Owners Title Insurance is something most people think about only a few times during their lives.
It is purchased when they buy real estate, then it is mostly forgotten unless there is a problem and a claim needs to be filed. Owners title insurance requires a one-time premium and it stays in effect as long as the purchasers or their heirs own the property. When titling real estate into the name of a trust, for estate planning purposes, most people never consider how that might affect their Owners Title Insurance Policy.
For years attorneys have inadvertently terminated their client’s title insurance coverage when transferring property to the clients’ trusts because coverage was limited to the original purchaser of the property. The national industry standard 1992 ALTA Owners Policy requires the trustees or beneficiaries under a trust to obtain an endorsement to the Policy to extend coverage past the original owner and unfortunately, this was often overlooked in the estate planning process. The ALTA 2006 Owners Title Insurance Policy revised the standard 1992 ALTA Owner’s Policy of Title Insurance and expanded coverage to include estate planning needs, specifically the transfer of property to a trust for estate planning purposes.
In addition, the 1998 ALTA Homeowners Policy, which is an extended coverage policy and generally runs about twenty percent higher in premiums, also covers the transfer of property to a trust for estate planning purposes. Therefore, it is very important, when considering a transfer of real estate to a trust, to look at the existing Owners Title Insurance Policy and determine if coverage will remain in effect after the transfer.
The Estate Planning & Elder Law Firm understands that the transfer of a parcel of real property to a trust is more than a deed. To avoid unintended consequences, they will consider and take into account the effect of the transfer on mortgages, home owner’s insurance and title insurance.
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