Man’s best friend becomes ‘heir to the bone’

The Bakersfield Californian
October 7, 2011

One of my boomer retirement planning clients has a big slobbery boxer puppy named Elvis. He loves that dog. He takes it nearly every place he goes.

My client, who I will call Sam, is approaching retirement. His wife died a couple of years ago. His grown kids have moved away. Elvis is Sam’s companion and soulmate.

I have been working with Sam on developing a plan that will allow him to retire and realize his dream, which is to travel and live for many years in good health, with adequate finances so that he will not be a burden to his kids or anyone else in his later years.

Sam recently came into my office to discuss Elvis, who he said was a big part of his dream. With any luck, Elvis will live a good, long life as Sam’s retirement sidekick. In fact, Sam worries about Elvis outliving him. Sam wants to make sure Elvis is taken care of in the event Sam dies.

Most of my clients are focused on developing a financial strategy that will take them to their finish line. Until Sam, none had expressed concern about providing for their pets.

Sure, I have heard about really rich people leaving millions of dollars to their pets. Hotel heiress Leona Helmsley left Trouble, her beloved white Maltese, a $12 million trust fund when she died in 2007. (A court later reduced the amount to a measly $2 million.) British singer Dusty Springfield left money and detailed care instructions for her 13-year-old cat, Nicholas, when she died in 1999. Among the instructions was that the cat would be fed imported American baby food, live in a 7-foot-high indoor treehouse, sleep in a bed lined with one of the singer’s nightgowns and be treated to one of Springfield’s recordings each night before bedtime.

I read that Michael Jackson left his chimp Bubbles $1 million in his will. Bubbles now lives in a Florida animal sanctuary. In 2002, actress Drew Barrymore included her Labrador mix puppy in her will. The pooch was to receive a house worth $1.3 million. Why? Because a year earlier, the dog was credited with saving Barrymore’s life by alerting her and then-husband Tom Green to a fire in the house.

There are many more tales of very rich people leaving extravagant inheritances to their pets. But surprisingly, researchers at Washington University in St. Louis, Mo., reported recently that between 12 percent and 27 percent of pet owners — most just average people — are making provisions for their pets in their wills.

Clearly Sam’s legal questions about bequeathing Elvis money must be answered by an attorney who specializes is trusts. It would also be helpful if the attorney had knowledge about pet trusts. Laws regarding pet inheritances vary from state to state.

And the advice of a certified public account also would be helpful. Tax rules can affect how pet trusts are handled. If done correctly, money given for a pet’s future care — particularly if the care is provided by a non-profit animal organization, for example — may favorably affect a person’s entire estate.

But providing money for pet care and making arrangements require some of the same financial strategies I discuss with my clients and students in my October Levan Institute retirement planning class at Bakersfield College.
(Go to www.bakersfieldcollege.edu/levaninstitute/ to enroll.)

From a financial planner’s standpoint, the following are some points pet owners should consider in developing a “beyond the grave” care plan:

  • Write it down. Instructions should be left in writing about who and how your pet is cared for in the event you die. Note: Pets cannot inherit money. It must be directed to an individual or organization. Instructions and the money to pay for a pet’s care can be directed in a will or trust. That’s where a lawyer comes in.
  • Talk it out. Ask the future “guardian” or animal organization if they are willing to care for your pet. Don’t assume. Include “back up arrangements” in the event the first designated person is unable to comply.
  • Check it out. Make sure your plans are practical and legal. Remember Leona Helmsley? She directed that her dog Trouble be buried next to her in the family mausoleum. But that won’t happen because pets can’t be buried in that cemetery for humans.
  • Tell your family. Don’t surprise your human heirs with some generous after-death gift to your pet. Discuss your plans in advance. Explain that your arrangements also are intended to lessen your family’s burden to care for your pet.
  • Identify your pet. Don’t just say something like “my fawn-colored boxer Elvis.” There have been cases involving substantial money where the “guardian” keeps replacing the real Elvis with fawn-colored boxers to keep the trust money flowing. Microchips can be inserted into a pet to ensure that the money is going to the intended animal.
  • Provide money for care. Few of us have the vast sums of money that Helmsley, Barrymore or Oprah Winfrey have. Oprah reportedly is setting aside $30 million for the care of her several dogs. Depending on the arrangements you make, ongoing care costs could be zero (if you hope a sympathetic relative will take Elvis in) or many thousands of dollars (if you want Elvis to be truly pampered.) My client Sam is a man of modest means. He is considering taking out a life insurance policy, with the beneficiary being the guardian he selects for Elvis.
  • Consider an animal sanctuary. I know a couple who adopted a desert tortoise about 30 years ago. The tortoise, Molasses, is now estimated to be nearly 100 years old. Believing the old boy will likely outlive them, the couple made arrangements with an animal sanctuary to care for Molasses when they die. They have provided a “gift” to the sanctuary in their will.

Whether you are planning for your retirement or your beloved pet’s, a good plan doesn’t just happen. You have to work at it.