Adding a trust to a homeowner's policy

[523HRR]

Recently purchased a new home titled in our respective trusts. No issue adding our trusts as an insured interest with Electric Insurance. It would be interesting to know what exactly is AllState's concern with revocable trusts.

 

[kaneohe]

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.

My impression was that property in a community property state got a 100% step up. Not sure whether you needed a community property agreement to make that true. We got both the CPA and the trust at the same time (CA).

 

[Ready]

My impression was that property in a community property state got a 100% step up. Not sure whether you needed a community property agreement to make that true. We got both the CPA and the trust at the same time (CA).

My attorney seems to think that unless you specifically label the property in the trust as community property you would not qualify for the 100% step up. I'm a novice at this stuff so I can't qualify his position on this one.

I have now spoken to Liberty Mutual, State Farm, Amica and Travelers. All four companies confirmed they can add the trust as an additionally insured. So I think this is looking like an Allstate quirk, or possibly just my agent being incompetent.

Amica surprised me with a quote of only $429.00 for a $5M umbrella policy. Their overall pricing was the lowest of the four as well. And, Amica scored #1 in customer satisfaction from both JD Powers and Consumer Reports, so I'm leaning toward going with them.

But I will speak with each of the brokers next week just to confirm everything before making a decision.

 

[googily]

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.

I'm not sure that's the case here in DC, because my estate attorney is incredibly through, and once DH was ill I have no doubt she would have pushed to have us get the house into the trusts, given how long ago we bought our house and how much it has appreciated.

 

[Ready]

I'm not sure that's the case here in DC, because my estate attorney is incredibly through, and once DH was ill I have no doubt she would have pushed to have us get the house into the trusts, given how long ago we bought our house and how much it has appreciated.

This article gives a thorough explanation of how the step up basis works, but I'm not sure how it may differ in community property states like CA vs DC. Maybe someone with a better background in taxes can help to explain to all of us.

https://www.cpajournal.com/2017/08/18/greatest-hits-community-property-step-basis/

 

[Golden sunsets]

My attorney seems to think that unless you specifically label the property in the trust as community property you would not qualify for the 100% step up. I'm a novice at this stuff so I can't qualify his position on this one.

I have now spoken to Liberty Mutual, State Farm, Amica and Travelers. All four companies confirmed they can add the trust as an additionally insured. So I think this is looking like an Allstate quirk, or possibly just my agent being incompetent.

Amica surprised me with a quote of only $429.00 for a $5M umbrella policy. Their overall pricing was the lowest of the four as well. And, Amica scored #1 in customer satisfaction from both JD Powers and Consumer Reports, so I'm leaning toward going with them.

But I will speak with each of the brokers next week just to confirm everything before making a decision.

Ready; Your new quote of $429 may not include the same coverage as your old policy. Our Umbrella policy of 4M costs $633 per year. I just paid the annual premium. The policy includes Uninsured/Underinsured motorists coverage as well as liability. That component is often missing from newer policies. Some companies won't include U/U I've been told by our agent. We could drop the U/U and save $318/year which would reduce our premium to $315 per year. We have chosen to retain it. You would be surprised at what that coverage covers: a lot more than if you are in an auto accident. A personal injury attorney friend of ours harps on how important this coverage is. Just a thought.

 

[Ready]

Ready; Your new quote of $429 may not include the same coverage as your old policy. Our Umbrella policy of 4M costs $633 per year. I just paid the annual premium. The policy includes Uninsured/Underinsured motorists coverage as well as liability. That component is often missing from newer policies. Some companies won't include U/U I've been told by our agent. We could drop the U/U and save $318/year which would reduce our premium to $315 per year. We have chosen to retain it. You would be surprised at what that coverage covers: a lot more than if you are in an auto accident. A personal injury attorney friend of ours harps on how important this coverage is. Just a thought.

Interesting point. I checked my Allstate policy and it does not cover uninsured/underinsured motorists either. I called Amica and then told me that CA umbrella policies do not include that coverage. Here is a description of what my Allstate policy covers:

Policy Coverages and Limits of Liability
Coverages
Excess Liability - Bodily Injury and Property Damage Annual Aggregate Limit
$5,000,000 each occurrence $10,000,000 during the current policy period

Excess Liability - Personal Injury Annual Aggregate Limit
Additional Dwelling Rented To Others
Limits of Liability

$500,000 each occurrence $1,000,000 during the current policy period
Not purchased*

I have asked Amica to send me complete copies of auto, home and umbrella policies so I can review them closer.

 

[Golden sunsets]

Ready; this may or may not be of interest to you. It is a cut and paste from our lawyer friend's material regarding UIM, with state specific references xxxxed out . In addition to the list below, he also told me that it would pay out if the insured is in a vehicle driven by others where there is no or insufficient liability insurance including taxis and I assume UBER and LYFT drivers. That is something to think about. Particularly UBER & LYFT which have become our new "taxi" service.

"Little is known by most xxxxxx about UM and UIM coverage. An uninsured motorist is someone who does not have any motor vehicle liability insurance coverage at the time of an accident. An underinsured motorist is someone who has auto insurance, but their limits of coverage are not adequate to fully and fairly compensate you for your injuries, and you carry higher UIM limits of coverage. In xxxxxx, minimum limits of UM/UIM coverage are mandatory. However, you can request and pay for higher limits of liability and UM/UIM coverage. If you have purchased higher limits of UM/UIM coverage, it is that insurance that can come to the rescue for you and your family if you are involved in a serious motor vehicle accident. This very important type of insurance coverage will help compensate you and your passengers for the full extent of your damages. And, the cost to add these higher limits of coverage to your insurance policy is minimal - it is the mandated minimum limits that are the most expensive to purchase.

Your uninsured and underinsured coverage may apply if you are:
·Injured in a motor vehicle accident caused by a driver with no auto insurance.
·Injured as a pedestrian, bicyclist, or skateboarder when struck by a motor vehicle.
·Injured as a passenger in a motor vehicle or other type of vehicle, such as a snow machine or ATV, struck by a motor vehicle.
·Injured in a "hit and run" accident or in an accident where a phantom vehicle swerves into your lane and causes you to drive off the road - physical contact between the vehicles is not required.
·Living with a blood relative in the same household - under xxxxx law, in certain circumstances multiple UM/UIM policies of family members may stack one of top of the other to provide even greater coverage.
·Injured in a motor vehicle accident caused by a driver whose liability insurance coverage limits are lower than your UIM limits of coverage."

 

[Scuba]

My attorney seems to think that unless you specifically label the property in the trust as community property you would not qualify for the 100% step up. I'm a novice at this stuff so I can't qualify his position on this one.



I have now spoken to Liberty Mutual, State Farm, Amica and Travelers. All four companies confirmed they can add the trust as an additionally insured. So I think this is looking like an Allstate quirk, or possibly just my agent being incompetent.



Amica surprised me with a quote of only $429.00 for a $5M umbrella policy. Their overall pricing was the lowest of the four as well. And, Amica scored #1 in customer satisfaction from both JD Powers and Consumer Reports, so I'm leaning toward going with them.



But I will speak with each of the brokers next week just to confirm everything before making a decision.

That is a good deal for a $5M umbrella policy!

 

[MI-Roger]

Our home is owned by my wife's trust since my 401(k) plan is owned by my trust, and our Financial planner wanted to keep the two trusts' values as close as possible.

Our Home Owners insurance policy lists the Trust as the Owner. Local Tax Records list the Trust as the owner. Our home Mortgage lists the Trust as the owner

Vehicles were kept out of the Trusts since they tend to be traded much more frequently than homes, and keeping them separate eliminates 'churning' of the Trust by the Lawyers. Each revised Trust needs to be circulated to all the affected parties.

 

[Scuba]

Talked with our Allstate agent today. He said Allstate will not name a Trust as Additional Insured. He also said that as long as DH and I are the trustees of our trust (which we are), we are fully covered without having to name the Trust as an Additional Insured.

We are checking with our trust attorney to validate this.

 

[Ready]

Talked with our Allstate agent today. He said Allstate will not name a Trust as Additional Insured. He also said that as long as DH and I are the trustees of our trust (which we are), we are fully covered without having to name the Trust as an Additional Insured.

We are checking with our trust attorney to validate this.

It's good to know that it wasn't just my agent. But what still bothers me is that Allstate is the only company I have spoken to who is taking this position. State Farm, Liberty Mutual, Travelers and Amica all confirmed they would add my trust as additionally insured. So why is Allstate being so stubborn?

 

[45th Birthday]

It's good to know that it wasn't just my agent. But what still bothers me is that Allstate is the only company I have spoken to who is taking this position. State Farm, Liberty Mutual, Travelers and Amica all confirmed they would add my trust as additionally insured. So why is Allstate being so stubborn?

Is it possible the policy language broadly defines the insured to include a trust for which the person is the sole beneficiary?

 

[misanman]

I know that people do this, and maybe eventually I'll be so out of it that I won't care, but it's hard for me to imagine setting things up with the goal of living under Medicaid LTC.

 

[Ready]

Is it possible the policy language broadly defines the insured to include a trust for which the person is the sole beneficiary?

No. The issue Allstate has with trusts is that the ownership can change, and if that happens they could end up insuring a party without their awareness and acceptance. Whereas if they only name the individuals on the policy the policy is limited to those two people. In theory a trust could be owned by 10 different family members, and then Allstate would be responsible for insuring all ten owners.

 

[Scuba]

Interestingly, I asked my Allstate agent to confirm in writing that as long as DH and I are the sole trustees of our revocable trust, that our policies cover us up to the policy limits for property, auto and umbrella. No response yet. Although he told me this verbally and he’s been our agent for many years, I think getting this in writing is a reasonable request given what’s at stake.

 

[DrRoy]

We talked to our State Farm agent about this. He said bring in the trust papers. We did and he added the trust as an insured party on the policy.

 

[Spock]

After reading this thread, Allstate just added my dad's trust as a named insured. No problem (so far). Problem must be the OPs local agent.

 

[Ready]

After reading this thread, Allstate just added my dad's trust as a named insured. No problem (so far). Problem must be the OPs local agent.

Good to know. I think there is a corporate directive not to, but I figured a good agent would find a way to do it regardless rather than lose a client. My agent is worthless.

 

[tb001]

Talked with our Allstate agent today. He said Allstate will not name a Trust as Additional Insured. He also said that as long as DH and I are the trustees of our trust (which we are), we are fully covered without having to name the Trust as an Additional Insured.

We are checking with our trust attorney to validate this.

FWIW, we’re in the process of setting up second trust for a purchase so I sent our atty an email asking about this and she confirmed the above.

 

[Scuba]

My Allstate agent did send me written confirmation of the above, so I feel better. I’m going to stick with my agent unless our attorney says he is incorrect re the above. He has a physical office I can go to very close by, and he is easy to get on the phone. Much more service-oriented than if I had to dial a 1-800 number and talk to a different person each time.