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The name may evoke stories of heirs and heiresses setting aside enormous sums for their pets, but these trusts aren’t just for millionaires.
Many pet owners see their beloved animals as a part of the family – but if something were to happen, who would make sure Spot was taken care of? Would someone provide him with needed food, water, and medicine? Would he end up at a local animal shelter?
For some, knowing the answer to these questions is worth establishing a pet trust. In Canada, a person cannot outright leave money to a pet. Under Canadian law a pet is considered property and you cannot gift property to property. You can however, set up a plan.
The term “pet trust” may evoke stories of heirs and heiresses setting aside enormous sums for their pets, like American hotel magnate Leona Helmsley famously did by leaving $12-million to her Maltese lapdog, Trouble, but these trusts aren’t just for millionaires. Whether your pet a has a substantial lifespan (think birds or horses) or you simply want to ensure your furry friend will always be looked after, a trust may be the best option for ensuring your pet’s continued care.
Perks of a Planning
- Legal assurance. Creating a formal trust means the money placed in the trust must be spent on the pet – and any amount left over when the pet dies will be distributed according to your specific instruction. The same assurance of care isn’t provided if you simply leave money to a pet caretaker in a will.
- It can be customized. You can leave explicit, detailed instructions for your pet’s care.
- It applies while you’re alive. The trust will ensure your pet’s care if you become unable to provide care due to age or illness, while a will would only take effect at your passing.
Tips for Establishing a Pet Trust
- Consider funding options. Talk to your financial advisor about your choices. Gifting money to another person in Canada with the stipulation that it must be used for the benefit of the pet is an option.
- Choose the right caregiver. Select someone who’s both willing and capable, and encourage him or her to name successors as a precaution.
- Power of Attorney. Putting direction into your power of attorney document allows your agent to make payments to the caregiver who is watching over your pet. This allows for payment for extraordinary veterinary bills or other expenses.
- Name a separate trustee. This can help avoid potential conflicts of interest.
- Be specific. Determine where you want leftover assets to go when your pet dies. Bear in mind that leaving them to the pet caregiver could create a conflict of interest.
You’ve carefully crafted an estate plan that will provide for your loved ones – now, consider whether a trust for your animal companion fits in as a piece of that larger plan.
Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.
Source: Globe and mail. Diane Jermyn: “How to write a ‘fur kid’ into your will” Images: Gettyimages.com