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One of the rules of my blog is to stay positive; but I’ve had to learn that being positive doesn’t mean that we bury our head in the sand and ignore reality.  I was thankful to Anisha Sekar for submitting this great information about the importance of pet insurance, but for also broaching the subject of setting up a pet trust.  What happens to our pets if something happens to their humans?

Pets are indispensable, not only providing joy, but also surprising health benefits, including prevention of heart disease and reduced risk of depression. Needless to say, most pet owners care f0r and invest a great deal in their pets’ well-being. Pet owners spent $50.96 billion toward pet care in 2011 alone, according to the American Pet Products Association.

Fiercely loyal and loving without pretense, our dogs, of course, are family. It’s only right to treat them well, and it seems we’ve mastered the costly art of rudimentary spending, what with the $1,500+ we spend each year on our four-legged friends. But beyond the basics of food and shelter, it’s also important to plan for emergencies.

Something happens to your dog: Pet insurance or a savings account?

Dogs get sick and get hurt without warning, and the appropriate medical attention can be just as costly as that for a human. And just as health insurance exists to guard against rare yet prohibitively expensive events, pet insurance offers a hedge against vet bills, emergency visits and ongoing care.

Like human medical insurance, most pet insurance pays for a percentage of doctor’s visits and for care above an annual deductible. But should you opt for a premium or just set aside funds for your pet’s care and add to it over time?

According to the APPA, the average dog owner spent $407 on surgical visits and $208 for routine veterinary care in 2011. The average person who has pet insurance will pay in more than he gets out – that’s how insurance companies are profitable. If you’re able to absorb the hit of an expensive health problem, you may be better off avoiding the premiums and opting for a high-yield savings account.

When you get insurance, you’re saying, “I’d rather pay $100 for 10 years than pay $500 in year one.” You’re likely to lose money, but you do so because the consequences of being hit with the bill all at once would be catastrophic. If this isn’t the case, you can save the money and put aside a set amount each year in a rainy-day fund.

Something happens to you: Setting up a pet trust

Just as with our pets’ health, the future of our own is uncertain. Should your dog outlive you, the best gift you could leave behind is to entrust your dog to a loving caretaker. You can set up a pet trust that names a caretaker for your dog and provides the funds to do so. Remember that caring for a pet is a significant monetary burden (over $1,500 a year on average), so it’s best to provide sufficient funds for your dog’s care. That money is typically paid out annually for the rest of the pet’s life (though some states limit the annual payouts to 21 years).

Pet trust laws vary from state to state. Check the ASPCA’s state law chart to see the laws and limitations. Kentucky, Louisiana, Minnesota and Mississippi don’t have pet trust laws; if you live in one of those states, the ASPCA recommends looking into a life trust, writing your pet into your will or making arrangements with a humane society.

When writing your pet trust, remember to:

  • Adequately provision for the cost of your pet over its lifetime. A puppy will likely require more funds than an older dog.
  • Include stipulations for your pet’s care. For example, require annual or biannual veterinary checkups.
  • Leave detailed instructions for your pet’s care. Include allergies, exercise, diet, medical history, etc.
  • Account for the costs of setting up and maintaining the trust. This includes attorney fees, for example.

As we know, our dogs are a costly investment. For prospective dog owners, the financial aspects should be weighed appropriately prior to undertaking the responsibilities of dog ownership. Nevertheless, we treat our dogs as we would family for their unswerving loyalty and abundant affection. We can take the necessary precautions now to ensure they’re loved in the best way their whole lives through.

Author Bio: Anisha Sekar writes for NerdWallet.com, a personal finance website dedicated to unbiased reviews of credit cards, savings accounts and more.

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