Term Life Insurance Articles
Funding a Pet Trust with Life Insurance Funds
2010-05-29
The attitude of many Americans towards their pets has changed dramatically over the last few generations. Many years ago, a cat or a dog was considered a person's property, no different from any of the other farm animals, or a piece of furniture. Today, a pet is a full-fledged member of the family. Moreover, Americans are becoming increasingly concerned with the issue of how to protect and care for their pets after they die.
One solution is to establish a pet trust with funding from your life insurance proceeds. Almost all life insurance policies will allow you to set aside a specific portion of the life insurance funds for a pet trust. A pet trust is a legal document signed by you. It will designate two important persons: a trustee and a caregiver. The trustee will handle the funds and disburse money for the benefit of your pet, in accordance with your instructions. The caregiver will be the person who lives with your pet and takes care of his or her needs. You should also consider naming an alternate trustee and caregiver, in case the primary individuals cannot fulfill their roles.
In the trust, you need to be as specific as possible regarding your pet's care and how the funding from your life insurance should be used. What veterinarian do you want your pet to see? How often do you want your pet to have routine check-ups? Does your pet have any special needs? What are your pet's favorite activities? How often does your pet need to be groomed, walked, etc.? How do you want the trustee to disburse your life insurance funds? Do you want the caregiver to receive a monthly stipend to cover food and other expenses? Or do you want the trustee to disburse money only when presented with a bill or receipt for goods or services? Do you have any special instructions in the event your pet has a terminal illness or is suffering from a chronic condition? What do you want to happen to your pet's remains? You should also name a beneficiary for any funds that remain in the trust after your pet dies.
When deciding on how much of your life insurance funds to set aside for the pet trust, take in consideration your pet's annual costs and add some more in case of unforeseen expenses. Also, make sure the funding from your life insurance is sufficient to handle administrative and legal fees. Consult an attorney before establishing your trust. The legal requirements for pet trusts vary state by state, and in some states, pet trusts are not enforceable in a court of law.
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The attitude of many Americans towards their pets has changed dramatically over the last few generations. Many years ago, a cat or a dog was considered a person's property, no different from any of the other farm animals, or a piece of furniture. Today, a pet is a full-fledged member of the family. Moreover, Americans are becoming increasingly concerned with the issue of how to protect and care for their pets after they die.
One solution is to establish a pet trust with funding from your life insurance proceeds. Almost all life insurance policies will allow you to set aside a specific portion of the life insurance funds for a pet trust. A pet trust is a legal document signed by you. It will designate two important persons: a trustee and a caregiver. The trustee will handle the funds and disburse money for the benefit of your pet, in accordance with your instructions. The caregiver will be the person who lives with your pet and takes care of his or her needs. You should also consider naming an alternate trustee and caregiver, in case the primary individuals cannot fulfill their roles.
In the trust, you need to be as specific as possible regarding your pet's care and how the funding from your life insurance should be used. What veterinarian do you want your pet to see? How often do you want your pet to have routine check-ups? Does your pet have any special needs? What are your pet's favorite activities? How often does your pet need to be groomed, walked, etc.? How do you want the trustee to disburse your life insurance funds? Do you want the caregiver to receive a monthly stipend to cover food and other expenses? Or do you want the trustee to disburse money only when presented with a bill or receipt for goods or services? Do you have any special instructions in the event your pet has a terminal illness or is suffering from a chronic condition? What do you want to happen to your pet's remains? You should also name a beneficiary for any funds that remain in the trust after your pet dies.
When deciding on how much of your life insurance funds to set aside for the pet trust, take in consideration your pet's annual costs and add some more in case of unforeseen expenses. Also, make sure the funding from your life insurance is sufficient to handle administrative and legal fees. Consult an attorney before establishing your trust. The legal requirements for pet trusts vary state by state, and in some states, pet trusts are not enforceable in a court of law.
