With the wildfires, our firm has received numerous questions about whether your homeowner’s insurance policy should be held in the name of your living trust if the title is held in the trust. This is an important consideration when managing both home insurance and living trust details to avoid complications.
A living trust is a legal document that allows you to transfer your assets into a trust during your lifetime. This arrangement provides benefits such as avoiding probate, maintaining privacy, and ensuring your assets are managed according to your wishes if you become incapacitated. Proper coordination between home insurance and living trust ownership is key to maximizing these benefits.
In the past, many of our clients have successfully received claim payouts from house insurance policies held in their individual names rather than their trusts. However, this should not be considered the standard. Particularly in catastrophic situations, such as wildfires, insurance companies might scrutinize claims more closely and seek reasons to deny them. If your home is part of your living trust, it is crucial to inform your insurance company to ensure alignment between your home insurance and living trust.
The trust, as the legal owner of the property, must be named on the insurance policy. Failure to do so could create complications when filing a claim. For example, if your property is insured under your name but owned by the trust, the insurance company could deny the claim, citing a lack of insurable interest. This highlights the importance of ensuring your home insurance and living trust are properly coordinated.
Naming your living trust as the insured party on your homeowner’s insurance policy eliminates confusion about ownership and ensures the rightful party can file a claim. Moreover, it safeguards the trust’s assets from potential legal disputes. Additionally, designating the trust as the legal owner ensures that any insurance payouts go directly to the trust, preventing the need for court involvement if you’re no longer alive to receive the claim.
For expert guidance on aligning your home insurance and living trust, contact our office at 626-858-9378 or visit www.tyrelawgroup.com.