Practical Financial and Estate Planning for Pets

by Iris Zinck, Financial Advisor

Most prospective parents today plan ahead for the costs of caring for their children. Consulting a financial planner can help them choose strategies to manage these costs, as well as ways to protect children in the event of parental death or disability. But what if your “children” happen to have four legs, feathers or scales? More than 71 million homes in the U.S. now include at least one pet [1], yet few people consider the role pets play in their lives when they sit down to focus on finances.

This lack of attention can result in beloved pets ending their days in a shelter if their owners’ wills didn’t provide for them, or compel pet owners to euthanize their pets because they can no longer afford veterinary care. More recently, a lack of planning has contributed to the dramatic increase in the number of pets surrendered to shelters when homes are lost to foreclosures.

Fortunately, there are many strategies available to help pet owners ensure that their animals will have the care that they need, not to mention a roof over their heads. Given your circumstances and goals, a knowledgeable financial advisor can help you identify and appropriately address issues related to your pet’s ongoing care as part of your financial plan.

Let’s look at three key issues you should consider as part of your planning process.

Protect yourself and your pet

Would you take a long trip before making sure your car has plenty of oil and the tires are in good shape? Hopefully not. Useful financial planning also facilitates forward thinking. Before making any recommendations, a skilled advisor will review your current situation. Is your current level of debt manageable? Will you be facing higher mortgage payments in the future? Have you set aside adequate cash reserves for emergency use? Do you have a way to cover the cost of caring for your pet if you were to become disabled, or if your assets were depleted by nursing home costs? Issues like these are important to consider not just for your own behalf, but also for anyone who depends on you for support, including your pets.

Prepare for emergencies

Every pet owner’s worst nightmare is a trip to the emergency vet in the middle of the night. Depending on where you live, such a trip could cost you up to $250 just to walk in the door, and treatment is likely to run into thousands of dollars. While you can purchase pet insurance, you should carefully consider such a policy’s utility and cost-effectiveness. Depending on the policy’s terms it may cover accidents, may have a long waiting period before any illness is covered and may exclude conditions most likely to affect most pets.

Another option is saving a set amount every month in an interest-bearing account. In a July 2008 article on its website, the Financial Planning Association suggested that pet owners consider this approach, and recommended saving $400 to $500 per pet each year. Another possibility is obtaining and setting aside an additional credit card that is to be used only for this purpose. Finally, you should be aware of CareCredit, a health care payment plan that offers no-interest or low-interest loans for expensive pet treatments. However, it’s not available everywhere and may not be offered at the veterinary emergency hospital closest to you. To investigate this further, go to; if you click on “Find a Doctor,” you will find veterinarians listed among the categories and you’ll be able to tell if those near you accept it.

Most breeders recommend that you decide how to handle emergency costs as far in advance as possible, ideally, before you even bring your new pet home. Whatever strategy you choose to manage pet emergencies, it’s important to factor the cost of such emergencies into determining how much of a cash reserve you need to maintain. Your financial planner may be able to suggest the best approach for your situation.

Include your pets in your estate plan

Preparing for the inevitable is something we never like to think about, but a well-organized estate plan can be one of the greatest gifts you’ll ever give to those who outlive you. If you own a pet, you should include provisions for its care. Neglecting to do so generally means whoever receives your personal property will also receive your pet, regardless of whether or not they want the animal or are capable of caring for it.

Most people simply have an informal understanding with a trusted friend or relative who they count on to take in their pet and may even leave that person money for the pet’s care. However, bear in mind that such arrangements, like naming a “guardian” for your pet, are not enforceable and involve no oversight to ensure funds intended for the pet’s support are spent on its care. Thus, if the trusted person’s circumstances change and they are no longer willing and able to provide for your pet, it may easily end up in a local shelter for adoption.

For anyone desiring more certainty in providing for their pet’s ongoing care, a pet trust may be a useful solution, especially if you have multiple pets and/or intend to allocate meaningful funds toward their (or its) care. Using a trust allows you to name an initial (and successor) trustee who is responsible for making sure your pet is cared for according to the trust’s terms as well as a direct “caretaker,” who cares for the pet (either with or without compensation) utilizing funds from the trust as distributed by the trustee. If the person(s) you designated as caretaker is unable or unwilling to fulfill this commitment, the trustee would also typically identify a substitute caretaker as necessary. You would also be able to name one or more “remainder beneficiary(ies)” (like other family members or charities), who would receive any assets remaining in the trust after your pet’s passing.

What you should know about setting up a pet trust

Because the rules governing pet trusts vary from state to state, you’ll need to consult a local attorney to find out what approaches are available to you. A traditional pet trust provides you with the most control over your pet’s future, but can be costly to utilize. According to Professor Gerry Beyer of Texas Tech University, statutory pet trusts are a simpler, less expensive approach; as of August 2008 they were available in nearly 40 states as well as the District of Columbia. However, care in reviewing your state’s law is required, since statutory pet trusts are merely “honorary” in some states and thus unenforceable (meaning the trustee may use the trust’s funds for the pet’s benefit or transfer them back to the estate executor for distribution to persons due to receive your personal property). If an enforceable, statutory pet trust is not available in your state, a traditional pet trust may be the only means of providing for your pet’s ongoing care with sufficient certainty.

An attorney can also help you determine whether a testamentary trust (i.e., a trust that only becomes effective upon your death), or an “inter vivos” trust (i.e. “living” trust established during your lifetime) is more appropriate for your situation. Generally, a testamentary trust is more affordable to set up, but with this approach, the funds for your pet’s care may not become available until the estate goes through probate. Establishing a funding trust during your lifetime is likely more expensive. However, it should help make the designated funds available virtually as needed upon your death and would also enable you to provide for your pet in the event of your disability/incapacity. [2]

Regardless of the type of pet trust you might utilize and when it is established, you should consider how to effectively coordinate it with your overall estate plan as well as how (i.e. with what) you intend to fund the trust. Even though the legal documents for a statutory pet trust may now be available online (for a modest fee) you should consult with an attorney to clarify your choices and ensure the document you utilize is best utilized for achieving your desired outcome (and avoid unintended ambiguity or complications.) In order to adequately fund your pet trust, you may want to designate specific assets, create a dedicated account for this purpose, or name the trust as a (likely partial) beneficiary of a life insurance policy.

Depending on your specific circumstances and goals, your financial advisor can help identify common solutions to address they key planning issues. Considering how much happiness and companionship your pet brings into your life, not to mention how much it trusts and relies on you, doesn’t it make sense to plan for your pet’s welfare as you focus on your own financial future?

This information is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied up on in any particular situation without the advice of your tax, legal and/or your financial advisor. Neither Ameriprise Financial nor its advisors or representatives provide tax or legal advice. The views expressed may not be suitable for every situation.

Ameriprise Financial Services, Inc., Member FINRA and SIPC.

© 2008 Ameriprise Financial, Inc. All rights reserved.

[1] Source: 2007-2008 National Pet Owners Survey conducted by the American Pet Products Manufacturers, Inc.

[2] “Estate Planning for Pet Owners,” published on and updated 8/14/2008

Iris Sinck and Erica Hubbard are financial advisors who focus on the concerns discussed in this article as part of their financial planning process. For more information, visit their web pages: or