People in the Greensboro, North Carolina area who want to create a pet plan often have a lot of questions. Some of these questions involve life insurance, and more specifically, whether or not they can use a life insurance policy to provide for their pet.
While you should only try to create an estate or pet plan after speaking to an experienced attorney, it is possible to use your life insurance policy payment in a way that benefits your animal. To show you how you might be able to do this, let’s take a look at some issues.
Life Insurance Policies
Though there are significant differences in life insurance benefits depending on the kind of policy you obtain, all policies generally work in the same way. Once you buy a policy, you agree to make regular payments. Upon your death, the life insurance company agrees to provide a death benefit payout to a beneficiary you have selected. The beneficiary can be almost anyone you like, and as long as you select your beneficiary in the way outlined under the terms of the insurance policy, you can change your beneficiary whenever you wish.
Pets and Property
If you can choose whomever you want as your insurance policy beneficiary, does that mean you can choose your pet?
Not really. Under the law, a pet is not a person and does not have the same property ownership rights that people have. While you can provide your pet with gifts or care, that doesn’t mean the pet is actually paying for those things, or is the legal owner. You own your pet as property, and cannot give your pet and inheritance, or name your pet as your life insurance beneficiary because a pet is not allowed to own property itself.
If your pet cannot own property, how can you protect your pet if you become disabled or die? In most situations, the answer lies with a pet trust.
A trust is a kind of legal entity. Like a corporation, a trust is not a real person, but it can own property. If you create a trust you can choose your trust to become the beneficiary of a life insurance policy, or allow your trust to inherent property after you die.
Some trusts, known as pet trusts, can be setup to specifically provide for the needs of a pet left behind after the death of the owner. With these trust you set aside some of your property to provide for the pet’s needs. You also choose a trustee who will manage the trust, and a caregiver who will provide the pet with the care it needs. Because the trust can own property, you can name the pet trust as your life insurance policy beneficiary.
However, as with all legal devices, it’s important that you create your trust properly and make sure it complies with all requirements as imposed under the laws of the state of North Carolina.