If you count yourself in the 95% of pet parents who consider their pets to be members of the family, you'll want to specifically include your pets in your estate plan. However, since pets are technically considered property under the law, you can't simply give money directly to your pets like you would a human beneficiary or organization.
The workaround is to make funds and other support available for the pet's use under the supervision of one or more humans by a separate legal instrument. One such legal instrument is a pet trust.
Types of Pet Trusts
A pet trust generally takes one of three forms:
- A revocable living trust, also known as an inter vivos trust, created during the pet parent's lifetime;
- A testamentary trust created under the pet parent's will; or
- A separate sub-trust created under a pet parent's revocable trust instrument that only becomes effective on the pet parent's death
The third option of a separate sub-trust under a 'main' revocable trust instrument is typically the most common.
Pet Trust Requirements
All 50 states recognize the validity of pet trusts. While the laws governing the creation and administration of pet trusts vary from state to state, most pet trusts share five elements:
- Identification of pets. Perhaps the most obvious, the trust instrument should identify the pets on behalf of which the trust is intended to serve
- Nomination of a caretaker who takes physical custody of the pets and is responsible for their health, safety, and wellbeing.
- Nomination of a trustee responsible for administering the trust, which includes making distributions to the caretaker for the benefit of the pets and completing all accounting and regulatory filings. The trustee can but does not need to be the same person as the caretaker.
- Dedicated use of trust funds. Except as expressly provided otherwise in the trust agreement, the principal or income may not be converted to any other use other than the benefit of the pet
- Distribution of all remaining funds upon termination of the trust. Upon termination of the trust, any of the funds leftover must be distributed. Typically, the trust specifies remainder beneficiaries entitled to receive these distributions
In addition to these five common elements, a pet trust instrument may also include care and medical instructions for the pets, contact information for veterinarians and other people, or nomination of a third-party to oversee the trustee's proper use of the trust and the caretaker's proper care of the pets.
Like other trusts, in order for a pet trust to be effective you will need to fund the trust. If the pet trust is a standalone revocable living trust, you'll fund the trust immediately after creating it. If the pet trust is a testamentary trust or separate sub-trust, the trust will be funded at your passing based on the funding provisions specified in your will or primary revocable living trust.
Alternatives to Pet Trusts
A pet trust is not a viable option for every pet parent because it involves additional expense potentially both during the pet parent's life and after the pet parent's death. Unless you plan on leaving a small fortune for your pets, you may consider a Pet Protection Plan that mirrors the benefits of a pet trust without the cost, making an outright gift of the pets and an allowance to a trustworthy person who has agreed to care for the pets, or gifting the pets to a pet retirement home or sanctuary that has agreed in advance to take care of the pets.
