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In light of California’s changing climate and the increasing frequency of wildfires, it has become more crucial than ever to ensure that your estate planning is comprehensive and your home is properly protected. One essential aspect of this process is placing your home in a trust. Many homeowners worry that transferring their property into a trust may complicate insurance claims or jeopardize their coverage. However, with proper steps, you can avoid these issues and protect both your home and your family’s future.

Why Place Your Home in a Trust?

Placing your home in a trust is one of the most effective ways to ensure that your assets are managed and distributed according to your wishes. A properly structured trust can help you avoid probate, provide privacy, and streamline the transfer of property to your beneficiaries upon your death. Additionally, a trust allows you to appoint a trusted individual to manage the property if you become incapacitated without the need for probate court involvement.

Does Titling Your Home in Your Trust Affect Insurance Claims?

A common concern is whether transferring your home into a trust will affect your homeowners insurance or the ability to make claims. The good news is that placing your home in a trust should not negatively impact your insurance, as long as you handle the title transfer correctly.

Here are some key points to keep in mind:

1. Understanding the Named Insured and Additional Insured
Generally, the “named insured” on your homeowners insurance policy remain(s) the living, owner-occupied individual—in other words, you.
We are now recommending to our clients that they request that their revocable living trust be listed as an “additional insured” or “additional interest” on their policy. This would be considered best practices in light of the current insurance environment and would serve to eliminate any uncertainty of coverage complications in the event of a claim. Clients can confirm that their revocable living trust has been added as an additional insured by reviewing the “Declarations Page” of their policy. The Declaration Page should clearly state the individual property owners as well as the revocable living trust are the insured parties.

2. Clear Communication with Your Insurance Broker
Every insurance company and policy is different. To ensure your claims won’t be denied after a wildfire or other disaster, it’s crucial to speak with your insurance broker when placing your home in a trust. Your broker can help you update your policy to reflect the trust and confirm that all necessary endorsements are in place. This will help avoid any misunderstandings in the event of a claim.

Steps to Properly Place Your Home in a Trust

1. Work with an Estate Planning Attorney
Transferring your home into a trust requires a legal process. An experienced estate planning attorney will draft the necessary documents and ensure the deed is properly transferred into the name of the trust.

2. Inform Your Insurance Provider
Once the deed is transferred, notify your homeowners insurance company immediately. You will also want to notify any other insurance companies that cover your home with umbrella policies or title insurance. Provide them with a copy of the trust documents and request that the trust be added as an additional insured or additional interest on the policy. Here is a sample letter that can be used for this purpose.

3. Review Your Policy Annually
Regularly review your homeowners insurance policy to ensure it remains up-to-date and provides sufficient coverage for both the structure and personal property. This is especially important in high-risk areas where wildfires are prevalent.

Why This Matters Now

With the risks posed by wildfires and other natural disasters, it’s imperative to take proactive steps to protect your home and family. A trust offers significant benefits for estate planning, but it must be implemented correctly to avoid complications with insurance claims. By consulting with your insurance broker and working with an experienced estate planning attorney, you can achieve peace of mind knowing that your home is safeguarded—both legally and financially.

At Botti & Morison, we specialize in helping California families navigate the complexities of estate planning. If you have questions about placing your home in a trust or want to learn more about protecting your assets, we’re here to help.

Thanks for reading.
Christopher E. Botti, Esq., Certified Specialist in Estate Planning, Trust and Probate Law

This blog is for informational purposes only and does not constitute legal advice. Every situation is unique, and you should consult with a qualified attorney for advice regarding your specific circumstances.