The Land’s End catalog announces that “it’s closet refresh season.” However, a refresh of your files to review your insurance policies and estate plan is more important.
Ensure that your trust is named as an additional insured on your homeowner’s insurance policy. Insurance policies are designed to protect the named insured. Third parties have no rights unless explicitly named. When you transfer your home to your trust, you don’t own your home as an individual, but as trustee of your trust. Confirm with your insurance agent that you, as trustee of your trust, are named as an additional insured on the policy.
Review your life insurance policies and retirement plans to confirm primary and contingent beneficiaries are named. If the named beneficiary dies and no contingent beneficiary is named, the life insurance or retirement plan must pass through probate.
If you have a trust, verify that your trust holds money so your trustee can pay your bills upon your death. Frequently, people create a trust, fund the trust with their homes, but never transfer a bank account to the trust. The trustee needs money to pay the bills. Often parents name an adult child as a joint tenant on the bank account, instead of putting the bank account into the trust, believing the child needs money to “take care of things.” The child has no legal obligation to use that money for trust expenses, or to give any to his or her siblings. Most believe the child “will do the right thing,” but that doesn’t always happen. Therefore, transfer your bank accounts to your trust, so your trustee has funds. To operate as planned, the trust must be funded with property and bank accounts. Confirm that you transferred your home to your trust.