Many people worry about what will happen to their pets when they die, but all too often they fail to plan their estates accordingly. One way to reserve funds for a pet's care is to designate proceeds from a life insurance policy. A life insurance policy also can be a way to generate funds for other purposes, such as paying funeral expenses, providing for other loved ones or naming your favorite charities as beneficiaries.
Many states now allow a pet owner to set up an enforceable trust that courts can monitor to ensure that funds set aside for a pet are used as the deceased owner intended. In other states, pet owners must leave funds to a specific person charged with administering care without court oversight, known as an honorary pet trust.
Consider this example. Elizabeth, 50, wants to set up a trust to care for her two horses, three dogs and a cat when she passes away. She purchases a permanent life insurance policy with a death benefit of $100,000. If she passes away before her pets do and while the policy is in force, the death benefit can fund a pet trust that she had established. This ensures that the trust receives funding for what may be several decades or more of pet care, and Elizabeth’s family or her designated charity can receive whatever remains of the death benefit after her pets are deceased.
The best place to start a conversation about this type of estate planning is with your accountant, attorney or life insurance representative. Keep in mind that enforceable pet trusts are not available in every state and that, because they are relatively new vehicles, many estate planners may not be familiar with them.
The HSUS has developed a fact sheet called Providing for Your Pet's Future without You for you and your estate planner, which features sample language that can be used in your will. The HSUS also encourages every pet owner to use a living trust to make sure a pet is cared for in the event of an owner's severe disability, a situation in which a will would not be valid.
Companies like MassMutual, which hosts planned giving seminars for HSUS members nationwide, offer this sort of coverage. For more information, please visit www.humanesociety.org/petsinwills, email us at gifts@humanesociety.org or call us at 1-800-808-7858.
Insurance as a Charitable Gift
Life insurance policies also offer excellent ways to increase contributions to the charities that mean the most to you. As a complement to your regular or annual gift, naming your charities as beneficiaries creates a legacy after you pass on. More information on ways to enhance giving with insurance policies is available at www.humanesociety.org/insurance.
Updated June 8, 2008
