Homeowner’s Insurance for a House in an Irrevocable Trust

July 28, 2022
Dear Clients and Friends:
So your house is in an irrevocable trust, what happens if the house burns down? Keep reading…
Hi Lawrence. You put our house in an irrevocable trust years ago and now I have a question about the insurance on the house. Our homeowners’ policy now is in our names and I remember that you told me that we had to continue to pay for the insurance ourselves. Are we doing everything right?
You are ALMOST doing everything right. You are correct that it is your obligation to pay personally for the insurance. The trust should never pay for it. However, I ask the logical question, who would the insurance company pay if the house burned down? The answer is you since it’s your name on the policy. If they pay you then the money will be out of the trust and unprotected from Medicaid. Yikes!
The answer is to call up your insurance company TODAY and add the trustee and trust as “ADDITIONAL INSUREDS.” This is the general consensus in the elder law community as to how to handle this situation.
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Stay safe!
Until next time,
peace, health, and happiness,
Lawrence Eric Davidow