all, we’ve all heard stories about millionaires leaving their entire estate to pets instead of family members. There are extreme examples, but the reality is that pet trust is important for many people.
The unfortunate fact of the matter is that roughly 500,000 pets enter shelters each year because their owners pass away, or experience a medical emergency. If these animals are on the older side, then it’s likely that the shelter won’t be able to support them long if they aren’t adopted again quickly.
No one likes the idea of their pet being euthanized because no one wants that. That’s why pet trust is so important. It provides your trustee with either written instructions or the funds to support your animals.
What Are the Different Types of Pet Trusts?
Believe it or not, there are a variety of different types of pet trusts you can leave for your animal friends. In this section, we’ll go over all three of them. Keep in mind that we’re only including the formal, legal options. We won’t go into any informal arrangements that may be made.
1) Traditional Trust
A traditional trust gives you a lot of control over the way you plan for your animal’s future. It allows you to choose an amount of money and a trustee to control it. You can also select a specific caregiver and leave them instructions on how to care for your animal.
You can provide this set of written instructions through a letter of intent. This is invaluable for helping your trustee fulfill your exact wishes when it comes to your pet. If you set up a traditional trust with your life insurance company, then you will need to contact them. They will give you the proper wording to officially designate a beneficiary.
2) Statutory Pet Trust
A statutory pet trust is much simpler than a traditional one. It allows you to set aside a certain amount of money for your pets. For example, let’s say you put aside $10,000 in your will for your dog and cat. If you die, the court will take over and fill in the dots. A probate court will appoint the proper personnel to oversee the money.
This individual will then use that money to make sure they get the care they need. The downside of this is that it doesn’t allow you to leave any instructions for your pet. As such, it’s not the best option for animals that require a lot of care and attention.
3) Pet Protection Agreement
If you don’t have any money to leave for your pet’s future care, then the Pet Protection Agreement is a good alternative. This is a do-it-yourself option that allows you to make a legally binding agreement with a future guardian.
In it, you can layout any of the instructions that the pet may need. However, we don’t recommend this option if you don’t trust the guardian. They may attempt to break the contract. If this happens, then there are no funds that will ensure the safety of your pet.
What Type of Pet Trust Is the Best?
No one pet trust is inherently better than the other. However, traditional trust gives you a lot of freedom when it comes to planning your pet’s future. As such, some individuals may prefer this option. For example, if your pet has different medical conditions, then they may require certain medications, care, and environments.
Without this information, your animal won’t get the proper treatment for any of their conditions. Or, they may be placed in a loud environment with lots of people when they prefer quiet solitude. This is where a statutory pet trust can backfire. You can’t expect strangers to know every detail, personality trait, and preference that your dog has.
No one knows your pet as well as you. So generally we recommend choosing the option that allows you to include as much detail about your animal friend as you can. The specific instructions you can leave behind in a traditional trust allow for them to get the care that they need and deserve.
Using Your Life Insurance to Pay for Your Pet Trust
As we mentioned before, there are some types of life insurance policies that allow you to set aside pet-care money. However, you will need to decide on the types of life insurance. Generally speaking, there are two popular types:
- Term policy life insurance
- Permanent life insurance
So which option should you choose? Generally, the process is pretty easy if you take into account your age and the animal’s age. Term policy life insurance allows you to set aside a policy for a certain amount of time, say twenty years. This is a good option for animals that have a relatively short life span.
It’s also good if you expect yourself to outlive your animal. The policy will simply act as insurance in case the unexpected happens. A permanent life insurance policy on the other hand covers your entire life.
As such it’s ideal if you expect your pet to outlive you because it will never expire. If you have children, then you can also designate a portion of the money to go to the pet and the rest to your offspring.
When Should You Start a Pet Trust?
Any pet owners in their old age should consider getting a pet trust, even if you think you’ll outlive your animal. After all, you never know what might happen. However, there is a certain category of pet owners who require trust more than others. For example, if your pet has an abnormally long life span, then you should organize it.
Certain parrot species can live up to seventy years. And let’s not forget that one tortoise lived to be 187 years old. For these people, not having a pet trust almost isn’t an option. It’s also always advised that individuals with exotic animals organize a pet trust. These pets require a lot of work to find adequate caregivers.
What Are Some Mistakes Everyone Should Avoid?
Unfortunately, just because you have a pet trust in place doesn’t mean it will go according to your wishes. As such, it’s important to avoid some mistakes when navigating the process. First, you should make sure that any caregiver is 100% willing and able to provide the proper care for the animal.
You should also make sure that your trustee (the person controlling the money) and the caregiver are two different people. This will make sure that the money is distributed evenly and unbiasedly. If your caregiver or trustee becomes unable to fulfill their role, you should also appoint future successors.
Finally, include a caveat of what to do with the money if the pet dies. We recommend an animal organization over your caregiver. Leaving the remainder of the money to the caregiver would give them a reason to hope the animal dies.
Need Help Setting up Your Pet Trust? Get in Touch With O’Bryan Law
We hope this article helped you see the importance of setting up a pet trust for your animals. No one likes to think about leaving their furry friends behind. But planning is important, especially for individuals who expect their pets to outlive them. If you want someone who knows the intricacies of a living trust, then look no further than O’Bryan Law.
Sean O’Bryan has drafted over 3,000 trust agreements. This gives him the experience and knowledge to help you. Our team offers a wide variety of trust, estate planning, and will services. As such, we can help you ensure that your pets will be properly provided for in the event of an unexpected death. Contact us today so you can rest easy knowing your furry friends will be provided for.