Love Your Pet? Plan For Your Pet!
Tuesday, March 18, 2014 • 7:39pm
Are you a good pet owner? We Americans love our pets; many of us view our pets as family members and we derive real physical and emotional benefits from owning pets. We spend over $50 billion per year on our pets and nearly 2/3 of our households have one or more pets. Yet millions of unwanted pets are euthanized each year because pet owners did not make provisions for pets when the owners became disabled, died or no longer could afford their pets.
With so much time, love and money invested in our pets, pet planning is prudent and responsible. Here are 4 areas to consider:
1. Pet ownership in the context of your overall financial plan
2. Pet insurance pros and cons
3. Disability insurance for pet owners (so unexpected disability doesn’t mean giving away or euthanizing your pet).
4. Estate planning that includes provisions for your pet(s)
Budgeting for Pets: Seek advice from a fee-only CFP® to construct a financial plan that also references your pet(s). Pets not only need food -- they also may need toys, training, grooming, boarding, standard and acute veterinary care and burial or cremation. All of these things cost time and money. If you work or take trips, boarding costs or traveling with your pet can add up. If you own a dog and you work, dog-walking can be an added expense. Even before you own a pet, estimate monthly or annual expenses so they don’t eat into other non-discretionary items (housing, food, medical, insurance, transport, family support). Retirement savings also should not be affected. Although this sounds obvious, some pets end up in shelters or are euthanized because their owners couldn’t afford them!
Pet Insurance Pros and Cons: Pet insurance is best used to fund extraordinary and unexpected veterinary costs, not basic veterinary care. Secure insurance when your pet is young. Insurance won’t cover pre-existing conditions. Pet owners incur the expense and submit paid receipts to the insurance company.
But is pet insurance right for every pet owner?
Benefits: Like human medical insurance, pet insurance presents a bewildering maze of deductibles, payout periods after deductibles are med, payout caps, waiting periods etc. Pet insurance is helpful if you must choose between veterinary care and euthanizing your pet. Pet owners with insurance tend to seek veterinary care more often and treat their pets’ medical issues more proactively than owners without insurance. There are various websites to assist pet owners in evaluating different plan. A great resource is www.animalleague.org
Negatives: Like any other catastrophic insurance, you may end up paying far more in premiums than any benefit you may receive for your pet, and reimbursement may be partial. It’s not uncommon to hear about policies that cap coverage at $5,000, leaving committed pet owners to pay additional thousands out of pocket.
Or Consider Self-Funding Instead of Insurance Example: your young pet is anticipated to live 12 years. Calculate how much you want to earmark for serious illnesses (e.g. $10,000). At 3% inflation, $10,000 in current dollars grows to $14,300 – or approx. $100/month saved in a separate pet emergency fund. You pay-as-you-go if your pet needs hospital treatment or surgery. If no care is needed, you direct these savings elsewhere.
Disability Insurance for Owners: Disability insurance only covers individuals who have earned income. If you’re a pet owner, do you have sufficient coverage to care for you and your family and your pet if you acquire a disability?
Estate Plans That Include Pet Trusts: A good pet owner knows that a pet may outlive him/her so provisions must be made that go beyond a simple will or informal handshake agreements with friends and family members. Wills are problematic since they can lack Power of Attorney provisions and don’t cover pet care if an estate is stuck in probate or if the owner is still alive (but unable to care for his/her pet). A great resource for pet trusts is the North Shore Animal League, a nationwide no-kill shelter that can serve as both custodian and trustee for pet trusts. Discuss adding provisions for your pet to your estate documents.
An experienced and compassionate financial planner and affiliated specialists (e.g. estate attorney with pet trust experience) can help you pull together a comprehensive financial plan that serves you and your family’s interests, including your pet family members. Given the millions of dollars we spend on pets, and the millions of unwanted pets that are euthanized, good planning just makes good sense!
Eve Kaplan is a Fee-Only (no products sold) Certified Financial Planner® Practitioner with 29+ years of investment/planning experience. Eve is proud to be a Fee-Only planner because she upholds the highest Fiduciary standards in the planning industry. Eve opened Kaplan Financial Advisors in Berkeley Heights in 2004. Prior to that, she spent 20 years working as an equities analyst and fund manager in NY, Tokyo, Singapore and Rotterdam. Kaplan Financial Advisors provides comprehensive planning/investment management services to high net worth individuals. Her firm also provides high-quality, low-cost 401(k) and 403(b) plans. Eve can be reached at 908-898-0549 or Eve@KaplanFinancialAdvisors.com. Visit her website at www.KaplanFinancialAdvisors.com
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