As individuals and families look to preserve their assets against the uncertainty of tomorrow, the formation of a living trust is a viable estate-planning technique. It is not uncommon for a home and other major assets such as bank accounts, investments, and sometimes automobiles, to be transferred to a trust for that purpose.
Although attorneys handling the formation of the trust address the insurance implications, it is necessary to notify your insurance agency. In the case of a home, the name of the trust as well as those of the trustees must be added to the homeowner’s policy as “additional insured.” This is necessary for the asset to continue to be properly covered by your insurance policy.
The same holds true if you transfer the ownership of your automobile to your trust.
“When you put property in a living trust, the trust becomes its owner, which is why you must transfer the title to the property from your own name to that of the trust.”1 Thus, it is important that the applicable insurance policy (whether it is home or auto) reflects the insurable interest of the deeded owner of the property. In most cases the occupant (a beneficiary of the trust) is the named insured, and the trust or trustee is an additional insured on the policy. Most insurance carriers do not charge an additional premium to add a trust to a policy.
If the ownership of your home or automobile has been transferred to a trust, please contact your Cleary representative to discuss.
Concerned about your personal insurance coverage? At Cleary, our experienced Personal Lines department will work with you to evaluate your insurance needs, identify exposures, and create a customized insurance portfolio. Give us a call today at 617-723-0700.
1 Chapter 5, page 2, American Bar