Estate planning is something we do for the ones we love. Too often, however, people neglect their furry or feathered family members when creating a plan for the future. Believe it or not, estate planning for pets is a growing trend, and it’s not just for the uber-wealthy with pampered poodles. If you have a pet that you love, you need to consider what would happen to your pet if you were no longer around to care for it, whether due to death or physical or mental incapacity.
Fortunately, estate planning for pet owners can be easily incorporated into the general estate planning process, and it can provide security for your pet and peace of mind for you.
What is Involved in Estate Planning for Pets?
Estate planning for your pets doesn’t mean creating a trust to fund Fifi’s pedicures in perpetuity. It simply means creating a plan for your animal’s care in your absence, and providing funding for that care. You might think, “Well, my daughter will make sure my dog is taken care of,” or “My brother loves my cats, I’m sure he’ll take them.” But even if you have discussed the issue in passing, when the time comes, the caretaker you were counting on may have different thoughts. They may not have the time to care for an active or ailing pet, or the financial resources to feed a pet and pay for their other needs, such as medical care.
Creating a pet trust is a way of formalizing an agreement with a chosen pet caretaker and giving them what they need to properly care for your pet. This isn’t something new; it’s a concept that has been codified in Michigan estate planning law for decades.
How Does a Michigan Pet Trust Work?
A pet trust can be a standalone document. But more commonly, it is incorporated into an individual’s larger trust document. So, if you are already making a trust as part of your estate plan, you can easily provide for your pet in the document.
Most people who make a pet trust do so for a dog or cat, but you can do so for any domestic animal, including a horse, bird, hamster, turtle, or even a pet snake. A pet trust can provide for multiple animals and terminate upon the death of the last pet.
The person creating the trust is known as the settlor. The settlor names a trustee, who will manage and distribute assets in the trust for the benefit of the trust. The trust also names a caretaker who will be directly responsible for the pet’s care. The trustee and caretaker may be the same person, or two separate people. Having a separate trustee and caretaker can provide a measure of oversight and assurance that trust funds are being used for their intended purpose. Talk to your estate planning attorney to discuss whether separating the two roles is necessary or desirable in your situation. If you don’t name a trustee for your trust, or your chosen trustee is unable or unwilling to serve, the probate court will appoint a trustee.
Once you and your attorney have decided on appropriate terms for your pet trust and drafted and executed the trust, you’re still not done. You must fund the trust: place assets in the name of the trust so that the trustee can distribute funds for your pet’s benefit. Your estate planning attorney will advise you as to how best to fund your pet trust, but it can be as simple as creating a checking account in the name of the trust and putting money in it for your pet’s care.
How much money should you use to fund the trust? That depends on the age and need of your pet or pets. It costs much more to provide for a horse than, say, the average cat. You will want to fund the trust with enough assets to ensure that your pet has the food, medical care, grooming, and other incidentals they need. That said, don’t put more money in the trust than will reasonably be needed for the pet’s care.
The sad reality is that your pet will pass away at some point, and there may be funds remaining in the trust. To prepare for that possibility, your pet trust should name a contingent beneficiary who will receive any money remaining in the trust when its purpose has been completed. The trust continues, as stated above, until the pet passes away, or for a maximum of 21 years, whichever event occurs first.
Don’t Neglect Estate Planning for Pets
If you are like many people, your pet is a member of the family. You would never leave a family member’s future care to chance; not every pet owner can count on someone kind stepping up to provide pet care. Take measures to protect your pet today.
If you have questions about Michigan pet trusts, contact Estate Planning & Elder Law Services to schedule a consultation.