October 2, 2019
Estate Planning for Millennials: Don’t Forget the Fur Babies
BY: Melissa N. Moser
The desire to provide for one’s children after death is a major reason that prompts clients to engage an attorney for the preparation of estate planning documents. Americans are having fewer children, however. According to the Centers for Disease Control and Prevention, in 2018, the number of human births in the U.S. was the lowest in 32 years, continuing a downward trend since 2007.
Who is to blame? Millennials, of course! Millennials, defined as those born from 1981 to 1996, will overtake baby boomers as the largest adult population in the United States in 2019, according to the Pew Research Center. Along with their love of avocado toast, millennials are putting off having children until later in life, some opting not to have children at all. If one of the reasons people seek out estate planning attorneys is to provide for their children, and people are opting to have fewer or even no children, what could an estate planning attorney do to encourage millennials to partake in estate planning?
While the nation, and the millennial cohort in particular, is having fewer and fewer children, pet ownership has displayed a consistent upward trend for over two decades, according to the American Pet Products Association (APPA) National Pet Owners Survey. According to the Survey, 68% of U.S. households, or about 85 million families, own a pet. (By comparison, only about 35 million families have children under the age of 18.) It may come as no surprise that millennials are the primary pet-owning demographic. Moreover, a 2013 survey by Kelton Global revealed that of the American pet owners surveyed, 81% consider their pet to be true family members, equal in status to children.
Not only are Americans having fewer babies, owning more pets, and considering their pets to be equal in status to children, pet owners are spending more and more on their pets, with $72.56 billion spent on pets in the U.S. in 2018 and an estimated $75.38 billion will be spent in 2019, according to the APPA. Not only are pups being pampered, but responsible pet ownership has been highlighted with pet insurance, and pet estate planning is also on the rise. Estate planners would be wise to adapt their provision of services to include helping their clients plan for the care of their pets in the event of the owner’s incapacity or death.
Practical estate planning considerations should be given to the use of a Durable Power of Attorney, a Will, and a Pet Trust.
A client’s Durable Power of Attorney document should be drafted to authorize the agent to care for the client’s pet and to spend the client’s money for the pet’s care in the event a pet owner becomes incapacitated or disabled. The care could be defined to include food and treats, routine and emergency veterinary care, grooming, toys, socialization, boarding, pet insurance, and even placement with a long-term care provider.
Providing for a pet via a will is a tool in the estate planning repertoire, but providing for the pet with an outright gift of the pet is not ideal. Because pets are considered “property” under Virginia law, clients can make a specific bequest to leave their pet to a prearranged caretaker. An additional amount of money can be left to the caretaker to support the care of the pet. However, money left this way is not guaranteed to be used by the caretaker for the client’s intended purposes. Furthermore, there is no guarantee that the caretaker will keep the pet nor care for it in the fashion the client would desire.
A pet trust is an effective and legally binding way to provide for one’s pet and can be established during life or at death. By establishing a pet trust, settlors can specify the standard of living they desire for their pet and ensure these standards are met after their death for the lifetime of their pet. The Virginia Uniform Trust Code provides, in § 64.2-726 of the Code of Virginia, that a trust may be created to provide for the care of an animal or animals alive during the settlor’s lifetime. A pet trust will have a trustee, who controls the finances, and a trust enforcer, who has the rights of a trust beneficiary for the purpose of enforcing the trust. The trust enforcer is the caretaker of the animal, and the trustee should visit the trust enforcer from time to time to ensure the animal is being cared for as directed. Similarly, the trust enforcer should request accountings from the trustee to ensure the funds are being properly administered. This provides a system of checks and balances for the pet. During the settlor’s lifetime, the settlor can be the trustee and the trust enforcer, but upon the settlor’s passing, the trustee and the trust enforcer should be different individuals. Alternatively, a testamentary pet trust can be established by a will.
Pets play a significant role in the lives of pet owners, especially (but not limited to) millennials. Responsible pet owners will recognize the importance of providing for their pet upon their incapacity or death. Estate planning for pets is still relatively uncommon, yet is an essential way for estate planners to serve this expanding client base. Given the recent trends of lower birth rates and higher pet ownership rates, as well as the mindset that pets are equal in status to children, those who offer estate planning for fur babies will be on the cutting edge of this relatively untapped market.