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How to include your pet in your estate plan

Key takeaways

  • Animals can’t be named as beneficiaries of retirement accounts or any other assets.
  • To fund your pet’s ongoing care, you can leave money to an intended guardian directly in your will or create a pet trust.
  • An attorney can help you set up estate planning documents to include your pet.

Pet owners will go to great lengths to ensure that their beloved animals receive the finest of care for life—even if, in some cases, it extends beyond the life of their owner.

Take famed designer Karl Lagerfeld, who reportedly left his Burmese cat Choupette a 7-figure piece of his multi-million-dollar fortune. Or hotelier Leona Helmsley, whose will left $12 million in a trust for the care of her Maltese dog Trouble.

While Helmsley’s bequest may have been extreme (a judge later knocked down the amount to a relatively modest $2 million), the impulse isn’t: “When it comes to their pets, people are extreme!” acknowledges Aimee Kwain, an advanced planner with Fidelity and an animal lover who has multiple cats.

Leaving money to your pet directly may seem like the simplest solution to provide for their support. But an animal can’t be the beneficiary of an IRA or any other tangible asset. That’s because under the law, all animals are considered personal property, and therefore can’t own property or assets themselves, explains Kwain. That includes real estate, cash, retirement accounts like IRAs, or any other brokerage accounts.

Still, a pet is a beloved member of your family—and you should plan for their ongoing care accordingly. “Whenever I see that a client hasn’t included their pet in their estate plan, I always ask about it,” says Kwain. She suggests taking the following steps.

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1. Select a guardian

Your will and power of attorney documents should name the person who would be your pet’s caretaker, or guardian, in the event you could no longer care for them yourself. Just be sure to have an open conversation with the intended caretaker to make sure that they’re up to the task, says Kwain. “Don’t make any assumptions,” she urges. And be realistic: Kwain recalls a client who wanted to stipulate in their will that the pet would be cared for in the clients own home. “You can’t expect someone to move their entire life to take care of your dog,” she says.

2. Decide how you’ll fund ongoing care

While you can’t make a direct bequest, you can opt to either leave money directly to a guardian through a specific bequest, or set up a trust for the care of your pet.

Through a specific bequest: With this method, you choose an amount of money you feel will cover the cost of your animal’s care and leave it directly to their guardian in your will or living trust. Just keep in mind that this means the heir ultimately controls how the money is spent, and it doesn’t matter how long your pet lives. “If I leave Joe $100,000 in my will for my cat’s care and the cat dies a week later, that money still belongs to Joe,” Kwain explains. Also keep in mind that gifting some assets, such as an IRA, could potentially involve tax consequences for the beneficiary; non-spousal heirs to IRAs or other retirement accounts generally have 10 years to empty the accounts, and will pay their regular income tax rate on any tax-sheltered assets. Should your pet pass away before you, you’ll likely need to update your will accordingly.

Through a pet trust: This method can offer you more control over how the money is spent. “The trustee has a fiduciary duty to carry out the terms of the trust,” says Kwain. In addition, any money left after your pet dies goes to the beneficiary of the trust—which doesn’t necessarily have to be your pet’s guardian. If you’re setting up a trust, you may consider including a side letter with details about your animal’s care, suggests Kwain—anything from a special diet they’re on to how often they need to be taken outside or to the vet. While pet trusts are generally recognized in all states, trusts are complicated and there may be tax consequences, so it is important to work with an attorney who has familiarity or experience in this area.

3. Create a backup plan

People’s circumstances can change (say, your cat’s would-be guardian acquires an allergic roommate), so consider finding and spelling out a backup plan as well, says Kwain. That could be an organization that would match your pet to a good home, or a shelter that you feel comfortable with. You can also consider making a bequest to that organization in your will or adding them as a beneficiary on your trust.

Finally, make sure to revisit your estate plan regularly, including anytime there are changes to your pet’s health or care plan. After all, a dog doesn’t really need millions of dollars to lead a happy life—but they do need an owner who will treat them with kindness every day.

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Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

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