The Independent Investor: Pet Trusts Are the Way to Go

If you have been avoiding a visit to an estate planning lawyer, despite the pleading of your spouse, your kids or grandkids, consider this: your pet's future well-being could be in jeopardy without a legal safeguard.

As I wrote in my last column, new legislation is surfacing in a number of states that recognizes our concern for our pets. Even though we consider our pets part of the household, legally, your pet is not considered a human. Instead, they are considered tangible property and, generally speaking, tangible property cannot be named as a beneficiary of a trust.

Many states, however, are allowing legally enforceable documents that can guarantee a pet's continuing care. Forty-six states and the District of Columbia have passed statutes specific to pet trusts, according to the Animal Law Review. In Massachusetts, legislation was passed in 2011 to provide for pets' welfare after their owners' demise.

"The definition of tangible personal property hasn't changed," explained attorney Holly Rogers, an expert in the area, "but legislatures have recognized a compassionate exception when it comes to our pets."

The primary legal document required to safeguard your pet is a pet trust, according to Rogers:  "It can be as simple as 'I leave $20,000 to my sister, Betty, for the care of my cat, Fluffy.'"

The pet trust can be a stand-alone document, inserted into your will, or worked into your existing revocable trust. And, as we have written in the past, everyone should have a will or trust anyway. A trust is especially important if minors or adults who can't care for themselves are involved. A trust allows your beneficiaries and your pets to avoid probate which is time-consuming, public and expensive. Trusts also allow for tax-planning if you are leaving a substantial inheritance to your beneficiaries.

For those of us that want more than a simple directive, a pet trust can be drafted with any amount of complexity. Rogers who does estate planning for her Massachusetts clients, is the local "go-to" lawyer when it comes to pet planning.
 
"I have created trusts where there are multiple layers of contingencies," she says. "The trust can name trustees and caretakers both appointed within the document, in which the trustee insures that the pet is cared for and disburses money to the appointed caretaker, and provides specific provisions for the pet's care and the duties of the trustee and caretaker. Responsibilities can be broadly or narrowly defined depending upon the owner's wishes. "

How much can you expect to pay for a pet trust? It depends on who you go to and the level of complexity that you demand. Holly Rogers would be much more reasonable. She estimates a range of $250 for an amendment to add a simple pet trust to your existing will or trust to as much as $1,500 for a soup-to-nuts drafting of an estate plan for you and your family in which your pet trust is part of the package.

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.