You may never have considered your auto or homeowners’ insurance as part of your estate plan, but you need to – ASAP. Jeff Lazar, owner of Lazar Insurance in Westfield, Indiana, shared just two stories of many that drive home the point…
Although alert and mentally competent, Grandma (P.), a recent widow, needs physical care and lives in a nursing home. P will probably never return to live in the home she owns, which is now occupied by her grandson. Grandson J. not only lives in P.’s house, he manages the business co-founded by P. and her late husband. J. drives both P.’s car and the vehicle owned by the business. The homeowner’s insurance policy and the auto insurance are both in Grandma’s name (one of the auto policies is written for P. as a DBA, since the business was never formalized as a corporation).
Does Grandma intend to deed her home to her grandson? If so, either she or J. (who has his grandmother’s Power of Attorney) needs to contact the title company to effect that transfer; the homeowner’s policy would then be rewritten in J.’s name. If the intent is to keep the home in P.’s name, the insurance agent will need to rewrite the insurance as a landlord-tenant policy. If nothing is done to bring the insurance in line with the current situation, future claims could be denied and the policy could even be cancelled) Meanwhile, in order for J. to continue driving each of the vehicles, the insurance on them needs to be rewritten to ensure that coverage will be in force in the event of a claim.
While it appears that Grandma has done some estate planning (as witnessed by J. having the Power of Attorney), it’s time to introduce the insurance agent and the lawyer, to make sure both are aware of the decisions that must be made, both now and later.
In an eerily similar story, the insured on both a homeowner’s and an auto policy has not responded to calls or letters by the insurance agent. A neighbor of the insured reported that the home appeared to be vacant, although a grandson of the owner was supposed to be living there.
When a home is vacant, many insurance companies will not provide coverage at all; at best, the coverage will be reduced to DP1 level, with no coverage for certain perils such as frozen pipes or damage caused by water or by the weight of ice and snow.
“Big or small, complex or simple, every estate has one thing in common — you can’t take it with you when you die,” Risk Strategies reminds us. “The best of intentions can go awry if your Property & Casualty (P&C) insurance advisor isn’t included in the discussion.”
As estate planning attorneys in Indiana, we agree. In fact, at Geyer Law, we are often involved with estate administration following a death. That process involves gathering property, distributing the deceased’s assets and paying any remaining debts. We help executors make sure the deceased’s last wishes are granted in terms of their property and possessions. In some cases, we act as executors and assume the responsibilities of settling the estate. Part of that process, of course, involves dealing with insurance on the property in the estate, including both real estate and vehicles.
Your attorney and your property-casualty agent both have a role in your estate planning!
– by Ronnie of the Rebecca W. Geyer & Associates blog team