Listen to Lawrence…Should a trust and its trustees be insured on the homeowner’s insurance policy?

January 21, 2021
I have a family irrevocable trust created by your firm 3 years ago. My primary residence is included in the trust. My question is, should the trust and the trustees be insured on the homeowner’s insurance policy? Thank you for your emails they have been very informative.
One of the most common concerns my clients have is how to protect their homes from Medicaid.  The answer is often to place the home in an irrevocable trust and wait out the look-back period. But what happens if the house suffers a loss from a fire or flood? We discuss this issue with all of our clients, both verbally and in a letter that we give them at the time, they sign their trusts. Of course, at the time of the trust planning, the insurance contract names the owner of the house (the soon to be Grantor of the trust) as the insured. But after the deed is transferred into the trust, the trustee/trust is the owner and thus needs to be insured as well. Therefore, insurance contracts that provide for payments to be made if there is loss or damage to your house held in trust should be amended. You will remain the insured but the trustee(s) and the trust should be named as additional insured parties.
I hope this helps! Please forward this information to your friends and relatives.
As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.
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