Parish notes several things you should be aware of regarding the use of a pet trust. Not all states allow pet trusts. If your state has a pet trust statute, check to be sure what pets it allows or does not allow to be cared for by the trust. Some states allow trusts only for dogs and cats. Find out how long the trust is allowed to care for the pet.
Some statutes restrict the life of the trust to the life of the pet or to a certain number of years.
Trusts are more costly to establish and maintain than to simply bequeath money through a will to a caretaker. Parish recommends putting cash or cash equivalents such as certificates of deposit or money market mutual funds in the trust, instead of assets such as stocks or real estate that the trustee would have to sell to raise cash. Income tax must be paid by the trust on earnings from the trust's assets. The tax rate applied is the same rate that a married person, filing separately, would pay. This rate is generally more favorable than regular trust rates, according to Parish.