Call Us: 801-802-9020

Revocable Living Trust Owned Vehicles

Revocable living trusts need to own your assets or the primary reason for a revocable living trust, probate avoidance, Revocable Living Trustisn’t going to be achieved. For the trust to own the assets, they need to be retitled in the name of the revocable living trust. Each type of asset has a specific procedure that needs to be followed to get it into the revocable living trust.

Revocable Living Trust Owned Vehicles

Vehicles (cars, trucks, boats, airplanes, RVs, etc.) need to be owned by the revocable living trust so that they are not subject to probate. (Of course, this applies to mom and dad’s trust also.)

The next vehicle you buy should be titled in your revocable living trust at the time you purchase the vehicle. But what about putting the vehicles you own now into your brand new revocable living trust? If you try to change the title on your car from your name to the name of your revocable living trust, some states’ department of motor vehicles have the funny idea that you have sold the car, and they want sales tax. Other states will recognize that you are changing the title to your revocable living trust, and it’s not really a sale of your vehicle, so you call and check.

If they do state they want the sales tax, don’t panic! All states have a “work around” where a vehicle can be transferred after the death of the owner without a big probate proceeding. It’s better to have your vehicle in the trust than rely on the work around, but it isn’t worth paying anything to get a vehicle you already own into your revocable living trust.

I usually recommend to my clients to take the chance that they will sell their current vehicle and get a new one before they die. Just remember to put the next one in your revocable living trust.  This does not affect your liability (see http://www.legalees.com/cars-in-trusts/).

Revocable Living Trust Owned Vehicle Insurance

What do you need to do about auto insurance when you put your vehicle in your revocable living trust? Insurance is always an issue when you hold a vehicle in a name other than your own. The biggest problem comes when people get the bright idea that their little company should own their vehicles. The idea is to have the company own the vehicles and let the company “write off” the vehicles for tax advantages.

People often forget about their insurance when they transfer their auto into a company or have the company buy the car outright. They use the vehicle both as a business vehicle and a family vehicle. This is a problem when there’s an accident while it is being used as a family vehicle, as there won’t be any insurance coverage if the company has purchased the insurance.

On the other hand, most people transfer the vehicle into their company and continue to carry a “personal” insurance policy on the vehicle. A “business” insurance policy is substantially more expensive than a “personal” policy. This is a problem when the insurance company figures out that the vehicle is actually owned by a company, so they have no intent of covering a family accident because they don’t have to.

The short story is the insurance coverage has to match the ownership and actual use of the vehicle, or there isn’t any coverage.

Transferring your vehicle or titling it in the name of your revocable living trust shouldn’t have any effect on your auto insurance. The car is still your “personal” vehicle as far as the insurance company is concerned. A revocable living trust is “invisible” to the insurance company. By law, a revocable living trust is “you” as far as the insurance company, tax man, and everybody else is concerned.

Revocable Living Trust: Property Tax Issues

My son recently bought a $35,000 car in Virginia and had it titled in the name of his revocable living trust, which is exactly what he should have done. When property time rolled around he got a bill for over $8000 in property taxes. The state said since it was not in his name the car must be a commercial vehicle and so needed to pay more tax – a lot more tax.

It took the standard fight with the government idiots to convince them it was a revocable living trust and had to be taxed as if the trustee owned the vehicle outright. I think he is the only one who has had a problem out of the thousands of cars I am aware of that have been bought in an revocable living trust’s name. So don’t be afraid to use your revocable living trust.

Information on living trusts and much more can be found in my newly updated book, Protecting Your Financial Future. It covers, wills, trusts, taxes, business structuring and much more. Check it out HERE.

 

By Lee Phillips

 Updated for grammar and clarity, May 1, 2014
46 Comments
  1. In this blog you say a vehicle should be titled in the name of a revocable living trust, but in another blog you say because of liability issues, a vehicle should not be in a trust and should be passed to a new owner through the state’s procedures. Which is it?

  2. Glenn,
    I don’t think that I have ever written that the trust shouldn’t own the vehicles, though I do hold that it is not a good idea for a business to own a vehicle because of liability issues (and the corrollary increased insurance cancelling out any potential tax savings). In a trust, the liability will be the same whether the vehicle is in the trust or not. I have said that you can usually transfer a vehicle without a probate by working with the state’s dept of motor vehicles. They usually have some sort of affidavit type procedure. The current vehicle can be left in your name, because of the hassle to change the title to the trust, but the new cars should be in the trust.

  3. Is it worth buying a car in a trust or not. ? I brought my house through our family trust too

  4. Courtney,
    Buying the car in the trust can save your family time and money after you die. There is no extra cost to you if you buy the car in the trust: all you have to do is get the new car titled in the name of your revocable trust. A little planning now can save your family a headache in the future.

  5. Thanks Lee. Fascinating stuff. I was hoping to put a car I received after my father’s death into a trust in order to avoid paying unnecessary insurance on my 16 yr old. Nobody else will ever drive it but me so there’s zero risk to me. As it stands now.. all cars owned by me and on the premises have to be taken into consideration as far as insurance is concerned (I’m told by my current insurance company). Problem is… this car is not driveable by anyone but me, is a convertible sports car of sorts, and will cost me a fortune just to keep in the garage as long as it’s owned by me. Any way around that, or do I need to sell this special vehicle because of the insurance company rules? Are there companies out there there allow you to insure vehicles based on those who will drive them, instead of being dictated to by the insurance companies themselves?

  6. Jamie,
    Putting the car into a revocable trust will not get around the insurance problem that you have. Any vehicle owned by the trust is going to be considered owned by you for insurance purposes. As for a company that will insure you without considering your teenager I am not sure; you may need to do some shopping around.

  7. I don’t think a vehicle of any sort should be in a trust. Let say your vehicle is in the trust and you get into a vehicle accident and hurt someone and get sued which you know happens every day! Guess who they use? The registered owner of the car!!!oops and guess who that is? And guess where all your other assets are? Yup p the trust! So now you just exposed the entire trust with all your assets !! Don’t put any cars, motor bikes or boats in a trust unless you have another trust just for vehicles that will cause a peril!

  8. Joseph,
    It does not matter if the car is in your trust or not if you are in an accident. A revocable trust provides NO asset protection. If you don’t put the car into the trust and get into an accident, guess what, they can still go after the assets in the trust. You are not putting the car or any other asset into a living revocable trust for asset protection reasons. You are doing it for estate planning reasons. If the car is not put into the trust and you die, you may have to probate the vehicle. If the vehicle is in a trust, your heirs will have a much easier time transferring the vehicle after your death. Vehicles are not as sticky as some assets to probate, but the trust will still save problems.
    Putting vehicles into separate trusts still would do you no good. Again, a revocable trust provides NO asset protection. As far as the courts are concerned, the trust is you. Even if you use multiple trusts, the victim in the accident can ask the court to make you revoke both of the trust and get at any of your assets no matter what trust you put them into, or if they are in your name obviously the creditors can get at them.

  9. From Joseph:
    Great information !! Thank you. I always wondered why people had vehicles in the trust. But it makes sense ! The trust is for estate planning not asset protection!! Thanks again, joseph

  10. Does a car titled in a revocable trust stay titled in that state regardless of residence of the beneficiary. If I am a FL resident and I create a revocable trust to put my cars into and I move to another state, do the cars have to be registered in that state or can they remain titled in FL?

  11. Jared,

    The car would need to be registered in the state where you reside.

  12. Hi Lee. My Father put his car into his trust, I’m a co-trustee of his estate with POA. My Father has failing health and asked that I sell his car. My brother want’s to purchase it. Can I gift it to him rather than sell it to him, and if so, can he avoid paying tax on it (we live in Minnesota)? Liz

  13. If I buy a car with my living trust, would I report it on my personal income or would it be filed under the trust taxes? Also, I have a crazy ex wife that is always trying to see what kind of money I’m making and has her lawyers looking through my tax filings. Would buying it and keeping it in the trust protect me from that? (as she is unaware of the trust) Thanks.

  14. Brad,
    A revocable living trust is invisible to the IRS and taxing entities. They will consider it a personal asset and you will pay the taxes on it on your personal tax return. It would probably not hide it from your ex wife’s lawyer. If the car was bought in an irrevocable trust, then it could have a different tax. Be careful, because irrevocable trusts tend to have a much higher tax imposed on them.

  15. I reside in FL and plan on purchasing a car and titling it to my revocable trust. At the time of sale, do I need to provide the buyer with a copy of my Trust Agreement?

    Lisa

  16. Liz,

    The best option would be to sell it to him. Your fiduciary duty as a trustee means you have certain responsibilities to look after the needs of the beneficiary. Just gifting the car could possibly be considered a violation of your trustee duties. However, if you father is competent and wants to gift the car it would be OK. As for taxes, you are not going to be able to get around those. You will have to register the car which means you will have to pay the taxes.

  17. Lisa,
    You do not have to give your trust to anyone when you purchase a car. You just simply state what name you want put on the title.

  18. My father’s 2007 car is titled in the name of his trust in the state of Illinois. He is recently deceased. I am the trustee. My siblings and I want to give the car to the wonderful woman who cared for him for ten years instead of a severance. She would very much appreciate that. The auto insurance is now also in the name of the trust so I would like to gift the car as soon as possible to the caregiver. Is signing the title over to her, as trustee, going to be a problem? How does one gift, or sell, a vehicle that is in the name of a trust? Is the process any different than simply a private owner?

  19. Kathy,
    As trustee of the trust you can sign the title to transfer the car. You just need to make sure that you sign the title as trustee, “John Doe, trustee of BOBs trust.” As for making the gift, you need to read the trust to see how the car should be distributed. You can’t just give the car away as trustee if the car is supposed to go to someone else. You may have to sign the title to the rightful owner under the trust, and then that owner can gift the car to the caretaker.

  20. Question for Lee… I have all my assets (home, 4 cars and a boat) in a trust. The trust is not a business; it was just set up for probate protection purposes. I am essentially the sole proprietor; all the assets of the trust are either mine or were inherited. Now, I am purchasing a new vehicle. I am paying cash for a portion, and financing the balance. The dealership says no banks will finance the loan because the vehicle is being titled to a trust. Ford Motor Credit says they’ll service the loan, but they need the EIN–which I don’t have, because I’ve always used my SSN for tax purposes, even for things related to the trust. I disagree that they need an EIN. Who is right?

  21. Brackett,
    You don’t need an EIN. You can just give them your social security number. Many lenders don’t understand how a revocable trust works and they just get nervous when they hear the word trust. That being said, if you have trouble with the bank not willing to lend you the money you can take the car in your own name if there is not way to have them title it into the trust. Most states have a very simple system for moving vehicles after someone’s death without the need for probate if everything else is in the trust.

  22. Hi Lee, My brother is the trustee of our families revocable trust. My father passed away and the estate was closed in 2014. He now drives
    my father’s car to use for ‘family business’. There are 3 beneficiaries on the trust. Myself and the other have given no permission for use of this vehicle. Can the trustee use such a car for perpetuity until the wheels fall off and it has zero value if he so desires?

  23. If the trust has already closed then no. He is no longer the trustee and the car has to be distributed to the beneficiaries. One way to know if the trust has ended is if there has been an income tax filing for the trust. If the other assets have been distributed and no income tax has been filed the trust is gone. By keeping the car, the trustee has breached his fiduciary duty and is liable to the beneficiaries. If the trust is still going, he can use the car for trust purposes but not personal purposes.

  24. I am the trustee to my uncle’s estate. He is now deceased but all his money was put into the trust. The only things he did not put into trust were his two vehicles. He wants one to go to a friend and I would like the other one. My uncle resided in Florida and I live in Maryland. I called the DMV in Maryland and they said I needed an administration letter from the office of wills in the state of Florida to show them when I take the car in to exchange the plates etc. My uncle did not designate anyone to have this car. Can I just sign the title over to myself since I am the trustee? What is this about office of wills? Does the vehicles have to go thru probate? I plan on consulting an attorney when I go down there but just wanted to understand what this is all about. Thanks so much

  25. Lynne,
    There is a way of transferring the vehicle through affidavit and not a formal probate in Florida. You will need to work with the local DMV in Florida to get that done. If the car is not part of the trust and not listed on a schedule for the trust then the car has to pass according to your Uncle’s will. If it was listed on a schedule for the trust, then you would take title as trustee. You can’t actually claim personal ownership of the car. The car has to be passed on according to the terms of the trust or will. Also, unless your Uncle wrote down that he wanted a car to go to his friend, the friend may not actually get the car according to the trust or will.

  26. We were told that, if you receive any proceeds from your Auto/Home Insurance policy, that the proceeds would go into the trust if the auto/home insurance policy is in the trust. Does it make sense to make the trust the beneficiary of the home/auto insurance policy?

  27. Gary,
    You don’t have to change the beneficiary of your home or auto insurance. You can still have the insurance in your own name. The trust is invisible to the insurance company.

  28. We live in Florida and sold a motorhome that was titled in our Trust to a couple who reside in Orlando. We signed the title when they paid us the purchase price & took ownership. They had trouble transferring the title because they said DMV needed the first page of our Trust, so I made a copy & mailed it to them. They still can’t transfer the title because they said DMV needs a copy of the entire Trust. I’m not comfortable sending that to them. What I’d like to know is….when a person sells a vehicle that is titled in the name of their Trust what is the legal procedure for transferring the title?

    Thank you,
    Linda

  29. Normally all you have to do is sign your name as the trustee. This works as long as your name appears as the trustee of the trust on the title. If your name did not show up as the trustee on the title already, then that could be what is causing the problem. You should be able to send the DMV a certificate of trust (which gives the information that is needed for the DMV).

  30. We have just purchased a motor home, using our old motor home as down payment, and financing the balance with a Bank and Trust company. We have received a memorandum copy of the title with the new vehicle titled in our revocable living trust. We received a call this afternoon from the RV dealer stating that the Bank &Trust will not finance the vehicle if it is titled in a trust. We have had this trust for 15 years, bought and sold and financed many vehicles titled in the trust. This is the first time we have ever heard of this happening. Any suggestions as to why now, and what should we do. HELP

  31. Rod,
    Many banks just don’t like to deal with trusts. If the bank won’t finance the deal with the vehicle in a trust, you can put the vehicle in your personal name. As long as everything else you own is in the trust, most states will allow you to transfer a vehicle without having to go through probate. The other option is to find a different financier.

  32. My parents have a revocable living trust, my Dad passed away. Mom is now moving from Ohio to South Carolina and is having problems registering her car which is titled in the name of their joint trust. Can she keep the Ohio title in the name of the Trust, and just register the car in South Carolina? Does she need to retitle the car in South Carolina, if so, she is having problems with this as they don’t recognize the trust naming convention on the title document? Is it possible for her to sign the title over from the trust to herself and then have the car titled outside the trust (I know this seems backwards to what was originally done but she’s at her wits end trying to find a solution) Mom’s been to the the SC DMV and to the probate court and is not having any luck. The only suggestion they’ve made is for her to go buy a new car and trade in the old one titled to the trust! Thanks.

  33. Lisa,
    South Carolina does require that the title be transferred to the state. The problem may be that you need to have your father’s name as a trustee removed from the title, or that the name of the trust was done incorrectly on the title. When putting the name of a trust on a title you have to have the name of the trust, the date of the trust, and the names of the trustees. If the name of the trust is not correct on the title then you have a problem. She can try to have the car transferred from the trust to her own name. This may be the best step to take if the DMV will allow it. Most states allow for a vehicle to be transferred without probate as long as everything else is in the trust.

  34. Good morning.
    I’m in the process of purchasing a motorhome. The owners residency is AZ the registration and clear title are from Montana. He wants a $5000 non refundable deposit so he can hold it. The motorhome title is under his name but example. John Doe Living Trust — should I have any trouble getting the title into my name in NM? Best and thank you very much. FYI I would be paying with cashiers check everything total of about 80 K. I’m worried.

  35. Jose,
    As long as the seller’s name is listed as the trustee on the title then there shouldn’t be any problem. The name on the title should be something like “John Doe trustee of the John Doe Trust, dated 1/1/11”. There needs to be all three parts: the name of the trust, who the trustee is, and the date of the trust. If any of those parts are missing then there is a problem with the title and you may want to walk away.

  36. I had someone suggest to me that if my vehicle is in the trusts name and I cause an at fault accident that my trust could be tied to the lawsuits. If the car is titled in my personal name, then my trust assets are protected.

    I see an auto as a liability, not an asset I guess. Is this thinking correct?

  37. If the trust that is being used is a revocable trust (which is what most people use), then it doesn’t matter what name the car is titled in. A revocable trust does not give any asset protections. If you get into an accident with the title in your personal name, they can still go after anything in your revocable trust. This means that whether you have the car in the trust or not in the trust, the result would be the same. If you are using some type of irrevocable trust, then it may matter if the car is in the name of the trust or your personal trust.

  38. HOA says residents can’t park in guest parking, but if vehicle is titled to a trust and the trust does not reside in the HOA then is the vehicle considered a “guest” ?

  39. MF,

    I highly doubt you are going to be able to get around the HOA rules by putting the car into a trust. You would probably use a revocable trust and in a revocable trust the vehicle is attributed to be owned you as well.

  40. My mom has several commercial trucks valued from $10k to probably $50k and totaling $175k in the value four trucks and four trailers. Is it wise to place those trucks in a trust since her company is not incorporated, plus the cost of getting new authority from the DOT, as well as insurance and sales tax costs? It seems to me the various costs would prohibit the use of a trust in this case.

  41. Terry,
    It probably isn’t worth the effort and fees it would take to move the vehicle into a trust.

  42. Can you put a motorcycle in a will if you owe money on it

  43. Should we put our 2 cars and boat into the family trust if there are liens on them? If my husband and I passed, wouldn’t it be easier for the banks to come and get the cars and boat then have our kids mess with it?

  44. Paula,

    If there is a lien on the vehicle then you usually are not going to be able to transfer the vehicle into the trust. If you have everything else in the trust most states allow you to transfer the vehicle after someone passes away without having to go through probate. Your kids could then decide if they want to pay of the loan or let the bank just have it.

  45. Hi Lee. Before my mom passed away, she told me I could have one of their 2 vehicles. I couldn’t find the titles before this happened (dad couldn’t help because he was not mentally competent.) Dad is still alive, but in a care facility and cannot speak or really move due to Alzheimer’s, Parkinson’s other related dementia (I am his POA for financial, mental, have a Certificate of Authority, etc., and I am the Administrator for the Trust, which basically has only his home listed in it.)

    I finally found the car Titles, both of which list my Mom OR my Dad as the owner; there are no lienholders listed. The auto insurance company told me the name listed on the insurance policy has to match the ownership documents. So my question is, can I just run down to the DMV and have the vehicles retitled to me and my husband, or do I have to “purchase” the cars? This is in Arizona by the way.

    I also have a question regarding money left in my Dad’s business. The business is obviously closed, and I have shown the bank all of my POA documents and the family Trust documents, which basically say I can make any decision on any business interest Dad has, but the bank will not release the funds. It’s only $4,000 or so, but I need that to continue to pay for the nursing home he is in. I’m not sure what to do… The Certificate of Authority was drawn up by a very reputable family law attorney. I feel as though the bank is stealing from us by not releasing the funds… there literally is no other person in the company; it was just my parents. Your suggestions will be appreciated! Thank you.

  46. Holly,
    As the agent for the POA you can transfer the title of the cars into your own name. You do need to be careful, though, because your responsibility is to look out for the welfare of your dad and it may not be considered to be in his best interest to have his vehicles given away. If you have brothers or sisters who will become beneficiaries after your father passes away then they could contest the transfer of the cars.

Leave a Reply

Social Networks

 

 

Legalees A+ BBB Business Review

Testimonials

We wish everyone in America had the means to obtain the knowledge that Attorney Lee Phillips is attempting to impart in the Accumulation and Preservation of Wealth course. We are thankful that there is a legal system that is designed to protect people’s assets, no matter how little or how much.
~ Ed, Dallas Texas