Do you have a revocable living trust? Are you thinking about creating (or updating one) in the New Year? Either way it is important to transfer your assets into that trust, including any real estate that you own.
Estate planning attorneys who draft trusts for their clients always advise those clients to transfer assets into the trusts. This is important because if the assets are not transferred into the trust, then the terms of the trust may not cover how those assets are later used and distributed.
When dealing with real estate, you need to be careful as noted in a recent post by the Wills, Trusts & Estates Prof Blogtitled "Title Insurance Issues Triggered By Estate Planning Transfers." Transferring real property into your trust could result in the loss of your title insurance.
The big issue? While your title insurance might cover your ownership of the property, it will not necessarily continue to provide coverage after the property is transferred.
If there are later legal disputes concerning the property, then you could be in trouble. For this reason, it is extremely important that you review any title insurance policies before transferring real estate into a trust.
Accordingly, it may be prudent to contact the insurance provider and get coverage for your trust.
This issue is easily avoidable, of course. Just make sure that you and your attorney review any title insurance before transferring property to a trust or other legal entity.
Are you interested in drafting a trust but have no idea where to begin? Visit Hertiage’s website for more information on trusts and estate planning.
Reference: Wills, Trusts & Estates Prof Blog (December 19, 2014) "Title Insurance Issues Triggered By Estate Planning Transfers"