Who gets Fluffy when you're gone? Pet inheritance is more complex than you might think

Cost of Living5:02Pet inheritance. It's a thing.

Sue Garratt doesn't want her dog and cat to end up at the local humane society if she dies before they do. So the Barrie, Ont., resident got a life insurance policy to ensure that her daughter will have the dogs' expenses covered should the worst happen.

 "So if I kick it tomorrow, she collects the money next week and can be looking after the expenses for Jethro and Tansy," she told CBC.

Most people know they should have a will to make sure it's clear how their estate will be divided after their death. But they may not realize that pets are considered part of that estate, and can't be heirs in their own right, said Jonathan Ng, an estate lawyer in Calgary.

However upsetting it may sound, estate law in Canada is clear: "pets are considered personal property," he told Cost of Living. "You cannot say, 'I give to Fluffy $10,000.' Fluffy is, unfortunately, like a Chesterfield or a necklace."

And it may not be enough to simply designate a beneficiary to take over caring for a beloved pet. Unlike that necklace, pets cost money to care for, so it's important whoever ends up with your pets has the resources to properly provide that care.

Pets are expensive, so have a plan

In Canada, owning a dog costs around $4,000 a year. Food alone can cost more than $1,000 annually, and then there are veterinarian bills and other unexpected expenses. 

Ng cautioned that you may need to do more than simply designate your cousin to receive your pet and include some cash.

"Perhaps the cousin receives the pet at Day 1, including the cheque for $10,000, and goes straight to the SPCA [Society for the Prevention of Cruelty to Animals] to give up the dog," Ng says. "It happens." If this is a concern, Ng said you can set up a pet trust, with someone to act as a trustee, creating a "firewall" between the person caring for the pet and the money. The trustee makes sure that the expectations set out in the will are met, and will dole out money from the bequest accordingly.

Obviously, it doesn't need to be so rigid that unexpected events can't be accommodated, Ng said. "The trustee also has the obligation to listen to needs outside of [a monthly amount]." For example, the trustee can provide more money if a pet needs surgery, he said.

When the pet dies, "then the trust ends and the money that's left in the trust goes in some other direction that the deceased wanted," Ng said. "I quite often see the pet trusts ending with the money going to an animal-related charity."  

The amount of money required to care for a pet such as a dog or a cat is fairly straightforward, because we generally have a good idea of their lifespans, Ng said.

'I'm in the will for this lady with 30 birds'

But what if the pets are, say, parrots, which often live for decades?

That's a concern for Megan Craig. She runs Greta's Roost, a parrot rescue in Lethbridge, Alta. 

"Your parrot can outlive you, and probably will," she said. Moreover, it's common for parrot owners to have more than one bird. "They're kind of like chips. You can't just have one." 

Craig is the beneficiary of several parrot owners who are also her friends.

"I'm in the will for this lady with 30 birds, and then I have another friend who has six or eight birds, and then another friend who has another six or eight," she said.

"It's like, 'Man, if you guys all die at once I don't know what I'm going to do,'" she said, laughing. "$10,000 isn't going to be enough for anybody to do this job."

She says it's concerning for her, because she has no idea how long the birds will live. "There's no guarantee I'm going to be running this rescue for the next 10 or 20 years."

Make sure your beneficiary knows what they're in for

Craig has asked her friends to check with her annually to ensure she's still in a position to take the parrots should their owners die. "If we're not in a position to help, it's no good for the animal, it's no good for your family, no good for us."

As some of the longest-living pets, parrots — along with turtles and tortoises — are also very expensive to care for.

Craig says one medium-sized parrot costs around $200 per month to care for just for food and toys alone. (Parrots, she explained, are very destructive creatures and destroy toys frequently.)

She says she would attempt to re-home the birds with caregivers she knows love parrots, but that could take time.

Ng echoed the need to check in with your beneficiaries. "You don't want the receiver of your pet or the trustee of the fund to find out that they have this role at the funeral," he said.

For her part, Garratt said setting up a separate life insurance plan to cover pet expenses was just common sense. She actually began planning for it decades ago, when the premium was $112 per year. Now, it's fully paid up and is worth about $24,000, she said.

She has no doubt that her daughter will provide excellent, loving care for her animals.

"It's like all the other parts of your financial planning," she said. "You have to go the distance on who knows you, and who would do what you would want, or need, were you not capable."