If you own a pet, chances are that you consider it a member of your family. But what happens to your furry or feathered friend if you die or become incapacitated? Unless you make specific arrangements for its care, your pet could wind up as one of the more than 500,000 animals killed in shelters and veterinary offices each year after their owners die.

But with some planning--whether through informal agreements with friends and family or more structured arrangements such as a pet trust or a prepaid-care program--you can ensure that your pet is well cared for when you are no longer able to do the caring. Read on for more information on how to set up a pet trust using the traditional form or the newer, simpler statutory trusts now available in a growing number of states. Other options for your loyal companion's continuing care include programs run by animal organizations, sanctuaries, and veterinary schools (see Alternatives to pet trusts).


New trust options

You can't leave your money to Fluffy or Fido directly--in part because pets are considered property in the eyes of the law--but you can use the legal instrument of a trust to arrange for your pet's support. The various types of pet trusts work the same way as those set up for a human: You name a trusted person or financial institution (the "trustee") who has the duty to follow your instructions for the care of your pet. The trustee delivers the pet to your designated caretaker, and the money is doled out to the caretaker according to the terms you specify in the trust.

Gerry W. Beyer, a professor at Texas Tech University School of Law, says that pet owners willing to spend the money have long had the option of creating a traditional pet trust. The heiress Doris Duke let a hefty amount of her estate go to the dogs, so to speak, with a $100,000 trust for the care and feeding of her canine.

Traditional pet trusts can be expensive and complicated to set up, Beyer says; the simplest ones usually cost at least $1,000. Much like a trust you'd set up for a child, which often lists conditions that must be met before any money is paid, a traditional pet trust lets you spell out exactly how you want your pet cared for, from its daily routines to its preferred brand of kibble.

How specific can you be? The singer Dusty Springfield reportedly left her cat, Nicholas, to a friend with the instructions that the kitty's bed be lined with her nightgown, that her recordings be played each night at his bedtime, and that he be fed his favorite imported baby food.

An alternative to the traditional pet trust is a statutory pet trust, now available in the District of Columbia and 37 states and pending in several more. These simple, legally enforceable trusts can be established for minimal cost, as little as $50 or $100, as part of your will.

"Statutory pet trusts are nice, even if you're leaving only a nominal amount of money, because this makes it easy for the lawyer--he doesn't have to draft a full trust," Beyer says. "You can put in just a line or two and have it be effective." Because state law "fills in the gaps" on such details as when the trust ends and how it is enforced, you need include only a simple provision in your will, such as, "I leave $1,500 in trust for the care of my cat, Milo."

A major drawback to establishing a pet trust in your will, called a testamentary trust, is that your trustee and designated caretaker must wait until the will goes through probate to receive the money, a process that can take several months for even the simplest estates. So if you take this approach, you'll need to arrange care for the interim. An alternative is to create a living trust, which does not have to go through probate so it can be implemented immediately.

Your attorney can draft a living trust, or you can work with a company like PetGuardian (www.petguardian.com), based in Los Gatos, Calif., which creates living pet trusts effective in any state for birds, cats, dogs, and horses. The program, which costs $500, includes a pet trust document and a cost analysis to determine how much money to set aside for care. The analysis takes into account food, veterinary care, and medications over the life expectancy of your pet, along with estimated expenses for burial or cremation.

Bird owners can face a special challenge. Because some birds, such as certain types of parrots, can live for about 80 years, it's important to leave sufficient funds and to name alternative caretakers, or even an avian sanctuary as a "last resort" caretaker. A parrot born this year might still be doing the "Polly want a cracker" thing in 2087.

The PetGuardian trust will describe your pet's usual care. "We ask if there are any special needs for your pets, such as supplements, and do they have any fears or any special places for walks," says Amy Shever, the company's founder. "A lot of people who consider their pets family members want to continue that same kind of care."

PetGuardian works with Best Friends Animal Society, an animal sanctuary in Utah, to find homes for pets whose caregivers named in the trust are no longer available, regardless of where the animals live.


Funding the trust

A practical way to fund a trust, especially for those who would have a hard time setting aside money for it now, is to name the trustee as the beneficiary of a life insurance policy. It can be a policy you have taken out to fund your pet trust, or you can allocate a certain portion of an existing policy to be payable to your pet trust. Just be sure to consult with your attorney or insurance agent about the correct way to name the beneficiary. And be aware that transferring unreasonably large amounts of money or property to the pet trust could prompt your human heirs to contest the arrangement.

For example, Doris Duke's pet trust was challenged, but the court upheld her wishes. To avoid legal challenges, you should designate an amount that accurately reflects what it would cost to maintain the care you specify. Obviously, Ms. Duke intended a high degree of canine coddling.

Other options for funding the trust include pay-on-death (POD) accounts, annuities, and retirement accounts, if the institution allows a trust to be named. Funding the trust while you're still living ensures that it will spring into action immediately on your death. But if you can't afford to fund it now, Beyer notes that using life insurance or a similar arrangement is a good compromise. "It isn't prefunded, but funding can happen much faster than if the will needs to be probated first," he says.

To avoid hassles (some institutions make if difficult to name trusts for children or pets), keep your designations simple. If you use a POD account, for example, keep only the funds for the pet trust in it, so the entire account belongs to the trust upon your death.


Trust, but verify

You'll need to name a beneficiary who will get whatever is left of the trust when your pet dies. Don't name the caretaker, Beyer stresses. You don't want to give him or her any reason to hasten your pet's demise. You may also want to make sure that the funding stops when your pet dies.

Beyer tells of a trust set up in San Francisco for a black cat whose caretaker "was on her third black cat before the trustee figured out what was going on." The best method of identifying your animal? Have your trustee obtain a DNA sample before giving the animal to the caretaker. "I used to laugh at that," Beyer says, "but not anymore."

Peggy Hoyt, a lawyer and author of "All My Children Wear Fur Coats: How to Leave a Legacy for Your Pet" (Legacy Planning Partners, 2002), has three horses, five dogs, and five cats, and she has created a trust for all of them. She has even appointed an "animal-care panel," which includes a veterinarian, that will oversee the performance of her designated caretaker and the trustee. Hoyt, whose father headed The Humane Society of the United States for 27 years, says she saw an influx of clients after her book came out. "Some people still think pet trusts are crazy," she says. "But I'm getting more requests for them every year."