Financial planners are charged with protecting the things that matter most to their clients — and those things often include pets.
June is National Pet Preparedness Month, a time for making sure pets are incorporated into emergency plans. It presents a perfect opportunity for advisors and planners to connect with pet-owning clients to help them plan for their beloved pets' long-term care by incorporating their needs into estate plans.
Below are a few areas to consider and questions to ask to help your clients ensure their pets are cared for after they're gone.
The importance of pre-planning for pets
Estate plans usually provide for family members, but, incredibly, most of them fail to mention those with fur or feathers.
To help a client remember their pet during estate planning, ask toward the beginning of the process: "What can we do now to ensure the best outcome for your pets after you're gone?"
READ MORE:
Determine a pet caregiver — and cover their future costs
Once the conversation is started, the key question is: "Who have you identified as a potential caregiver for your pet, if you were no longer able to care for them?"
For clients who already have a caregiver in mind, advise them to confirm that the caregiver has agreed to accept this responsibility. It's a big one, and even close friends may be reluctant to take it on.
Once the client has a willing caregiver, advisors should then craft a letter with instructions to guide the caregiver. The letter should include information about the pet's medical history and conditions, prescription medications and dosage, veterinary contact, special dietary restrictions, habits, etc.
Finally, ensure your client's chosen caregiver will have enough financial resources to care for the pet (or pets). This can be accomplished either via an outright bequest to the caregiver for this purpose, or by arranging a pet trust. Which option to choose will often depend on the client's tolerance for complexity and the circumstances of the chosen pet caregiver. Some clients may prefer a pet trust because it helps ensure pets are taken care of and financially secure — even if the selected caregiver falls on hard times, becomes ill or passes before the pet does.
If the client has no designated pet caregiver, they can instead name a trusted animal shelter or other nonprofit to receive the pet, along with a monetary bequest to cover the care costs until the pet can be re-homed. Larger and/or more unusual pets may require additional legwork upfront. For example, clients with horses may need to contact a ranch or stable to ensure a willingness to accept and board them for the remainder of their life.
READ MORE:
Pet-specific financial planning
Once it is determined who will take care of your client's pets after the client's death, then you can ask: "Can you estimate how much money needs to be allocated to ensure your pet's well-being?"
This discussion is significant, as pets can be expensive.
Most pets haven't amassed their own fortunes (apparently, Taylor Swift's cat boasts a net worth of
Encourage your client to catalog what they spend annually on their pet. The list should include food, grooming, vet bills, walking services, toys and medications, as well as things like dental cleanings, boarding for vacations and even plane tickets. Once you have that number, the estate plan can specify a formula for funding a pet trust or for a bequest amount, for example: the annual expense amount multiplied by the animal's life expectancy at the time the owner passes.
Most people who own pets consider them to be integral members of the family. Though advisors can use National Pet Preparedness Month as a reminder to clients to not to overlook pets in the estate planning process, this same reminder can be made at any time of the year. Incorporating pets into estate plans ensures their continued care and well-being and provides clients with peace of mind, knowing that their beloved animal companions will always be protected, no matter what the future holds.
