Adding a trust to a homeowner's policy

[Ready]

Our home is in a trust, and it occurred to me that I need to add the trust as an additionally insured on our homeowners and umbrella policies. We are with Allstate and our agent is refusing to do so, stating that Allstate does not want the liability of naming a trust to a personal insurance policy.

Has anyone else had this issue? I called State Farm and spoke to two different brokers, both of which confirmed they had no issues adding the trust to the policy. Is this just an Allstate thing?

The Allstate rep is telling me I'm still completely covered even though the trust is not named on the policy, but every article I've read suggests otherwise.

 

[RobbieB]

Yeah, if you die in the fire that burns down the house who is the insurance Co going to pay?

 

[Golden sunsets]

I had a similar realization about 3 years ago and out State Farm agent acknowledged it was a problem. She added the trust as an additional assured to both policies.

 

[googily]

I had a similar realization about 3 years ago and out State Farm agent acknowledged it was a problem. She added the trust as an additional assured to both policies.

This is how mine is set up as well. Chase sent detailed instructions.

But Chase also threatened to scuttle the deal because State Farm did the papers as Goog Ly as the owner and The Goog I. Ly Revocable Trust as the additional, where the name on the mortgage is Goog I. Ly, so "they don't match, so we can't confirm you have homeowners insurance." And after three attempts with State Farm to get them to format things didn't come to fruition, I called Chase and turned into the freaked out widow, saying that this was all happening because my husband had died and were they really going to penalize me over a freaking missing initial? Since it was the same homeowners policy we'd had for years, Chase relented.

 

[Ready]

Thanks for the feedback everyone. It looks like Allstate is going to lose my business since they won't add the trust to the endorsement. I've been with them for 25 years and you would think they would try to find a solution for me, but my broker is an airhead. I chose her father 25 years ago and he was great. He retired and gave the business to his daughter. I've never had a good experience with her, so I guess it's time to move on.

 

[kaneohe]

What is the problem if the trust is not listed? Is there a problem if you are alive or is the problem if you are not?

 

[Ready]

What is the problem if the trust is not listed? Is there a problem if you are alive or is the problem if you are not?

This is one of those areas where I don't know what I don't know, but common sense tells me that if a trust owns my home but the insurance company does not acknowledge this in the policy, and something goes horribly wrong, it could create an opportunity for the underwriter to deny coverage.

I did find a good article that covers some things that can go wrong when you don't get the trust added as an additionally insured. It's worth a read if you find yourself in a similar situation:

https://www.irmi.com/articles/expert-commentary/protecting-assets-when-home-ownership-is-transferred

 

[kaneohe]

This is one of those areas where I don't know what I don't know, but common sense tells me that if a trust owns my home but the insurance company does not acknowledge this in the policy, and something goes horribly wrong, it could create an opportunity for the underwriter to deny coverage.

I did find a good article that covers some things that can go wrong when you don't get the trust added as an additionally insured. It's worth a read if you find yourself in a similar situation:

https://www.irmi.com/articles/expert-commentary/protecting-assets-when-home-ownership-is-transferred

Thanks for the link. Brain is not wanting to work right now so I read quickly thru link but only absorbed part of it. Will have to repeat. Meanwhile have the question in to State Farm.

 

[aldo]

OP, Thanks for posting. Contacted State Farm and Liberty Mutual; both wanted to know of our trust

 

[meierlde]

It appears that there is an endorsement to the standard homeowners policy to do this:
https://www.mynewmarkets.com/articles/89847/changing-status-of-who-is-an-insured


In particular it appears to be HO 05 43 "Residence Held In Trust (HO 05 43): Homeowners endorsement extending named insured status to a Trust. Also extends protection to the spouse of the trustee and resident relatives of the trustee but only while residing in the residence premises listed in the policy."
So the question might be to the agent does the company offer the endorsement.


In general this is needed because otherwise the person owning the homeowners policy legally does not have an insurable interest since they do not own it.

 

[Scuba]

Thanks to the OP for bringing up this issue. I too am with Allstate, and we transferred our home into our trust back when we created the trust 8 years ago. It never occurred to me that this would impact our coverage. Definitely will be following up with our agent. Luckily our renewal is in July so the timing of this is perfect for me.

 

[Ready]

Thanks to the OP for bringing up this issue. I too am with Allstate, and we transferred our home into our trust back when we created the trust 8 years ago. It never occurred to me that this would impact our coverage. Definitely will be following up with our agent. Luckily our renewal is in July so the timing of this is perfect for me.

Let me know if you have any more luck with Allstate than I did. They flat out refused to accommodate me.

 

[Ready]

It appears that there is an endorsement to the standard homeowners policy to do this:
https://www.mynewmarkets.com/articles/89847/changing-status-of-who-is-an-insured


In particular it appears to be HO 05 43 "Residence Held In Trust (HO 05 43): Homeowners endorsement extending named insured status to a Trust. Also extends protection to the spouse of the trustee and resident relatives of the trustee but only while residing in the residence premises listed in the policy."
So the question might be to the agent does the company offer the endorsement.


In general this is needed because otherwise the person owning the homeowners policy legally does not have an insurable interest since they do not own it.

The article I reference in my earlier post addresses this endorsement and the limitations of it. In addition to this endorsement it is important to make sure the policy names the trust as additionally insured.

 

[Jerry1]

Let me know if you have any more luck with Allstate than I did. They flat out refused to accommodate me.

Did you contact Allstate directly? Or, did you only rely on the agent. Not that you don’t have a good reason to leave, perhaps a quick call can straighten this out while you look for a new agent or company.

 

[Ready]

Did you contact Allstate directly? Or, did you only rely on the agent. Not that you don’t have a good reason to leave, perhaps a quick call can straighten this out while you look for a new agent or company.

Well, I've tried twice. I can't find any phone number to reach Allstate outside of their useless customer service line which has entry level people who only want to refer me back to my agent, who is creating this problem for me in the first place.

Does anyone have any other suggestions on how to get around them?

 

[meierlde]

Well, I've tried twice. I can't find any phone number to reach Allstate outside of their useless customer service line which has entry level people who only want to refer me back to my agent, who is creating this problem for me in the first place.

Does anyone have any other suggestions on how to get around them?

Write a letter to the CEO telling him the problem.

I did find this website that gives a phone number for Corporate HQ of Allstate
Allstate Corporate Office & Headquarters It also gives the address. For this sort of situation a letter may work better than a phone call.


BTW could also contact a different agent and ask for the policy to be transferred. You could call the second agent, and if they are willing to handle the

situation, call the first agent and say fix or transfer.

 

[meierlde]

BTW out of curiosity did the lawyer who set up the trust advise you about insurance? It seems to me that the lawyer should tell you about this gotcha. (That essentially you need as named insureds the trust and the owners, one for the structure, and one for the personal goods and liability)

 

[Ready]

BTW could also contact a different agent and ask for the policy to be transferred. You could call the second agent, and if they are willing to handle the

situation, call the first agent and say fix or transfer.

I tried that too. They told me I would need to cancel the policy and wait six months before they could assign me a new agent. Another Allstate company policy. I'm told it's to prevent agents from stealing existing clients.

 

[Ready]

BTW out of curiosity did the lawyer who set up the trust advise you about insurance? It seems to me that the lawyer should tell you about this gotcha. (That essentially you need as named insureds the trust and the owners, one for the structure, and one for the personal goods and liability)

Nope. It came up here on another thread. Otherwise I would have missed it. That's why this forum is so valuable.

And yes, he should have told me to look at my insurance. I guess he forgot.

 

[meierlde]

Nope. It came up here on another thread. Otherwise I would have missed it. That's why this forum is so valuable.

And yes, he should have told me to look at my insurance. I guess he forgot.

Actually had you had a serious claim against the structure, you might have been able to sue the lawyer for malpractice. It sounds awefully close to malpractice.

BTW you could also call the state insurance department.

 

[USA]

I’ve some research to do. My agent knows our vehicles are in the trust but the real estate? Reading that got my attention!

 

[Scuba]

Nope. It came up here on another thread. Otherwise I would have missed it. That's why this forum is so valuable.



And yes, he should have told me to look at my insurance. I guess he forgot.

I sent my Allstate agent 3 articles to illustrate my concerns. He called me back today to discuss but I was busy. We are going to talk Monday so I can update you after that.

Interestingly, I sent our estate planning attorney the same 3 articles and asked for his advice about how his clients handle this. Despite having set up many trusts, he said he had never run across this issue before. Either the rest of his clients are super smart and knew about this before creating a trust, or more likely, I suspect there are a lot of people out there with assets held in a trust that haven’t modified their insurance.

I’ll let you know how this turns out for us.

 

[ncbill]

I sent my Allstate agent 3 articles to illustrate my concerns. He called me back today to discuss but I was busy. We are going to talk Monday so I can update you after that.

Interestingly, I sent our estate planning attorney the same 3 articles and asked for his advice about how his clients handle this. Despite having set up many trusts, he said he had never run across this issue before. Either the rest of his clients are super smart and knew about this before creating a trust, or more likely, I suspect there are a lot of people out there with assets held in a trust that haven’t modified their insurance.

I’ll let you know how this turns out for us.

I think that's a safe bet.

Though why put it in a trust in the first place?

Probate a bear in your state?
Dementia or other cognitive impairment run in the family?

Putting the home in a revocable trust doesn't provide other significant benefits.

 

[Ready]

I think that's a safe bet.

Though why put it in a trust in the first place?

Probate a bear in your state?

Putting the home in a revocable trust doesn't provide other significant benefits.

Putting the home in a trust allows the surviving spouse to inherit the entire home at the fully stepped up basis, thus avoiding any capital gains taxes on the home if you sell it. Otherwise the surviving partner would have to pay capital gains taxes on 50% of the gains. For us, that number is quite substantial.

 

[googily]

Mine is in a revocable trust, at the urging of my estate attorney, so that if I become incapacitated and there is a need for money to fund my care, my trustee can sell the house to get it.

That of course is part and parcel of the estate planning for incapacitation as a widow with no children. PoAs and the naming of a successor trustee in the event I am judged by two physicians to be no longer capable of handling my affairs.

It's why my taxable brokerage account is also owned by my trust.