Pet Trust

As pet ownership becomes increasingly prevalent, clients are providing for their pets' continued wellbeing much like they would for any other heir. According to the American Pet Products Manufacturers Association, 63% of U.S. households own a pet. For many, a pet is as important as their most valuable and prized possessions.

If you have a pet, have a plan. Florida now has laws that recognize trusts for pets. You should designate a caretaker and a trustee to look after the money. Preferably, the trustee is someone other than the caretaker.

A pet trust enables the pet owner to set forth a detailed plan of pet care for the animal's remaining years. For example, you can specify the trustee who manages the property, the type of care the caretaker will provide for the pet, who will take over if the caretaker can no longer provide proper care, and how to handle the remains after the pet dies.

To allocate enough funds for the life of the animal, start by establishing the cost of caring for the pet, consider the age of the pet; its life expectancy; pre-existing medical conditions; and current maintenance expenses, such as grooming annual trips to the vet, and emergency care.

Choose a caretaker who knows and enjoys a harmonious relationship with the animal. Name a remainder beneficiary to receive any remaining trust property after the pet dies. In order to avoid a conflict of interest, the remainder beneficiary should not be the caretaker or the trustee.

• Under federal estate tax law, any amounts left to a pet trust will be included in the grantor's gross estate.
• The IRS has ruled that no portion of the amount passing to a pet trust qualifies for the charitable estate tax deduction, even if the remainder beneficiary is a qualifying charity.
• The trust for the benefit of an animal will be subject to income taxation, unless the caretaker is the trust beneficiary.

Making provisions for a pet may raise issues among family members, and you should try to allay concerns.