Do I need to tell my Homeowners Insurance Company I have a Living Trust?

Owning a home is a significant milestone. Many people have used a Revocable Living Trust to protect their property and ensure a smooth transition of ownership. But what does this mean for ownership and insurance? This article will provide an overview of these questions.

The Grantor Retains Full Ownership:

When it comes to who legally owns property transferred into a Revocable Trust, the answer is straightforward: the Grantor (creator of the Trust) retains full ownership. Placing assets in a Revocable Trust does not equate to relinquishing ownership. As the Grantor, you maintain full legal and equitable title to the property during your lifetime. This means you have control and beneficiary rights, including the ability to revoke the Trust at any time.

Insurance Considerations for a Home in a Revocable Trust:

Many insurance companies have already begun to limit their coverage in California citing high risk.  The tragic recent fires in the Los Angeles area seem to have exacerbated this, as it has been reported that some insurance companies are allegedly refusing coverage for homes held in Revocable Trusts.  As discussed above, this is not a law they are following, but their own policies to protect their interests.

If your home is owned by a Trust, but your homeowner’s policy only includes your name, you may now encounter issues in the event of a claim. Because of this, while not legally required, we recommend that our clients contact their insurance company to add their Trust to the policy.

How to Insure a Home in a Revocable Trust:

To insure a home in your Revocable Trust, the name of the Trust will be added to your policy as an also insured. The process of doing this can vary depending on your insurance carrier. Some insurers may require you to cancel and rewrite the policy, while others may be able to add the Trust to the existing policy without much hassle.

To add your Trust, include the name of the Trustees, the name of the Trust, and the date of the Trust. For example: “John Smith and Jane Smith, Co-Trustees of The Smith Family Trust dated January 1, 2025”.

The essential point is that both you and the Trust will be listed. Typically, you will be listed as the Named Insured, and the Trust will be listed as an Additional Insured. This ensures that in the event of a claim, all parties with an interest in the property are adequately protected.

Conclusion:

As the Grantor(s) of the Revocable Trust, you retain ownership and control, with the added benefit of simplified property transfers upon death. However, given the current insurance climate in California, we recommend adding your Trust to your homeowner’s insurance policy as an also insured.

Very truly yours,

DROBNY ROSENTHAL LAW OFFICES, PC

 /s/

MARK S. DROBNY, Founder and CEO

ANNE E. ROSENTHAL, Managing Shareholder

This testimonial or endorsement does not constitute a guarantee, warranty or prediction regarding the outcome of your legal matter.