February 20th is officially “National Love Your Pet Day.” This is a day for toys, treats, and back scratches for your furry babies. No question about it, the love people have for their pets is undeniable. So much so, it is even showing up in many people’s estate plans. There is a growing trend for people to include their pets in their estate planning documents. According to a survey conducted by Harris Poll for RocketLawyer.com, 18 percent of the participants in the study said they would include their pets in their estate plan. The poll also found millennials more likely and interested in including pets in their estate plan than baby boomers (millennials ranked at 23 percent; baby boomers at 14 percent).
This growing trend for pets in estate plans certainly caught the attention of our estate planning attorneys. We understand that your pets are your family. When creating an estate plan that includes your pets, we recommend these tips to safeguard your furry babies:
- Assigning a Guardian for your Pets in your Will or Trust.
A Last Will and Testament (“Will”) is an important estate-planning document that, although losing in popularity to a Living Trust, can still provide crucial financial organization. Wills are used to designate who should receive your assets upon your death. The people or charities you designate are called beneficiaries. Wills allow you to appoint someone to become “Personal Representative” of your estate. This person will be responsible for carrying out your last wishes according to what you wrote in the Will.
A “Living Trust” is a primary estate-planning document that is used in place of a Will. Assets are then transferred into the Trust. Trusts are used to by-pass probate. This means that upon your death, all assets in the Trust pass to the beneficiaries through the Trust, and not through any court process. Trusts can provide your beneficiaries with asset protection. Upon inheriting any monies or assets through a Trust, the beneficiary enjoys financial protection from future creditors, divorces, and bankruptcy. Living Trusts are fully revocable: the creator can change any terms or completely revoke (cancel) the Trust. Trusts are private documents that unlike Wills do not become a part of the public record.
Both a Will and a Trust allow you to assign a guardian to take care of your pets once you’ve passed away. You can detail what diet, type of attention, and routine your pets should have once placed the guardian’s care. You can even set up funds for your pet, which your assigned guardian can access and use for the pet’s care. These funds can be set up either through your Trust, a bank account, or a life insurance policy for your pets. Sadly, your furry babies can’t inherit your money or property. According to the court, pets are considered “property,” like a piece of furniture or a car. If your pets are not assigned to a guardian or any type of care after you’re gone, and no one comes forward to claim the animal, the court will treat it as property and possibly send it to a shelter or, even worse, local or state animal control. These animal control centers have a reputation of being “kill shelters” and disturbingly, no owner wants to envision their pets there.
- Considering Who Your Guardian Will Be
It is important to consider is who the guardian of your pets will be. You are able to choose different individuals for different pets and can designate alternate guardians in case the original guardian can no longer fulfill their role. It is also critical that you believe your pets’ future guardian will adhere to all the terms embedded in your estate plan. They should be trustworthy enough to use the funds you set up for your pets for only your pets, maintain the number of checkups and maintenance appointments in the year for them, and never neglect them.
P.S. Don’t forget about charitable giving!
Your love for animals can even extend to animal charities in your estate planning documents. Some efficient ways to show your philanthropy include:
- Make a gift to charity at the time of your death under the terms listed in your Will.
- Make a charity the beneficiary of your trust, such as your living trust, an irrevocable trust, or a charitable trust.
- Make a charitable distribution through your retirement accounts.
- Establish a charitable foundation of your own.
Regarding tax benefits, if you mention that you want “charitable giving” and assign animal charities in your estate plan, then you may be eligible for a reduction in your estate taxes, depending on the state you reside in.
You can also set up a Charitable Trust. Charitable Trusts are where a person creates a Trust and names a specific charity as a beneficiary. In the state of Florida, there are various types of Charitable Trusts. The two most popular ones are a Charitable Remainder Trust and a Charitable Lead Trust, which are essentially the opposite of each other. A Charitable Remainder Trust first disperses income to the creator (grantor) or the beneficiaries of the trust. After a specified term of years, the trust terminates, and the remainder of the trust assets are distributed to the charity designated in the trust. A Charitable Lead Trust pays income to the charity first. Upon trust termination, the remainder of the trust assets are distributed to the creator (grantor) or any beneficiaries designated in the trust. These two types of Charitable Trusts are both irrevocable and applicable to receive tax deductions.
Believe us, we get it. It is hard to name something you love more than animals. Our pets are also more than just property. They are family, and we understand the importance of ensuring our family’s well-being even after we’re gone.