'I'm 74 and Don't Trust My Kids With My Dog': How to Set Up a Pet Trust
What happens to your dog if your kids won't take her after your death? Here is a step-by-step guide to securing a trusted caregiver and funding a pet trust.
At 74, with about $1.5 million in savings, "Robert" was ready for a quiet retirement until about a year ago, when he brought his beloved Chihuahua, "Peanut," home. Peanut brought him great joy and became his constant companion.
Unfortunately, that love doesn't extend to his two adult children, who quite honestly can't stand Peanut.
With Chihuahuas regularly living up to 20 years, and since he doesn't trust his kids to take care of Peanut when he's gone, he worries about what will happen to her.
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Caring for dogs is expensive (about $1,937 a year). And Chihuahuas can be even more costly, as they are known to break bones, develop dental disease and experience knee dislocations. Plus, they tend to be high-energy and require a lot of attention. How can Robert make sure Peanut is cared for when he passes? He is willing to pay someone if that's what it takes.
Robert isn't alone. Millions of older Americans face the same dilemma. Here are four steps Kiplinger recommends to help people like Robert safeguard their pets' future.
Step 1. Designate a willing caregiver
The good news is that you can protect your pet and keep the family harmony intact. But first, you have to decide who outside your children you can trust to take care of them.
"Is there anybody else in your life that would want to take care of the dog?" asks Patrick Schultz, senior wealth planner at Clark Capital Management, when considering Robert's case. "It could be friends, family or sometimes a pet sitter you cultivated a relationship with," he adds.
If you don't have anyone on the list, organizations like those below can care for your pet if something happens:
- Local ASPCA chapters
- State- and city-run programs
- Private pet sanctuaries
- Animal shelters
Often, they charge an upfront endowment fee or require a provision in your will to cover the cost of the pet's lifetime care.
You can also appoint a professional trustee or a corporate fiduciary to designate a caregiver and oversee your pet's care when you pass, but that can get pricey and is usually for people who own a stable of horses or a large collection of animals that require significant, ongoing financial management.
Step 2. Create a pet trust within a revocable trust
Once you identify your pet's caregiver or caregivers, Wendy Sheinberg, a partner at Rivkin Radler LLP, advises establishing a pet trust within your existing revocable trust, if you have one. While you can create a standalone pet trust, it is often more cost-effective to incorporate it into your existing estate plan.
"If you go and set up a separate trust today, and if the pet is no longer with you, you'll have this free-standing pet trust that you paid a lawyer to set up that you no longer need. It's an unnecessary expense," says Sheinberg. "For most people, it makes more sense to do it within a revocable trust." When structured this way, the pet trust provisions typically activate only upon your passing, provided the pet is still alive.
You can name a caregiver in your will, but without a trust, it could end up in probate court, which means your pet's care and funding could languish for weeks or months while the courts work things out. In that case, your pet could end up in a temporary shelter, placed in an unsuitable home or without the medical care they need.
Step 3. Put up safeguards to protect against scams
The pet trust is where you outline all the specifics: who will care for your pet, how much of a stipend you’ll provide annually and how long the trust should last. Being specific and detailed is crucial, says Schultz.
He recalls a case from his early days as an attorney in which a client established a pet trust for a cat that paid the caregivers $25,000 a year. The trust lasted for 27 years, and the caregivers eventually admitted they had replaced the original cat with a lookalike three times over.
"We no longer paid for that cat. Nobody wanted to litigate that, but the trust wasn't paying for Fluffy Number 3. That was not the woman's intent," he says.
To ensure your estate isn't scammed, there are several requirements you can have written into the trust, including the following:
- Mandatory microchip identification: A licensed veterinarian must scan and verify the pet's microchip number before releasing any money.
- Annual veterinarian proof-of-life check: An annual exam is required before releasing funds to ensure the pet is still alive.
- Pet insurance requirement: The trust should require the caregiver to maintain a premium pet insurance policy using trust funds, so a single high vet bill doesn't wipe out the safety net.
- A "remainder" beneficiary: Designate where any leftover money will go (such as to an animal shelter) once Peanut passes away, removing the financial incentive for the caregiver to keep the trust after the pet's death.
"The trust lasted for 27 years, and the caregivers eventually admitted they had replaced the original cat with a lookalike three times over."
Step 4. Calculate the costs
While $25,000 a year to care for a cat may be excessive, when creating your pet trust, calculate how much care really costs, including food, supplies, grooming and vet bills.
If your caregiver is a little reluctant, you can offer additional compensation for their time and effort. Just make sure the estate can cover it, and also set a time frame.
Sheinberg said the trust could include language such as: "I [would] like to have the trust end on the earlier of the trust exhaustion, the death of the pet or 20 years and 364 days after the grantor’s death."
Thankfully, all 50 states and Washington, D.C. now have specific pet trust statutes. These days, pet trusts generally terminate upon the death of the last surviving animal covered by the trust. The 21-year limit is mostly an artifact of past practices, though some lawyers still include it to be safe.
The trust could also require that bills be presented and that a microchip registered in your name be implanted in the pet to confirm its identity. "But at the end of the day, if you think someone might try to swap in a different pet, you need to choose other people," she says.
The cost of doing nothing
The last thing you want is to do nothing. Under property law, your pet is treated as an asset, which means if you don't designate a caregiver, it goes to your beneficiaries, and if it's your adult kids, they can do with your pet what they want. It's better to have a plan so everyone is happy.
If you don't have a will or a trust, your assets pass to your heirs according to state intestacy laws, or default rules set by the state. If there is no executor, no will and no obvious family member willing to take the pet, the probate court oversees the distribution of your assets, including the pet. If no one steps up, the court may ultimately authorize the executor to surrender the pet to a shelter or rescue organization.
With a little planning and preparation, you can protect your pet without causing undue stress or family strife. A few hours spent with an attorney now will provide peace of mind for years to come. It is the best gift you can give both yourself and your loyal companion.
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