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Pet Insurance and Naming Someone to Care for My Pet When I Die?

Learn more about the personal-finance aspects of pet insurance and pet estate planning.
married couples estate planning

Americans love our animal companions, whether cats, dogs, lizards, mice, or chickens. Ninety-five percent of 16,000 dog and cat owners said their pets were part of the family, and most said they would pay any amount if their pet needed veterinary care. It’s a nice sentiment, but according to a recent article from The Street, “Best Tips For Navigating Pet Insurance and Estate Planning Costs,” the rising costs of pet medicine may not always allow this to occur.

Consumer Reports says few pet owners have pet insurance, and even when they do, coverage is not always a slam-dunk. One large insurance company canceled 100,000 pet insurance policies, leaving these owners few options. Pre-existing conditions aren’t covered in pet insurance, so older pets may be left in shelters when owners can’t pay for their vet bills.

If a pet policy is in place and the owner dies, the policy typically ends. The new pet owner must purchase a new one. This may be prohibitive for the new owner, making pet estate planning necessary.

Pet estate planning is exactly as it sounds—estate planning with a pet in mind in case the pet owner dies before the pet. The typical plan includes a pet trust containing funds dedicated to the animal’s care, with a trustee named who will be in charge of the assets.

A pet estate plan also names a person as the pet’s custodian. This person may or may not be the same person who is a trustee of the pet trust.

Estate planning is important for senior pets, who are less likely to be adopted if they are in a shelter and more likely to have expensive medical costs. Another reason for a pet trust? If the owner becomes incapacitated, admitted to a hospital, or needs to spend an extended time in a rehabilitation facility and won’t be able to care for the pet, the trustee can act.

How do you know how much to place in a pet trust? The amount depends upon the type of animal, their life expectancy, and the overall cost of their care. For instance, a pet trust for a horse would need to be far larger than one for a domestic cat.

Why can’t you give someone money in your will to take care of your pet? Unless the money is in a trust, there’s no way to ensure that the funds will be spent on the pet’s care. A trustee is a fiduciary bound by law to use the trust’s assets for the pet’s well-being.

An estate planning attorney can create a pet trust and guide the owner in naming a trustee and custodian. Just as an estate plan needs to be reviewed and updated every few years, the pet trust should also be reviewed.

Reference: The Street (June 10, 2024) “Best Tips For Navigating Pet Insurance and Estate Planning Costs”

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