It’s not unusual for homeowners to place their home into a trust for a variety of estate planning purposes. However, placing the home into a trust will definitely complicate your home insurance policy. If your home is owned by a trust, sort through the legalities to understand exactly how this should be reflected on a Delaware high net worth insurance policy.
Check that your insurance policy references the name of the trust as an insured. If your home is now owned by the “John Doe Trust,” it should also be named on the insurance policy. Many homeowners do not take this simple but important step when they establish their trust and transfer title of the home.
It is commonly assumed that nothing has changed from an insurance perspective or perhaps because they’re still the trustee, the policy will reimburse them in the event of a loss. However, if loss occurs, an insurance policy cannot pay anyone who is not named on the policy. For example, if your home is now in the name of the trust and you are not the trustee, your policy would only pay you for your personal property that you still own in your name. The value of the home cannot be paid to anyone who is not a named insured on the policy.
Avoid this issue by discussing the ownership structure of your home with a Delaware high net worth insurance agent to ensure that all parties’ interests are properly accounted for within your policy.
How It Works
Many homeowners have not only transferred their home into a trust, but have also become tenants in what was previously their home. These trusts are called qualified personal residence trusts and are more complex than the standard living trust, where you remain the trustee with complete control over the property in the trust.
With a qualified personal residence trust, you have the right to continue living in the home, but the ownership structure is somewhat different in a variety of aspects, including insurance. Connect with an agent to go through what will be specific to you.
Trusts have become more common for homeowners so insurance companies have begun clarifying how the home is insured. It may be as simple as adding an endorsement to the policy that names the trust and/or trustee as insureds; in which interests of all the parties to the home will be effectively covered by the policy. By taking the steps to place your home in a trust, you have begun an estate planning process.
Do not sabotage the process by not properly insuring the house with Delaware high net worth insurance.
About IFS Insurance
At IFS Insurance, we specialize in protecting homeowners and renters throughout Delaware, New Jersey, Pennsylvania, and Maryland. Our quality solutions and commitment to excellence has allowed us to serve these states for over 50 years. For more information about our products, we invite you to contact us today at (800) 598-042