Many people use a Revocable Living Trust to protect their property and ensure a smooth transition of ownership upon their passing. This process is called funding the trust, which essentially involves changing the ownership title of important assets to the name of the Trust. In the case of a home, the Grantor(s) of the trust (the person(s) who create the trust and contribute the assets) retain full ownership of the home throughout as retitling the home to the name of the Trust does not equate to relinquishing ownership but simply changes the form in which they own their home. In addition, the trust is largely disregarded for many financial aspects including income taxation.
However, to insure a home that is titled in the name of a revocable trust, the name of the trust may need to be added to your homeowner’s insurance policy as a secondary insured. This is important because having the insurance policy in an individual’s name, but the home titled in the name of the trust, can create complications if there is an insurance claim. Therefore, it is important to make sure a policy includes the names of the trustees, the name of the Trust, and the date of the trust.
Adding the Revocable Trust as a secondary insured on the policy can help ensure smoother processing of claims in the unfortunate event of a loss.