In a previous article, I talked about what to take into consideration when you are planning for your pet’s care, in the event of your incapacity or your death. In this article, I am going to give you the steps to take in creating a pet trust to provide for your companion animal, or animals, if you cannot be there.
A will is not enough
You might think that merely including a letter laying out the specifics of your pet’s care with your will is sufficient to provide care for your companion animals. However, you need to remember that the directions in your will won’t take effect until the estate is administered, which could take months or even longer.
In the meantime, what happens to your pet? If there is no provision for their immediate care, you may as well have just made an informal agreement, which is not enforceable. But, don't do that. Otherwise, there is nothing stopping your pet's caregiver from taking any money you leave behind for your pet's care and dropping your pet off at the nearest animal shelter or even at the side of the road for that matter. With an informal agreement, there is a moral obligation to follow your wishes, but no legal obligation. Without a legal obligation, there is no enforcement mechanism. This means that there is no way to force the caregiver to do as you say with regards to your pet.
Trusts lead to peace of mind
When you have money in a trust for your animals, it gives their future caretaker the ability to fund their needs in exactly the way you want them to. A trust is a legal arrangement that dictates how your pet, or pets, will be cared for if you pass away before they do.
Currently, all 50 states plus the District of Columbia have pet trust laws, and most of them state that they can be created for the care of animals alive during your lifetime. (Some also allow you to make a trust for animals in gestation, like if your dog has a litter of puppies on the way). Many states specify that the trust will be enforced throughout the lifetime of the pet, though some may just have a set number of years. In Hawaii, a pet trust covers the entire lifetime of the pet and ends when there is no longer a living pet covered by the trust.
Name a trustee
While you should have a caregiver (or two!) listed, you should also have a separate trustee to be responsible for administering pet-care funds. Giving the money to the beneficiary in a lump sum is not the best way to make sure your pet has what it needs throughout its life, even if their caretaker is well-intentioned. A separate trustee to manage pet-care funds will help to ensure that the caregiver does not spend all the money right away while leaving nothing left to care for your pet. And remember — you will want to provide money to pay the trustee for the work they will be doing to manage the trust, if possible.
Specifically identify your pet in the trust
You don’t want somebody running a scam to get the trust money that is meant for your pet so you should specifically identify your pet in the pet trust. There have been cases where caregivers have replaced pets with identical-looking pets to continue receiving funds. Do not fall for this trick. You can use detailed descriptions, photos, microchip numbers, and even DNA samples to make sure your pet, or pets, are easily identifiable by the trustee.
Provide REALLY detailed information about your pet's care
Previously I recommended you make a complete plan for your pet’s care, and I want to emphasize that it is important to go through every eventuality. That means more than just day-to-day care. You also should try to set money aside for major vet bills, end-of-life care, and cremation or burial. You should also have a plan for what to do with any remaining trust money when your pet passes.
For example, you can have remaining funds be given to a specific person or charity. Giving remaining money to the caregiver might seem like a nice gesture, but it is not a good idea if you are at all concerned that the caregiver could end your pet's life for the money. After all, you cannot predict the caregiver's future financial needs.
Think creatively about funding
If you are worried that you do not have that much cash on hand to put into the trust, remember that you probably have other assets to draw from too. That could include life insurance policies, annuity contracts, savings accounts, or money gained from the sale of physical assets.
Drawing a blank on possible pet care issues? Unsure what assets can help fund your pet trust? We can help you figure out the answer to any questions you may have about building a pet trust for your pet.
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This article is a service of the Law Office of Keoni Souza, LLC, a Honolulu estate planning law firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
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