Estate planning for pets – Part 2
- Proposing a trust in your will to eliminate the limitations of a basic estate plan of leaving your pet in the hands of a caregiver along with a financial bequest to cover the pet’s expenses.
Last week I identified limitations of leaving your precious pet, along with a lump sum of pet care money, to a trusted beneficiary.
The limitations I identified:
- The trusted beneficiary (the “caregiver”) might be a very loving pet owner, but the standard of care they are accustomed to giving their pets might be lower than what you want for yours.
- The caregiver is in a conflict of interest when it comes to the lump sum of money (the “pet fund”) if they have competing financial wants or needs.
- There is a lack of contingency plan after the pet fund has been paid to the caregiver, if they are no longer willing or able to look after your pet.
I am going to discuss how those limitations might be overcome.
Standard of Living Issue
My brother has a big heart for dogs. He’s taken in all sorts that have needed homes. He loves them to bits.
He’d take in yours too if you left it to him in your will. No questions asked. No compensation required. He wouldn’t even need a pet fund.
But he’s at work all day. He walks his dogs, but not daily. He feeds them, but not the highest end dog food. He’ll get them veterinary care if really needed, but the minimum.
He’s very honourable and wouldn’t misuse a pet fund.
But the extra effort of giving your dog a higher standard of living than what he has provided to his own dogs would be too high an expectation.
How about paying your chosen caregiver for those extra efforts.
Not just reimbursement for the extra expense, but compensation for taking the extra time out of their day to arrange the dog walker, have special treats available and provide proactive veterinary care, etc.
Of course, you’d have to come up with a sufficient hourly rate, or perhaps a flat monthly payment, that would motivate them to take those “above and beyond” steps.
Conflict of Interest
Insulate the pet fund from the caregiver’s financial wants and needs by putting it in the hands of a third party: A “pet trustee” who takes on the responsibility of reimbursing the caregiver for expenses incurred looking after your pet.
The pet trustee would also manage payment of compensation to the caregiver for their services.
You would direct that anything left in the pet fund, after your pet has lived out its privileged life, would go to some independent third party – perhaps the local humane society or SPCA.
Changing Caregiver
If something happens to the caregiver that they can no longer look after your pet, or if the pet trustee determines that they aren’t meeting the required high standard of care, the pet trustee would find an alternate caregiver.
This Can Be Accomplished in a Trust
I’ve given a basic description of what a “trust” is in a previous column. Find that by typing “What is a trust Hergott” in a browser search.
This column outlines the basic elements of a trust that could be set up in your will for the care of your pet.
The trust would own both the pet fund and your pet. The caregiver would have possession of your pet and responsibility for day-to-day care, but the pet trustee would retain ultimate authority to move your pet to a different caregiver if circumstances required.
You would very clearly describe the standard of care you want for your pet. Your pet trustee would ensure that standard is provided, paying the caregiver compensation and reimbursing their expenses.
The caregiver gets no benefit from under-spending on your pet because anything left in the pet fund goes to an independent charity.
Note that the terms of the trust would also need to include reasonable payment to the pet trustee for their services.
Drafting this Trust Clause
The trust structure I’ve described is conceptually straightforward. The challenge is drafting it in a way that is practical and effective.
I’d be interested to hear from readers who have included pet trusts in their wills. I’m interested in seeing how other lawyers have drafted pet trust clauses to address the issues I’ve raised.
Having a paid trustee oversee care provided to your pet after you die is going way above and beyond the norm. I expect there are many folks like my brother who would happily step in to look after an orphaned pet, giving them a very comfortable home without any need for estate planning.
If you are giving your pet a very privileged life and want to ensure they continue to enjoy that standard of living if something happens to you, consult with a lawyer with expertise in pet law and trusts to discuss what’s possible and the expense involved. If you need help, let me know and I’ll refer you.
