Because a trust allows for the distribution of funds at designated intervals, establishing a trust that includes plans for pets is a very useful way to ensure furry friends receive continuous care. When earmarking funds for pets, it is important to also provide as much detail as possible about care expectations.
Living Trusts and Pet Trusts
Establishing a trust to hold assets for designated purposes, whether self-care in the event of decline, or gifts to beneficiaries, charities, and yes, pets, is a pragmatic way to ensure funds are set aside and aligned to our intentions and values. Specifically:
A living trust is a legal arrangement that allows you to transfer ownership of your assets to a trust account for various financial purposes, including estate planning. You’ll assign a trustee to be responsible for the assets in the account on behalf of the beneficiaries. The assets within the account will be distributed after death or at any other time you choose.A living trust is created when a person, called a grantor, signs a trust agreement. When used as an estate planning tool, the agreement typically includes details about the purpose of the trust, the types of assets that can be held in the trust, the duties and responsibilities of the trustee, and the designated beneficiaries who will receive the assets in the account after the grantor dies. Next, the grantor transfers ownership of their assets and property to the living trust account.
Since assets placed in a trust bypass the public process of probate, they can be promptly given to beneficiaries upon the death of a grantor. Trusts are also advantageous in that they allow for the distribution of assets at intervals, based on the instructions accompanying the trust. Accordingly, estate planning experts point out that when a living trust is created, arrangements for pet care (aka “pet trusts”) can be included:
When you create your living trust you can include a Pet Trust to provide for your pet. You can also designate the person you want to be your pet’s caregiver….And you can include any monetary compensation you wish to leave your caregiver for your pet’s expenses. By creating a pet trust, you ensure your pet will be taken care of by the right person in the right way.
It’s important to include the following information when creating your Pet Trust:
– The name and address of your caregiver;
– The amount of monetary compensation to go to the caregiver for your pet’s expenses;
– Specific instructions regarding care and feeding for your pet;
– Detailed information identifying your pet (including microchip or DNA info…);
– Instructions for the trustee to regularly inspect the pet to prevent fraud by the caregiver;
– Directions for what should be done with your pet’s ashes or body when it dies.
Note that the pet’s caregiver does not have to be the same person as the trustee, who takes on the overall fiduciary obligations related to administering the trust. In addition to designating caregivers for pets wisely, the ASPCA encourages putting as much thought and detail as possible into trust arrangements: “A trust that takes effect during the life of the pet owner can provide instructions for the care of the animal(s) in the event the pet owner becomes incapacitated (sick, injured, comatose, etc.). Since pet owners know the particular habits of their companion animals better than anyone else, they can describe the kind of care their pets should have and list the person(s) who would be willing to provide that care.”
Good To Know: Trustees and Trustee Bonds
When any type of trust is established, one or more trustees are named to administer the assets in them, based on the arrangements specified in the trust agreement. Trustees are held to high legal standards, known as fiduciary obligations, “the most important of which are the duties of loyalty and care, and the duty to act in accordance with the terms of the trust agreement.” Given the seriousness of the role, trustee bonds are often required. Essentially, a trustee bond is a specific type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable state law. As a leading national provider of many types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain trustee bonds: Just get a quote online, fill out the information, and enter a payment method. Then, simply print or e-file the bond from anywhere.
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