Last week my brother’s dog passed away. For anyone who has lost a pet you know how painful that can be. I bring this up because I haven’t talked about pets from a financial and legal standpoint for a while. Although those of us who own pets know how special they are to us; under the law, pets are merely property. Because of this, it is important to take pets into consideration when it comes to estate and financial planning.
Because the law treats pets as property, as a pet owner there are two questions that you have to ask yourself: (1) What happens to your pet if you become disabled and unable to handle your affairs; and (2) What happens to your pet upon your death. If you don’t do anything, your pet will be treated as any other piece of property that you own. What that means is if you don’t have a will or a trust upon your death, under intestate succession laws, the State of Michigan determines who your beneficiary is. Typically, it will be your closest relatives. However, that may not be the right person to care for your pet. In fact, that may be the absolute wrong person. Therefore, it is important that if you are a pet owner, you do some estate planning for your pet.
Typically, for estate planning there are two ways to handle your pets. You can have a provision in your will or trust where you spell out who is inheriting your pet. You can even provide the financial resources to care for your pet. In addition, what has become more and more popular over the last number of years is a pet trust. A pet trust allows you to provide resources for your pet and also have trustees over the trust. The trustees act as a checks and balance to make sure that the pet is being properly cared for. If you leave your pet pursuant to a will, there are no checks and balances.
Another issue that pet owners have to face, particularly for those of you who are single, is what happens if you become disabled and unable to take care of your pet. If you have a pet trust you can take your disability into consideration. On the other hand, if you have a will, those provisions would not be effective for your disability. In those situations, having a provision in your medical durable power of attorney may be the most effective way of handling the situation.
The bottom line is that as a pet owner you have a responsibility to your best friend; therefore, it is important that you take them into consideration in handling your estate planning affairs.
There is another situation where you should consider your pet and that is in marriage. There have been many cases where a pet has become the center of controversy in divorces. Therefore, it is not unusual to take pets into consideration in doing a pre-nuptial agreement, particularly when someone is entering the marriage with a pet.
For those of you who are not pet owners, it may seem a little crazy to deal with a pet in a pre-nuptial agreement. However, I can assure you that there have been numerous cases where whoever gets the pet are the center of controversy. In fact, you even see today custody arrangements similar to those with children for pets. Therefore, to prevent fights and unnecessary litigation, taking your pet into consideration when you do a pre-nuptial agreement can save you a lot of grief and aggravation.
As most pet owners would say, they love their pets and would do anything they could to protect them. If you feel that way it is important to take your pet into consideration and protect it in any situation, whether it is your disability, death of even divorce.
If you would like Rick to respond to your questions, please email him at Rick@bloomassetmanagement.com.