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You’ve taken a smart step by setting up a living trust to protect your family and avoid the costs and delays of probate court. But here’s something many people don’t realize: if you don’t update your homeowner’s insurance after transferring your property into a trust, you could end up with a denied claim when you need coverage most.
Yes, your insurance company can deny a claim due to trust ownership if your policy isn’t aligned with your estate plan. It’s a risk that’s easily avoidable with a few proactive steps—and this article will show you how
Why Your Living Trust Impacts Homeowner’s Insurance
When you move your home into a living trust, you change who legally owns the property. While you may still live there and act as the trustee, the trust now holds legal title. That’s where the potential issue with your homeowner’s insurance comes in.
Insurance companies make decisions based on who’s listed as the legal owner. If there’s a mismatch between the legal owner of your home (the trust) and the name listed on your insurance policy (likely still you as an individual), your coverage could be at risk. In a worst-case scenario, your insurance company could deny a claim because the property ownership doesn’t match the insured party on the policy.
Imagine suffering serious damage from a fire or storm, only to find out your insurer won’t pay out because your policy wasn’t updated after you created the trust. Unfortunately, this situation happens more often than most people realize.
How to Avoid Having an Insurance Claim Denied Due to Trust Ownership
Fortunately, the fix is simple. As soon as you transfer your home into a living trust, contact your insurance company. Most insurers are familiar with trusts and can quickly make the necessary updates to your policy.
Typically, they’ll add your trust as an additional insured party or attach a trust endorsement to your policy. Both options make it clear that the trust owns the property and ensures you have continuous coverage.
While you’re updating your policy, double-check these important items:
Make sure your property coverage reflects current construction and replacement costs. Building expenses have increased in recent years, and your policy should keep up.
Ensure you have sufficient liability protection that covers both you and the trust if someone is injured on your property.
Confirm that any additional structures, such as garages, sheds, or guest houses, are covered and correctly tied to the trust ownership.
Most of these updates won’t cost extra, but they can prevent major financial headaches in the future.
Common Mistakes That Can Leave You Unprotected
Many homeowners aren’t aware of the details that can make or break their protection. Here are some of the most common mistakes to watch for:
Delaying notification
Some people wait months or even years to tell their insurance company about transferring their home into a trust. If you delay, you may end up paying for coverage that won’t actually protect you in a crisis.
Incorrect trust names on the policy
It’s important to list the exact legal name of your trust on your policy. For example, if your trust is called “The Johnson Family Living Trust dated January 15, 2025,” that exact wording should appear. Small errors can lead to big problems when it’s time to make a claim.
Skipping regular policy reviews
As your life changes—whether it’s a new addition to the family, renovations to your home, or rising property values—your insurance coverage should change too. An outdated policy can leave you exposed.
Forgetting about other properties
If you own multiple properties and hold them in different trusts, make sure each insurance policy is updated individually. Updating one property’s policy doesn’t automatically cover the others.
Protect Yourself from These Risks
Many estate plans only handle documents, leaving out the critical coordination between your trust and your insurance.
Our approach is comprehensive. We:
Take a complete inventory of your assets, including how they’re owned
Review your estate plan and insurance policies regularly to ensure they work together
Guide you through the correct process for transferring property into your trust
Help you avoid costly mistakes that could put your home and family at risk
It’s not just about creating a trust—it’s about making sure your plan works in real life, not just on paper.
This article is a service of The Ambitious Legacy Firm. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Legacy Planning Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by using the link below to schedule a call with our Client Services Director, who will be able to guide you on scheduling your Legacy Planning Session, or by emailing us at legacy@franco-lawfirm.com. Mention this article when you contact us to find out how to get this $750 session at no charge.
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