Financial planning for dogs and cats

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Pets have numerous redeeming qualities. Studies show they lower blood pressure, and owners can attest that their pets provide emotional support and endless entertainment. As a trade-off for their many positive qualities, pets also require a lot of care and devotion throughout their lives.

And Americans do care. They spent more than $43.2 billion on pets in 2008, according to a recent survey by the American Pet Products Association, or APPA. Despite the economic recession, the APPA estimates that the total will increase more than $2 billion in 2009.

Yet two areas are often overlooked by pet owners: pet health insurance and pet trusts. Both are affordable for most families and can even save your pet’s life.

Many pet owners are forced to euthanize an ill or injured pet because of a lack of money. Or, when their owners die, many pets end up at shelters, at risk of being put to sleep. Planning for your pets’ health and your eventual mortality can help your pet avoid becoming a shelter statistic.

Pet health insurance

Health insurance coverage is available for many different kinds of pets, but dogs and cats are the most likely to be covered because they are the most popular pets in the country, according to the APPA.

Veterinary Pet Insurance, or VPI, compiled a list of the most expensive medical conditions for dogs and cats from an analysis of claims received in 2007.

Most expensive medical conditions
Dogs* Cats*
Condition Average fee Condition Average fee
1. Intervertebral disk disease $2,844 1. Foreign body ingestion

(small intestine)

2. Lung cancer $2,032 2. Urinary tract reconstruction $1,391
3. Gastric torsion (bloat) $1,955 3. Foreign body ingestion (stomach) $1,391
4. Foreign body ingestion (small intestine) $1,629 4. Rectal cancer $1,011
5. Cruciate rupture $1,517 5. Bladder stones $989
6. Foreign body ingestion (stomach) $1,398 6. Intestinal cancer $942
7. Cataract (senior) $1,244 7. Hyperthyroidism (radiation) $920
8. Bone cancer $1,059 8. Fibrosarcoma (skin cancer) $780
9. Pin in broken limb $1,000 9. Acute renal failure $565
10. Brain cancer $916 10. Mast cell tumors $497
*Treatment costs vary on a case-by-case basis. Dollar amounts reflect average initial claim fees submitted to VPI and are not intended to suggest typical reimbursements, reflect average national veterinary fees or account for ongoing fees associated with a particular condition.
Source: Veterinary Pet Insurance

According to “A Veterinarian’s Guide to Pet Health Insurance,” a report compiled by the National Commission on Veterinary Economic Issues, pet health insurance is more similar to dental or car insurance than human health insurance, which comes with copays and many layers of red tape.

Pet insurance for virtually all plans requires that pet owners pay the vet bill upfront and then submit a claim. Insurance carriers usually pay out a preset percentage of the bill or they pay according to a schedule. Some plans also have a deductible.

Although some carriers will reimburse policyholders for routine care such as vaccinations and wellness checks, illness and accident coverage is the most cost-effective use of pet health insurance.

“Pet insurance is best used to help cover unexpected expenses from serious injuries or illnesses. It is most appropriate for helping cover serious vet treatments. Routine care and pet meds should be paid out of the owner’s pocket,” says Mike Hemstreet, owner of, a pet insurance research resource for consumers.

“Just as I don’t expect my car insurance to pay for changing my oil every 3,000 miles, I don’t look to pet insurance to pay for regular checkups,” he says.

When considering pet insurance, consumers have to do their homework. The carriers and policies vary quite a bit on what is covered and what is excluded. Apples-to-apples comparisons can prove difficult.

“Some insurers offer routine care and wellness programs, others only accident and illness coverage. Some insurers pay off a schedule, others pay a percentage of the actual veterinarian bill. All plans have some type of payment cap: either per incident, year or lifetime of pet,” says Hemstreet.

Sorting through the myriad options can be a little bewildering at first, and premium costs can range from as little as $10 a month to as much as $100. But if you’re clear on what you’re looking for in a pet health insurance plan and how much you want to pay, you’ll likely find something to satisfy your pet’s health and your pocketbook.

“Think about the current pet’s age and health status and what is most applicable,” says Gail Buchwald, senior vice president of the adoption center and New York City no-kill initiative with the American Society for the Prevention of Cruelty to Animals, or ASPCA.

Not all providers will accept older pets or certain breeds, but others will. Consumers should keep that in mind when shopping for a policy.

It may take some research, but the results can be worth it in the end.

Laurie Channer, a pet owner in Chicago, says that over the past five years since she adopted her beagle mix, Marley, her pet health insurer, VPI, has reimbursed her thousands of dollars.

More recently, Marley had a lipoma tested along with a blood test as a precaution for dental cleaning. The cost to Channer at the time of service was $578.23. VPI reimbursed her $216.10. So Channer’s actual cost was $362.13.

Pet owners considering insurance might ask their vets about their experience with health insurance. Not all are comfortable recommending a specific company, but many vets have found that owners with insurance are more likely to seek treatment for their pets’ ailments.

“If you have to pay out of pocket, this depends on the practice area and economy, of course, but if you are paying more out of pocket, you might not go in quite as much or do quite as aggressive a course of therapy,” says Shawn Messonnier, a veterinarian and author of “The Natural Health Bible for Dogs and Cats.”

Pet owners who are consistent savers might open a savings account  earmarked for pet health care.

“Making regular contributions to a savings account for your pet’s health care costs can be the right answer in the long run because many pets don’t face catastrophic illnesses or accidents. So that money builds and builds and without ever being taken advantage of,” says Kim Saunders, vice president of shelter outreach and public relations with

Estate planning for pets

Most pet owners are unaware that they can legally set up a trust to provide for the care of their pets.

Forty states and the District of Columbia allow statutory pet trusts. That means you can set aside money for your pet and name a caretaker. A trustee oversees the finances and makes sure the pet is getting the care specified in the trust.

Pet owners living in states without a pet trust statute — Connecticut, Georgia, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Oklahoma, Vermont and West Virginia — can still set up a trust for their pets, but it won’t be as easy or enforceable as a specific pet trust.

Danny Meek, a Florida estate plan lawyer and blogger on, explains why:

“In the 10 states that do not have statutory pet trusts, you can still set up a trust that will take care of your pet, but there are some big obstacles. Most states have specific rules against perpetuities, which are time frames that the documents cannot exceed, and a general trust is not necessarily enforceable by a third party,” he says.

Enforcement by a third party is particularly important if you want to make sure your pet is actually getting care.

“One of the benefits of the statutory pet trust is that if I’m the trustee and you’re supposed to be taking care of Fido and I see that you’re not, then I can go to the court and ask for a successor caretaker to be appointed or have myself appointed to make sure that the pet is being taken care of. In most states, the general trust statutes do not allow for that,” says Meek.

That leaves the door wide open for unscrupulous caretakers to take the money earmarked for the pet’s care and run — with predictably dire consequences for the pet.

Pet advocates such as Buchwald believe a discussion about a pet trust should be initiated by the attorney or financial planner assisting with a client’s estate plan.

Unfortunately, a large number of attorneys involved in estate planning are also unaware of the option of providing for companion animals, Meeks says.

“It’s hard to believe that a lot of attorneys are still unaware of this, but we’re educating them more and more on it,” he says. “Clients get most of their education from the professionals who are helping them out.”

Buchwald and the ASPCA see many pets relinquished to shelters after the death of their owners.

“The ASPCA just last week took in two pets from someone who had died, and the pets were at risk — there was no one to take care of them. There was a local caregiver and a will, but the will did not specify what should happen to them,” Buchwald says.

“They were obviously much loved and well cared for. They’re really lovely pets. The deceased had spent a lot of time drawing up with legal counsel a very elaborate, well-thought-out will when it came to her financial assets. It’s hard to believe she would have left them out had she known it was possible to provide for their care,” she says.

If your financial planner or estate attorney doesn’t mention planning for your pets, ask what would be appropriate for your situation and your companion animals.

Cost for a pet trust can range from $500 to $3,000, depending on its size and complexity. But if you add it to your basic estate planning package at the same time you draw up a will, says Meek, “then it could be very affordable for pet owners.”