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Kevin Greenard: Including your pet in your estate plan

Kevin Greenard

When we are working with our clients in creating an estate plan, one question we ask clients is if they have any pets. For many of our clients, their pet is a member of the family. Your pet is dependent on you for its survival and well-being. A plan should be in place if something were to happen to you. When we ask clients about who will take care of their pet(s) when they pass away, many have not considered the matter let alone made any concrete plans.

There are many factors in considering who should care for your pet. First you should ideally have someone who the pet is familiar with and is willing and able to provide care for your pet should something happen to you. If you are considering naming one person, thought should also be given to what if something were to happen to them: Do you have a contingency plan?

In your Will, it is possible to leave your pet to a named individual, which we will call the “caretaker.” Normally, a sentence would be added in this section of your Will to deal with the contingency of the caretaker being unable or unwilling to care for your pet. One approach to this situation is to give your Executor the power to select an appropriate person to take in the pets.

Another option is to create a trust within your Will specifically for your pet. This is also known as a Pet Trust. You could establish a trust named after your pet, for example the “Rover Fund.”

In choosing this option, you must have a caretaker that you would also name as the trustee. The Rover Fund would receive a sum of money payable to the trustee/caretaker provided that the trustee/caretaker uses it to look after Rover.

Similar to above, a sentence would need to be added in the Rover Fund section of your Will to deal with the contingency of the trustee/caretaker, in case they are unable, or unwilling, to care for your pet.

Typically, you would give your Executor the power to select an appropriate trustee/caretaker to accept the money from the Rover Fund and take responsibility for caring for Rover.

It should be relatively straight-forward to estimate a reasonable dollar amount to designate for the trustee/caretaker. The calculation could be based on your assessment of the life expectancy of your pet, age of the pet and an estimate of the annual costs.

Other factors like the type of pet, the pet’s medical condition, and the level of care that you want to be maintained should be considered when coming up with a dollar amount.

Perhaps the largest annual costs for caring for pets are veterinarian costs if your pet needed specific medical care. Similar to medical care for humans, the cost of veterinary care tends to increase as a pet ages.

Some of our clients have pet insurance for which they pay monthly insurance premiums. Even though our clients have purchased health insurance for their pet, it is important to keep in mind that the policy may not cover all health-related events. You will likely want to make sure you have allocated sufficient funds in your estate plan to cover future health-related issues, and also to ensure your pet’s basic needs are covered if your pet lives a few years beyond its standard life expectancy.

Each pet is different. Grooming costs, equipment costs, and medications will fluctuate. Estimating food and other costs for your pets should also be a relatively straight forward exercise. The budget could even include the costs of pet cremation and burial, as well as an extra amount for your caretaker/trustee for the time caring for your pet.

You could simply leave a flat dollar amount to the Trust or create a methodology that is outlined along with the estimated remaining life of your pet. You could create a budget that says it costs roughly $2,000 a year for your pet.

If you decided to leave $2,000 for each estimated year of life left for your pet, you would have to know your pet’s age and estimated lifespan. If your dog’s breed has an average lifespan of 12 years, then you could build this formula into the calculation.

The amount that you set aside for the caretaker for a two-year-old dog (10 years estimated remaining lifespan) would be greater than the amount you set aside for a nine-year-old dog (three years estimated remaining lifespan).

If you use this type of methodology, we recommend you discuss this with the potential caretaker to make sure they are agreeable.

Kevin Greenard CPA CA FMA CFP CIM is a Senior Wealth Advisor and Portfolio Manager, Wealth Management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week at Call 250-389-2138, email [email protected], or visit