Cars and other vehicles (motorhomes, boats, motorcycles, etc.) each have a title and require your signature to transfer the vehicle to another person. That means they are subject to probate after your death UNLESS you have the vehicle “owned” or titled in the name of your living revocable trust.
I hear all the time that you shouldn’t put cars into a living revocable trust. People for some reason think it will expose the assets of the trust to liabilities associated with the vehicle. The trust in no way protects your assets, so that reasoning is simply false.
You should put your vehicles into your trust in order to avoid probate. Only those assets held by the trust will avoid probate.
Most states have a procedure for moving a vehicle into the name of a trust. (That’s assuming you already own the vehicle before you set up the trust.) Call the Department of Motor Vehicles in your state and ask them what to do. You will need to take your current title in and get a new title issued. There will be a charge for that.
Some states insist on a “sales tax” or other fee structure whenever a vehicle changes hands. If you run into big problems, just forget the exercise and keep your current car the way it is before you created the trust. All states have a way that a vehicle can be transferred at death without a full probate. You can basically cheat on a vehicle. It isn’t like a bank account or piece of real property where there is no work around the probate problem.
I am willing to bet you will get another car before you die. The new car needs to be titled in the name of the trust when you buy it. The trust’s info needs to be on the title as the owner. Name of trust – Date of trust – and name of trustee. You will sign the title as trustee, not in our capacity as an individual. Remember, you are wearing your trustee hat, not your personal hat.
To get the trust’s information in the little space on the title paper, you may have to abbreviate. John Doe Trust could be Doe TR. January 1st 2015 could be 1/1/15 and John Doe Trustee could be John Doe TTEE. So it is Doe TR, U/A 1/1/15 John Doe TTEE. That’s not too bad. U/A stands for Under Agreement.
With that information, the trust’s ownership will be unambiguous. When you sell the car, you will sign again as trustee.
By federal law, moving the vehicle into a true living revocable trust (grantor trust) does not affect the auto insurance, although when you get insurance for the new car, you need to reflect the true title owner (the trust).
Taking title in the name of the trust does not make it a commercial vehicle for property tax purposes. My son took title in the name of his trust and got an $8,000+ property tax bill the first year. We had to go down and educate the DMV that a trust was not a business. The taxes dropped to $1,200.