Pets as Beneficiaries in a Will?
Pets cannot be a direct beneficiaries in a will. A person can be a beneficiary and receive money for the pet's care, but the beneficiary is under no obligation to use the money for the care of the pet, unless a pet trust is created.
Pet Trust
A pet trust can be created to ensure that your pet is taken care of after you die or if you become disabled. In effect, you are giving your pet, and money or property for the care of your pet, to a trusted person or bank ("trustee"). The trustee is under a duty to follow your instructions and will give your pet to the designated caregiver ("beneficiary") and will use the funds in the trust to pay the beneficiary for your pet's care.
In a traditional pet trust, the trustee follows your specific instructions and continues to pay the beneficiary for the pet's expenses so long as the beneficiary takes proper care of the animal. Of course, it is always a good idea to name alternate caregivers and instructions regarding what to do with any leftover funds, should your pet die prior to using the entire amount. If you neglect to make a trust for your pet but mention the pet in your will ("testamentary" trust), Colorado has a statute that "fills in the gaps" regarding any details you leave out.
Trusts may be made while you are still alive ("intervivos" or "living" trust) or when you die through trust provisions in your will ("testamentary" trust). A testamentary trust does not become effective until your death and is subject to court review ("probate"). Thus, there may be a delay between your death and when the will is probated. Unlike a testamentary trust, a living trust becomes effective immediately when signed and funded. Thus, there is no delay between your death and the property being available for your pet. In addition, unlike a testamentary trust, a living trust can immediately provide care for your pet if you unexpectedly become incapacitated. Needless to say, the trust should be updated if and when circumstances change (e.g. your pet dies or your chosen beneficiaries change, etc.).
Funding a Pet Trust
In a living trust, you transfer money or property to the trustee while you are alive and the trustee holds onto it until your death or incapacity, at which time it is paid to the beneficiary for the care of your pet. You may also use a "pour over" provision in your will to add funding to the trust upon your death.
In a testamentary trust, a trust provision is included in your will, and it indicates how much of your property to leave for the trustee.
You may also designate your trustee as the beneficiary in a life insurance or retirement policy, but an attorney should be consulted first.
The amount of funding to put into the trust depends on several factors, including the type of pet and its life expectancy. Keep in mind that an unreasonably high amount may cause your surviving relatives to challenge the arrangement.
A person should be named to receive funds leftover after the animal dies and the trust ends. This "remainder beneficiary" should be different from the primary beneficiary so that there is no incentive to hasten your pet's departure.
For an overview of the major estate planning tools, please visit the Estate Planning page.