Legal Question in Real Estate Law in California

First, I have no idea what your ultimate purpose is with all these shenanigans. If this has something to do with avoiding creditors, it won't work. The whole thing is transparent as glass in a debt-collection procedure. It isn't even a fraudulent transfer, because there is no real transfer, fraudulent or otherwise, despite the dummy trustee.

As to buying insurance and designating a loss payee, your best bet by far is to descibe the whole setup in Technicolor detail to your insurance agent, and let him or her advise you.

Generally, the party that bears the risk of loss is the named insured. Perhaps a solution would be to have all three parties - Alpha, Nevada, and Smith - be shown on the policies as additional named insureds. This may not even affect the premium.

Overall, however, don't kid yourself about "asset protection." I don't think you have added any through this elaborate setup. See a lawyer. I can give you case law showing the fallacy of what I assume is your thinking.