Money Help Desk: Wills can ensure your pets continue to be cared for

WHEN my husband died a few years ago, my son bought me a dog to keep me company. It is a dear little thing and I have become very attached to it. I am aware that the dog may outlive me and I would hate to think that she wouldn't be provided for. Is there anything I can do to ensure she is looked after?

JM, Peebles

Pagan Osborne partner Fiona McDonald writes:

In many homes, pets are very much a part of the family, so it is no surprise many people in a similar situation to yours want to protect them in the future. Provision can be made in your will to record what you would like to happen to your pet, which could include passing it to a friend or relative, perhaps with a monetary sum to assist them in caring for the animal. The money element can be conditional on that person agreeing to care for the animal.

By making a record of your wishes, you can also express how you would like the animal to be cared for: for instance, if you would wish particular pets to be kept together, given a special diet or kept at a certain location.

Leaving money to animal charities with the expression of wishes that you would like them to care for or rehome a pet is a popular choice. You can provide directions on how you anticipate any conditions being carried out and your executors can assess whether these conditions have been met.

Some people may choose to provide a friend or relative with a life interest in their estate, allowing them to have use of the assets in the estate and the income in it. This could be limited to the lifetime of the pet if that person has agreed to care for it.

After the death of the pet, the trust funds can pass to whichever beneficiary has been selected by the original owner. So, for example, a dog lover may choose to leave their house in life-rent to their good friend if that friend agrees to care for the dogs. The friend could then live in the house caring for the dogs, the dogs get to stay in the home they know and have always been in, and then on the death of the final dog the house could either pass to the friend outright or to another beneficiary.

A discretionary trust could also be established and financial assistance could be given to any individuals caring for the animals. The trust would allow for flexibility and could be used and adapted to the needs of the animals and the funds needed by the person caring for the animal.

Anxiety over need to purchase an annuity

I am planning to retire in two years, at the age of 65. My main pension is a personal plan with an insurance company, currently worth around 45,000. I have read recently about falling annuity rates, also that the government is planning to scrap having to buy an annuity at retirement. Does this mean I am off the hook?

CF, EdinburghTom McPhail, head of research at Hargreaves Lansdown, writes:

Annuity rates have been falling for most of the past 20 years and are currently at the lowest level they have ever been. A 65-year-old man today with a pension fund of 50,000 could buy an annuity paying around 3,200 a year. This wouldn't have any inflation proofing built into it; if you want your income to go up every year then you'd only be able to get around 2,000 a year as a starting income.

Annuity rates may fall further in the next couple of years because of low interest rates and increasing regulation. However, in the longer term they may go up again if we see inflation take off.

The government is proposing to scrap the compulsory annuity purchase rule from next April, so you won't have to buy one if you don't want to, but the rules will be quite restrictive and it may in fact still be in your best interests to buy an annuity.

Whatever you do, when you get to retirement make sure you shop around for the best possible terms - you could increase your retirement income by 20 per cent or more. And if you can, make sure you build some inflation-proofing into your pension: the average life expectancy of a 65-year-old is around 20 years, and over that kind of period inflation can do a lot of damage.