A recent article in AdvisorOne provides a good reminder of the need to take care of the details when construction your estate plan. The article, titled "Trusts and LLCs: Smart Ways to Transfer Wealth and Risk, but Mind the Details," uses the example of Trusts and LLCs to illustrate how even the best intended planning can go astray. These common entities are often used by estate planning attorneys to protect client assets from probate and creditors, then transfer the assets to loved ones after death.
Unfortunately, unless the assets are properly retitled the full benefit of the planning may not be realized. In addition, unless various insurance carriers are notified that the Trust or LLC is now the new (or additional insured), there may be challenges in the event of a future claim. For example, if the family home is transferred into a Qualified Personal Residence Trust (QPRT), but the property casualty policy is not updated to reflect this transfer.
Insurance is underwritten with the listed owner in mind. If you transfer an insured asset to a legal entity, then you might invalidate the insurance coverage.
The point is that there are no half-measures in planning for your estate. Perhaps this might be a good time to review your assets, your estate planning and your insurance coverages?
Reference: AdvisorOne (February 21, 2013) "Trusts and LLCs: Smart Ways to Transfer Wealth and Risk, but Mind the Details"