Don't forget Fido: Bridging the pet trust gap

Pet owners will skip their own luxuries before they'll skip their pet's vet bill. Yet most haven't given much consideration to what happens to that same pet once they're gone. 

According to the American Institute of CPAs (AICPA), among the 73% of adults with an estate plan, only 40% have included their pet in it. 

AICPA also reported that roughly 57% of Americans own a dog while 40% own a cat. Regardless of the type of pet they own, 95% consider their pets family, and 62% budget for pet-related expenses, which, according to Rover, ran anywhere from $1,390 to $5,295 annually in 2025. 

For clients uncertain about the fate of their pets, creating a plan starts with a conversation many advisors haven't had to have – until now. 

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The gap explained

Part of the issue comes from simple oversight. When clients meet with their advisors, other topics can take precedence, with pets becoming the afterthought. The AICPA reported that 40% of survey respondents said they hadn't considered bringing up pets during estate planning, and 38% said they assumed their families would sort it out.

Sorting it out is sometimes easier said than done, though. Cary Sinnett, director of financial planning for the AICPA, is a former financial advisor. When he was in practice, he witnessed a sorting mishap firsthand as four siblings grappled with what to do about the family dog after their mother died. 

"They couldn't agree on who got custody of the dog," said Sinnett. "It wasn't written about anywhere, and so the dog stayed in the house, and the siblings visited the dog on a rotating calendar."

For the advisor hoping to help clients avoid similar setups, "it's a good reminder to bring it up in the conversation," he said. "Any time you're talking with your client about dependents, you should simply add 'or pets.' Have the clients made provisions for their dependents or pets?"

Once advisors learn whether clients have pets, the natural follow-up, according to Sinnett, is to ask, "Where does Fluffy live if something happens to you?"

Clients need trusts

Putting together a plan for pets comes with its own complexities, according to Achim von Bodman of Secaucus, New Jersey-based Watter CPA. "Let's begin with a fact many people overlook," he said in an email. "It is not possible to leave money to a pet."

States treat pets like property, much like a car; therefore, a pet cannot be named as an heir outright in a will, according to von Bodman. Instead, clients need to craft a pet trust.

"In a trust," said von Bodman, "you give money to a trust, choose a human trustee to handle the money, select a caretaker to look after the pet and write clear instructions."

When setting up the trust, details are key, starting with the pet's expected time horizon. Animals like turtles and cockatoos live as long or even longer than humans, which is important to account for. 

When pop singer Michael Jackson set up the alleged $2 million trust for his pet chimpanzee, Bubbles, said Sinnett, his plan accounted for his long life expectancy. 

"If we are doing this with pets that have significant longevity," he said, "we want to make sure there is enough funding for that."

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Keeping it separate to keep it moving

In addition to accounting for long pet lives, advisors can help clients ensure they choose caregivers who will honor their wishes. Overreliance on one person to handle everything could come at a cost to the pet's quality of life, which is where advisors can suggest a separation system.

Erin Itkoe, a member of AICPA's PFP Champions Task Force, said, "I've seen people separate the responsibilities to make it more on the up and up. Maybe one person gets care of the pet, and they're the one responsible for taking care of it, but someone else is managing the financial aspects of that trust fund and serving as the trustee."

Consider the case of 7-year-old Winnie the Pooh, a dachshund with a $100,000 trust and a similar separation of caretaking. The media pounced on news of a dispute between the pup's caretaker and trustee, both of whom were personal friends of Winnie's original owner. 

The caretaker argued that the trustee was not fulfilling the original pet owner's wishes by withholding funds, and the trio eventually ended up in court. To avoid a similar nightmare, Sinnett recommends working with a corporate trustee who manages the fund aspect of the trust. 

"The corporate trustee will dole out the funds and make sure that there's adherence to what the wishes are," said Sinnett. "Have somebody that will be around as a corporate trustee to make sure that it's taken care of." 

Advisors should also help clients decide where remainder funds should go once the pet dies. Often, clients choose a named beneficiary, a charity or it goes back into the estate. The important thing is to have the client spell it out to avoid potential disputes.

The life to which they're accustomed, and the life ahead

It is also important to ask clients about their wishes regarding the pet's quality of life, with details as granular as possible when necessary. In one case, Itkoe worked with a client on a sizable trust for their posh pet. 

"There were provisions in there," she said. "In terms of exactly what food and treats they were to get, and about their birthday parties and different things around the lifestyle the pets were already accustomed to." 

During the planning process, advisors can have the client account for routine expenses and then build the plan out to include age-related or unexpected costs in the same way they prepare for an heir. It is also a good idea to get granular on the details to avoid any disputes around how the pet will live and to create a written document that lists the details.

"You want things written in your document so your wishes are there, in black and white," said Itkoe.