August 20, 2014 in Retirement

You’re dead. What about Fido?

Making arrangements for the care of your beloved pet in case you die first will prevent this family member from ending his life in an animal shelter.

“Animals are much-loved members of the family, and it is very important to many of our clients to make sure that their pet’s care is covered,” says Nicole Winter Tietel, managing partner of  financial advisory firm Winter Associates in St. Paul, Minn.

While a dog or cat might be expected to live no more than another decade, some of Tietel’s clients have horses that they are concerned about. Not only do horses live for 20 or 30 years, but also the cost of their food and medical treatment can be substantial. Start by laying out a financial plan, Tietel says. “Calculate life expectancy, total expenses, assuming inflation, and back into a hard number,” she advises.

Tietel says one of the easiest ways to set up this kind of care is by designating money in your will to be used to buy an annuity with an appropriate period certain in an amount that will generate enough monthly income to cover the pet’s needs. The pet can’t be the beneficiary; you have to name a human beneficiary. One way to make sure that the money is spent appropriately, she says, is to name two people in the will — one who will provide the care and one who will receive and distribute the money.

Other options

A more sophisticated option is to set up a pet trust. In nearly every state, a pet owner can create a fund and appoint a person or persons to administer it. After the animal dies, then the trust can be distributed to other heirs. A pet trust also can be set up so it kicks in while you are still alive if you are incapacitated and can’t care for your pets. Setting up one of these isn’t a do-it-yourself project. See a knowledgeable attorney.

A third option is to use a pet retirement home. A number of veterinary schools, including those at Texas A&M University, Oklahoma State University and Kansas State University, offer this service. The required financial arrangements at Texas A&M Stevenson Companion Animal Life-Care Center are typical. The minimum endowment for a pet owner who is 60 to 65 years old and who wants to enroll a small pet like a dog or cat is $60,000.  Large animals such as horses are more expensive, and the older you are, the more it costs.

Tietel warns against requesting in your will that a pet be euthanized because so many people have strong feelings against that and you could be asking for a legal challenge.

Learn more about putting pets in your will.