A revocable living trust can be a great way to handle real estate and keep it out of probate when you pass. However, there are a few key steps you need to take after creating the trust and many estate planning attorneys miss one critical step. You will need a deed transferring the property into the trust instead of your direct ownership, and most attorneys will work with you to ensure that happens. But everyone forgets about title insurance.
If you purchased a title insurance policy to protect your ownership interests in case problems turn up in the future, the policy covers the individuals who bought the policy. When you change ownership of the real estate so that it is part of your trust, you also need to change the name on the title insurance policy. Otherwise, the policy no longer provides protection, because the parties with the name on the policy no longer own the property. You can contact your title insurer and ask for them to prepare an endorsement to cover this. It’s a pretty simple process, but one that is often overlooked unless, like us, you work extensively with both real estate and estate planning.
