Once you’ve decided to establish a trust to make sure that your pet is provided for once you’re gone, you may wonder what the best way to fund it is. Here’s what you need to know:
- Decide How Much Money You’ll Need to Put Into The Trust. The amount of money needed to fund a pet trust varies, and it depends on a number of factors, including:
- How many pets are included in the trust?
- How expensive is the food for each pet?
- What are the grooming needs of each pet?
- What type of medical care needs to be provided for each pet?
- What is the life expectancy of each pet?
- Will you compensate the trustee and/or caregiver?
- Will you provide for the cost of boarding your pet(s) while the caregiver travels, or in case he or she is ill?
Thinking through how much it will cost to provide complete care for each pet for the rest of its life will help you to come up with an appropriate amount of money to put into the trust. A word of caution: putting an excessive amount of money into your trust might invite court intervention. So, don’t underfund your trust, but don’t fund more into your trust than can possibly be spent on your pet.
- Determine When You’ll Fund the Trust: You have two options; you can fund your pet trust during your lifetime, or at your death. Funding your trust during your lifetime means that the trust will be up and running well before your death, and that it can be available to provide for your pet in case of your incapacity. Funding your trust at your death is also effective, but, especially if the assets used to fund the trust have to pass through probate first, there may be some lag time between the time of your death and the date your trust actually becomes functional.
- Determine How You’ll Fund the Trust. You have a variety of choices for funding your trust. Life insurance is a popular method for pet owners who want to fund their trust when they pass away. You could also use funds from a bank account, an IRA, or a pay on death account, among other options. Your estate planning attorney can help you determine the best choice for you.