Can I Leave My Life Insurance Benefits to My Pet?
When you think of life insurance, you probably think of leaving money for your children or your spouse, but some people also want to leave something behind for their pet. In today’s materialistic culture, caring for pets can border on the extreme. Clothes for your pet is one thing, but a trust fund? If you can believe it, leaving life insurance to a pet has become the new normal for many pet owners. In case you were wondering, pets are not considered people and they cannot legally inherit money or possessions. However, many life insurance providers will offer their clients the option of setting up a pet trust, a legally binding agreement that holds money for specific beneficiaries. In so many words, the policyholder has the option of leaving money to a person who then assumes responsibility for caring for the pet.
Who Needs a Pet Trust?
There are some instances in which a pet trust makes the most sense. If a pet has a long lifespan and is expected to outlive their owner, that person would need to make arrangements for finding their pet a new home. Once they designate a new owner for their pet, they have to consider the cost that goes along with it. In some cases, a pet’s living expenses can amount to several thousands of dollars each year. A person with several pets would have to multiply those expenses. People with exotic pets might also invest in a pet trust. Certain animals would have difficulty finding good homes in their owner’s absence. A legally binding pet trust would ensure that these animals are properly taken care of after their owners pass away.
Pet owners have several options when leaving life insurance to a pet. Each option comes with its own limitations and special considerations.
The trust names a new caregiver for the pet with specific instructions for how the pet should be cared for. In most cases, the trust will also designate a separate trustee who’s responsible for managing the money in the account. This creates a system of accountability between the beneficiaries. If one person were responsible for taking care of the pet and managing the account, it could lead to a conflict of interest.
This type of trust simply designates a sum of money for the pet’s care. The court will then assign an individual to take care of the pet and a separate individual to oversee the funds. The original owner does not have the option of including specific instructions for how the pet should be cared for.
insurance company to make sure that your pet will always be in good hands.