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Pet Trusts: What They Are and How They Work
More than a quarter (27%) of Baby Boomer households have a pet. Beezer the cat can be a member of the family, but what happens to Beezer or [insert your pet’s name] after you are gone? How can you ensure your pet will be cared for? One option is to create a pet trust. While you can give directions in your will to leave your pet to a caretaker, there is no guarantee that the caretaker will continue to care for your pet. A pet trust can provide a little more security for the pet because a third party — the trustee — is obligated to ensure the pet is cared for.
What is a Pet Trust?
A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.” With a pet trust, the trustee makes payments on a regular basis to your pet’s caregiver and pays for your pet’s needs as they come up. The federal tax code does not recognize a pet as a beneficiary of a trust. However, all 50 states and the District of Columbia have laws allowing pet trusts. Another option is to set up a traditional trust and place the pet in the trust along with the funds. The pet’s caregiver can be named the beneficiary. Regardless of what type of trust you use, the following are some elements the trust should include:
Selecting a Caretaker for Your Pet
The pet trust will need to name a caretaker who will be willing and able to care for your pet. The caretaker should be someone who is comfortable with your animal.
Pet Care Instructions
The trust should include specific instructions on all aspects of the pet’s care, including the brand of food, activities the pet enjoys, and the preferred veterinarian.
Funding for Your Pet Trust
The amount of money necessary to fund the trust depends on the individual animal. Typically, you can leave the money to the trust in your will. Be warned that under most pet trust laws, the court can reduce the amount of caretaking funds to what it deems is reasonable for the care of the pet.
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