Few Americans put their pets in their wills. Here's why they should

To many Americans, the idea of putting a pet in one's will may sound ridiculous. The suggestion conjures images of eccentric heiresses who bequeath their fortunes to their dogs — characters like the real estate billionaire Leona Helmsley, who in 2007 left $12 million to her white Maltese.

In reality, there are very rational reasons to include pets in clients' estate planning. Chief among them is this: If a pet owner dies or is incapacitated, someone else will need to take care of their animal, and most pet parents would like to choose who that person is.

Megan Kopka, a managing partner at Apprise Wealth Management in Wilmington, North Carolina, learned this the hard way. Just before her grandmother died, she was taking care of a 15-year-old shih-tzu named Chrissy. Though she never wrote it down, the matriarch made it clear she wanted Kopka's mother to take care of the pooch. Then, at the last minute, Kopka's aunt declared herself Chrissy's rightful owner.

"My mom called me and told me she was considering her sister's opinion," Kopka recalled. "I reminded her, 'This was your promise to your mother.'"

Kopka felt strongly that her mom, a retired dog lover, would take better care of Chrissy than her aunt, a "neglectful" workaholic. And most importantly, it was what her grandmother wanted.

"My grandmother, the last time I saw her, asked me if I thought she was doing the right thing leaving Chrissy with my mom," Kopka said. "I told her she was undeniably the best person."

In the end, the aunt relented and Kopka's mother adopted the dog. But it was a close call, and the experience taught Kopka the importance of putting one's wishes in writing.

"I do think we should put guardians for our dogs in our wills," she said. "This could have gone badly and caused a family problem. Even young people should ask someone and place it in writing somewhere as a holographic will — it's better than letting your beloved pet go to the pound."

Unfortunately, this is far from a common practice. In general, only 26% of Americans have an estate plan, according to a new study by the will-writing website FreeWill. And within that small segment of the population, only 50% of pet owners with an estate plan have written their animals into it.

As for the other half, FreeWill found that 20% have made "informal agreements" with a future pet guardian — much like Kopka's grandmother — and the other 30% have no plan at all.

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Many financial advisors have noticed this pattern among their pet-owning clients.

"Most Americans have a hard enough time doing estate planning for their family, so it's no surprise that it's even harder to get started when taking care of one's pets," said Mitchell Kraus, owner of Capital Intelligence Associates in Santa Monica, California. "Many of my clients feel awkward asking their friends or family members to take care of their pets after they are gone — they don't want their pets to be a burden."

Another barrier — not just to pet planning, but to estate planning in general — is the discomfort of contemplating one's own death.

"It's not fun to think about what will happen to our pets if they outlive us," said Daniel Masuda Lehrman, owner of Masuda Lehrman Wealth in Honolulu, Hawaii. "In general, none of us enjoy thinking about our own demise, and we tend to procrastinate what we dread."

But giving in to that dread, both Kraus and Lehrman said, is a mistake that can leave pets high and dry. And it's not just dogs and cats who can get left behind — as some planners pointed out, more exotic pets can demand even more planning.

"Larger animals like horses require not only lots of space but are expensive due to the costs of food, health care and grooming," said Ron Strobel, founder of Retire Sensibly in Meridian, Ohio. "Smaller animals like parrots can live a very long time and are often bonded with their owner and hesitant to embrace strangers."

How can wealth managers help? To get started on solutions, Kraus said, clients must first face the problem.

"The first step is to have the owner acknowledge that their pet could outlive them," he said. "After that we talk about what he or she wants for their pet after they are gone."

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From there, the advisor and client can hammer out the details of what the animal will need and which kind of legal document would work best for the situation. One option is a pet trust, which can provide funds and instructions for the creature's care. Another choice is simply to include the pet in a broader will.

"If there's a lot of money involved or the pet might live for a long time after the owner dies, I recommend getting an attorney involved," Kraus said. "In simpler situations, I recommend the owner put it all in writing and have it witnessed with copies given to anyone who might be interested."

As for choosing a guardian, the best candidates are often easy to identify — because they have pets already.

"We recommend that pet owners should first try to find a friend, family member or someone who owns similar pets to act as the caretaker," Strobel said. "They can introduce the pets to that person and acclimate them to each other as part of the estate planning process."

If such a person is not available, the client can look into sanctuaries and other rescue facilities. This may not sound ideal, Strobel said, but it's a better option than leaving a needy animal with someone who doesn't know how to care for it.

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"It can be a terrible situation for both the pet and the adoptive owner if they are not knowledgeable enough or able to devote the time and resources required," he said. "A qualified rescue facility can offer a better outcome for the pet and not burden the owner's children with a pet they can't care for properly."

Whatever the plan is, many wealth managers said, the important thing is to write it down.

"After a loved one dies, there are often decisions made based on emotion and fuzzy memories," Kraus said. "Any owner who cares deeply about their pets future will take the steps to codify what they want and make it clear to anyone who needs to know."