PEAK TO PEAK - After my father’s unexpected passing without a will, we decided it was time to delve into the world of estate planning. Our aim was to create a structured approach that would make things as uncomplicated as possible for our survivors.

One key recommendation from the attorney who assisted us was to place our home in a trust. This strategy offered protection for our most significant asset and ensured that we could avoid the complexities of probate.

When Title and Insurance Don't Line Up 

Once the trust was established, we filed a quitclaim deed with the county to transfer our home’s ownership into the trust.

A common oversight in this process—one we thankfully avoided—is the failure to update homeowners insurance policies after the property’s title has been transferred to a trust or LLC. If the home is held under the “Fletcher Family Trust,” but the insurance coverage remains under “Irwin M. Fletcher,” disputes can arise in the event of a claim.

There have been cases, such as after the Marshall Fire, where homeowners found their claims denied because the name on their insurance policies did not align with that of the legal owner of their properties. Insurers argued that the policyholders did not technically own the homes, creating coverage complications.

Some insurers may choose to honor these claims, but others might not, leading to significant financial losses and potential legal challenges. 

To prevent this, it’s crucial for homeowners to ensure that their insurance policies explicitly reflect the legal ownership of the property. If a trust or LLC holds the title, that entity should be listed as an additional insured. 

Protect Your Home and Estate 

To safeguard your property and your estate plan, follow these critical steps: 

• Ensure the named insured on your homeowners insurance aligns with the property title. If held in a trust or LLC, add the entity as an additional insured. 

• Regularly verify that both primary and contingent beneficiaries are accurately designated on all financial accounts and insurance policies.

• Consult with an estate planning attorney and a qualified insurance agent to ensure your trust and insurance policies match your goals. 

• Notify your insurance provider promptly of any title changes to preserve valid coverage. 

• Designate contingent beneficiaries to prevent complications in the absence of the primary beneficiary. 

Avoid Costly Mistakes 

Taking the time to properly align your home’s title with insurance coverage is a critical step in protecting your assets. This process ensures a smooth estate transition, minimizing the risk of disputes or financial losses.

By consulting professionals, keeping beneficiaries updated, and notifying insurers of changes, you can avoid common mistakes and preserve your legacy.

Thoughtful planning today can provide peace of mind for your loved ones, shielding them from potential legal hurdles and unnecessary stress in the future.

Josh Harrod is a long-time Nederland resident and Realtor® at 8z Real Estate. He can be reached at Josh.Harrod@8z.com. Through his monthly column, Josh will share insightful tips and advice about living in the Peak to Peak region.