When Karl Lagerfeld passed away a few months ago, it brought renewed attention to estate planning for pets. The fashion designer left a chunk of his estimated $300 million net worth to Choupette, his beloved Birman cat.
Lagerfeld kept his furry companion in mind during estate planning, which other planners recommend your clients do, too.
“I have definitely recommended people taking certain steps planning for how their assets pass to make sure they take care of their pets,” Roger Ma, CFP® professional, recently told CBS News.
The 2017–2018 survey by the American Pet Products Association (APPA) found that 68 percent of U.S. households owned a pet. Pets are considered tangible property, like cars and furniture, so if your clients don’t leave a plan for their pet, it won’t be taken care of the way they want it to be.
Here are some things your clients can do to ensure proper care of their fur babies. Identify the pet’s new owner. Identify a person who can take care of the pet who actually wants to. Following this, leaving the pet to them could be done in a few ways.
Update the client’s will. It can be as simple as leaving instructions in a will, for example, adding a statement like, “I leave my dog, Baloo, to my brother Mike.” But know that Mike is now in charge of the dog and can take it to a shelter if he wants. That’s why it’s important for your clients to designate somebody who actually wants the pet.
Establish a pet trust. Philip Herzberg wrote in the August 2018 Journal that a pet trust may be more advantageous than a will. A pet trust “will enable your clients to appoint both a caregiver who will be responsible for the pet’s care and a trustee who will manage the funds for the pet’s well-being,” he wrote. Caring for pets is expensive. Have your clients figure out how much they spend on food, pet health care, medications, supplements, and supplies and fund the trust with that.
“Be sure clients name contingent caregivers and trustees in case their first choices are unable to serve in their respective roles,” Herzberg wrote.
Even though your clients may not leave millions to their pets, like Lagerfeld, they still should consider them in estate planning.
“Not everyone has millions to give their pet, but it shines a light on making sure there’s a qualified caretaker that you trust to ensure it has a good home to go to and also that you fund their needs,” Ma told CBS News.