Last year, when the designer Karl Lagerfield died, reports suggested that he had left some or all of his $195 million fortune to his cat, Choupette. This struck many people as an outrageous act of celebrity eccentricity, but in fact a lot of people like to provide for their pets in their estate plans. Needless to say, few people have anything like $195 million in their estates to leave to their pets, their relatives or anyone else, but every pet lover wants to make sure their animal companions are well cared for after they are gone.
One way to achieve this is by transferring ownership of the animal in a will. For instance, you might put wording in your will that gives your beloved golden retriever to your nephew, who always loved the dog.
However, transferring property through a will takes time, and it is in some ways ill-suited for transferring ownership of a living creature who will need food, medical care and attention every day. What’s more, transferring ownership of a pet doesn’t do a lot of good if the new owner doesn’t have the resources to care for the animal. For these and other reasons, some pet owners set up a pet trust.
How trusts work
Trusts are some of the most powerful tools in estate planning, and they can be adapted to many purposes, including care for a pet. Put simply, a trust is a way of dividing ownership of property between a trustee and beneficiaries. A trustee manages the property on behalf of a beneficiary or beneficiaries.
Trusts can take many forms, but in a fairly common scenario a trustee takes possession of an investment account and manages it for the benefit of named beneficiaries. The trustee sees that the principle property continues to grow, while giving reports to the beneficiaries along with checks once a year, quarterly, or at whatever regular interval is prescribed in the terms of the trust itself.
The terms of the trust itself can dictate how the money is to be used. For instance, a pet trust can specify that the funds will be used to pay for the animal’s food, medical care and other costs. Any pet owner knows that these costs can be high enough for dogs and cats, but they can be very expensive for animals such as horses, which need special facilities.
Every state, including Georgia, has a law allowing for pet trusts. Many states place time limits of of 21 years or less on pet trusts, but Georgia law specifies that a pet trust can last for the life of the animal.
Setting up a trust isn’t always easy, and it may not be the right choice for every pet owner. However, a pet trust can be a good way to see that animal friends are cared for, that heirs understand their obligations and that one’s wishes are honored.