Revocable living trusts need to own your assets or the primary reason for a revocable living trust, probate avoidance, isn’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 https://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 PhillipsUpdated for grammar and clarity, May 1, 2014
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?
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.
Is it worth buying a car in a trust or not. ? I brought my house through our family trust too
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.
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?
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.
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!
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.
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
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?
The car would need to be registered in the state where you reside.
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
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.
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.
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.
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?
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.
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?
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.
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?
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.
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?
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.
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
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.
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?
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.
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?
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).
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
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.
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.
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.
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.
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.
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?
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.
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” ?
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.
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.
It probably isn’t worth the effort and fees it would take to move the vehicle into a trust.
Can you put a motorcycle in a will if you owe money on it
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?
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.
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.
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.
Hi Lee. I live in California, and have had my auto insurance with AAA (the Automobile Club of Southern Ca) for over 29 years. We just bought a new Chevy Volt on Sept 30, and we had the dealer list our revocable living trust as the owner. We do not have the formal title and plates from the Ca DMV yet, but the DMV temporary ID shows “Sold to: The YOUNG FMLY TRUST OR GEORGE MICHAEL YOUNG”. I have to assume that will show on the title we will receive. The AAA says that the Trust should NOT be listed on the car title, and if we want to keep it that way then they have a special department that would act as a broker to find a company that will issue a separate auto policy on any vehicle listing the Trust as owner. That seems crazy to me, as I will lose the AAA dividend AAA provides me on the policy I’ve maintained for decades. I could have asked (but did not) on what happens if the vehicle is titled to me and my wife, and we transfer ownership of it to the trust after it is on the policy. We called the dealer and spoke to a Finance Manager, who said he has done ‘dozens of sales over the years with a Trust as the owner, but…know that the DMV could take up to 90 days to issue the plates and registration’. The problem is that AAA says they can only allow a 30 day grace period to add the car from date of purchase. Any thoughts on what I should do?
One thing that you have not mention is the fact that if a Husband and wife have a trust and both die can the successor Trustee sign the title documents to sell the vehicles. Especially since on the title it shows just the 2 trustees but not the successor trustee.
The successor trustees do not need to be on the title. You use a affidavit of successor trustee to show that there is a new trustee for the trust that can sign the title.
Lee, My Aunt who was never married or had children had a trust. She had her truck put in the trust. The title is in the name of the trust. She passed away. She left the truck to my father in her trust and will. He and I are trustees. Michigan Secretary of State are telling us we must pay sales tax to transfer the title to my father because they say you can not be related to a Trust. They are saying if the title was in her name there would have been no problem. This does not sound correct as my father (her brother) is her closest living relative. Your thoughts.
Every state does it differently. Some allow you to transfer without any problem, and others won’t.
This comment is to Debr Karr, I live in Michigan too. My mom gave my daughter (her grand daughter ) her vehicle. No sales tax because they are related. If it’s a revocable trust then it is owned by your dad’s sister and if he is being given the car there should be no tax. Ask for a supervisor. Sister to brother transfer.
I am purchasing a used excavator in your state and the purchase agreement requires Trust services, I want to know if you can provide closing and Trust service for this purchase.
Let me know if this is within your service capacity and I can email a copy of the purchase invoice, Trust instruction and purchase agreement to you for your review, if you cannot provide closing and escrow service for this purchase I will appreciate your effort if you can recommend who can.
Thank you while I await your response.
Hello, Lee. My Mom and I are trustees on her living trust after my Dad passed away. Her truck is in the trust and titled and registered in our names as trustees. She insures the vehicle. My husband and I want to pay her for the truck and insure it ourselves now. Do we have to change anything with the title and registration since I am already listed as a trustee also?
You do not have to change the title but if you don’t that truck will still be subject to the trust. If your Mom passes away then that trust would have to be distributed out according to the terms of the trust. If you have brother or sisters or someone else who is also going to become a beneficiary of the trust when your Mom passes away then you would want to get a new title with you and your husband on it and not in the trust.
We live in Oregon with a Revocable Living Trust in each of our names. We have State Farm Insurance (for over 50 years) and have had the trusts since 2002. State Farm now is saying that every thing we own in the trusts must be listed as the “owner” on our insurance policies. So now we will lose the multi-car and drive safe discounts not only on the vehicles but also on the homeowners policies. This will amount to $800 or more in discounts to us each year. On the homeowner insurance alone, it is going to be a $400 increase on the policy. We are unable to see the vehicles online and ability to pay online also due to the change to the revocable trusts. According to our agent, this has been in place for “2 to 4 years that it must be listed as the trusts being the owners.” They have no answers for why it was not changed sooner, nor are they willing to list the trust as an additional insured on the policy as it was in the past. Do you have any insight as to why State Farm is requiring the trust be listed as the owner, and is this legal? Thank you.
Insurance companies do not understand trusts very well, so they make decisions that really don’t make much sense. The trustee of the trust is technically the legal owner of the asset. They can require the trust to be listed on the policy. You may want to consider looking into other insurance companies. Sometimes if you let them know you are going to look elsewhere they will change their tune and work with you.
Good afternoon Mr. Phillips. I partially financed a portion of a car purchase about 4 years ago, and will be paying off that loan in a few months. Since the purchase, my husband and I have obtained a revocable living trust. Two questions: 1 – would I be able to contact the lien (and title) holder in advance of final payment and have them change the title to the revocable living trust before issuance? and 2- the trust is titled as me and husband last name, as trustees of the me and him last name living trust. By titling the car like this, would I be able to transfer title in the future myself alone, or would both of us have to sign to transfer? Thank you,
You can ask the lender if they would transfer it into the trust, but most will not. As for the transferring the vehicle out of the trust it would depend on what is written in the trust. The trust may say that it would only require one signature. If it doesn’t say it only takes one signature, then it would take both signatures.
If one has a revocable living trust and owes a large sum of money to a bank in a foreclosure can the bank receive money from a condo they own with no mortgage ? Or put a lean on the property ?
Thank you for your prompt attention. Joseph
The bank would first have to get a deficiency judgement against you to be able to go after other assets you may own. A revocable trust is not going to provide any asset protection against that deficiency judgement.
I am currently sitting in a Virginia DMV office with the same issue your son had— when I moved my mom’s car to VA from NH and had it retitled into the living trust of which we are not trustees, they insisted that it must be classified for business use. This disqualifies me from car tax relief and I assume causes issues with our personal auto insurance policy. I already argued once with them and gave up; I’m here to try again. If they again refuse, what recourse do I have? Can I appeal to someone in Richmond?
Clarification- meant to say we are both trustees of the trust.
How long does it take to get a vehicle in trust switched over I’m trying to buy one from a family friend who has a a vehicle in trust but I can’t get a loan until he has the actual title
It all depends on the trustee. The trustee is the one that has the right to transfer the title and can do so at any time just like anybody who transfers a title. If it is a professional trustee, then it can take some time, because they will have safeguards and procedures that their company is going to make them go through first.
Update: I gave up. The DMV explained that a few years ago there was an option in the system for a “trust” but it no longer exists— so the options are personal, business, and government. For $12, I had the vehicle transferred out of the trust and into my own name— problem solved. I will not be trying to place any more vehicles into a trust in VA!
Some states can be a pain to work with when dealing with cars in the trust. Luckily you don’t have to have the car in the trust. In most states if all of your other assets are in the trust when you pass away there is a simple process you can do that will transfer the car without having to go through probate.
Please i am purchasing a used excavator in your state and the purchase agreement requires an escrow services, I want to know if you can provide an escrow service/closing for this purchase so I can email a copy of the Trust instruction and purchase agreement to you for your review. Recommendation will also be appreciated. Thank you
For this it would be best for you to find a company that provides escrow services—usually a title company. Our office specializes in business formation and setting up trusts and other estate planning documents like the one you are working with.
Lee. I am a co-trustee on a revocable trust that was originally just in my mom and dad’s name. When dad passed, we changed the trust and made me co-trustee instead of beneficiary so I could help mom handle her affairs. The car is in her name only but is attached to the trust with the original date, not the revised one.. She wants to sell the car to a private individual. Is hers the only signature required or do I have to sign as well.
Your mom is the only one that would need to sign.
I live in Oklahoma and just bought a new car that I want to title in our revocable trust setup by my wife and I. Is it as simple as putting the name of our trust as the owner? Do both of us have to be present at the tag agency or can my wife do this alone? Also, do we notify our insurance that we are doing this? Thanks
You will list the trust as the owner on the title. Typically your wife should be able to make the transfer, but you may want to check with the local government to make sure. A revocable trust is you for most purposes so you don’t have to change the insurance.
Thanks very much. You were very helpful.
In reading all these questions I want to personally thank you for the valuable answers. I’m about to purchase a vehicle and have already titles previous vehicles in a trust without issue. I’m currently purchasing an electrical vehicle which has the $7500 tax credit from the government. I was concerned perhaps the titling to the trust may somehow affect my eligibility for the tax credit on technicalities. Based on previous replies, there should be no difference between me and my trust from a tax perspective, so I would still receive this full credit available for electrical vehicle purchases despite it being titled into the trust?
The trust is a disregarded entity (assuming grantor trust – basically a living revocable trust) as far as the IRS is concerned. For tax purposes you are considered the owner, even though the title is in the trust.
Hi Lee, I’m on the cusp of buying a fully electric vehicle. I already have some cars in a trust, the ones purchased after the trust was created as I see you already suggested. I also have an older vehicle which is not in the trust as it was purchased before it was created and was left as is as you seem to suggest as well. Since there is a federal tax credit for the fully electrical vehicle, I’m concerned I may run into issues when applying for the tax credit to my taxes ( https://www.irs.gov/pub/irs-pdf/f8936.pdf; Form 8936 instructions – https://www.irs.gov/instructions/i8936 ). From the remarks herein, it seems “A revocable living trust is invisible to the IRS and taxing entities”. Form 8936 doesn’t have anything listed for title, etc. and simply states in the instructions various rules of which “You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee, is entitled to the credit.” is the only remark regards to ownership. I’d like to see if you have any remarks on this front.
(keep post with first name only pls)
If you buy the car in the name of the trust you should still qualify for the credit since the trust is invisible to the IRS. If you are concerned about it you can buy the car in your own name. As long as all of your other assets are in your trust moving a car after you pass away is pretty simple to move the car without having to go through probate.
I live in SC. A friend of mine in VA father died and he asked me if I would like to buy his dads 2000 Toyota for $1.00 He is the First Successor Trustee of his father’s Revocable Living Trust. In his father’s Will and Testament it says “I give tangible personal property owned by me at time of my death (Except cash), including without limitation personal effects, clothing, jewelry, automobiles to the TRUSTEE of to be distributed in accordance with the terms of the Trust.
My friend sent me the title (which was in his dads name). My friend signed his name and indicated he was the executor. He also sent me a copy of the Trust and the Will and his father’s death certificate.
I went to SC DMV to get a new title. They would not except it saying my friend will have to go to a probate judge in VA and get a Personal Representative (PR) form allowing transfer of the descendants 2000 Toyota.
When I told him this he said SC DMV is mistaken.
Now what do I do?
A car is not personal property. It is a titled asset, and unless it is in the trust, it will have to go through probate or follow the rules of the DMV in the state where it is registered to transfer title. If it is owned by the trust, the trustee can make the transfer as trustee.
Hi Lee, years ago we put titled two cars we owned into our revocable trust, on the advice of our estate planner (similar to your advice here). It made sense then, and clearly we would not have done it if there would have been problems with auto insurance coverage. I called up Allstate recently just to clarify things after talking to a friend, as I had forgotten this whole discussion of how/why, and our Allstate office is now saying that “Allstate insures people, not trusts” and that even though they list our revocable trust as an additional interested party on the auto and umbrella policies, if the cars are not registered under our names, they will not be insured. What gives? Clearly this is a mistake? Is there some legal language that I can use to clarify with this office to help communicate with them that this cannot be correct? Or can they actually be correct, that insurance companies have the right to deny insurance coverage to cars titled/registered to a trust and not a person? Thanks
An insurance company can do whatever it pleases, because an insurance policy is a contract between you and the company. It is pretty much recognized that a living revocable trust is what is called a “disregarded entity.” Pretty much everybody knows it is revocable and just ignores it. The IRS and the courts basically ignore it. When you die, your living revocable trust will become an irrevocable trust and that trust has its own legal capacity. Dig a little deeper in the system and let me know what you find.
Thanks for your reply Lee. In the interim I got a response from my Allstate rep, this is the language she quoted from the company:
“Policies must be in the name of an individual, individual and spouse, or individual and registered domestic partner. Corporations, partnerships, estates and trusts are not acceptable for the personal auto policy.
However automobiles owned by a trust, may be written in the name of the grantor and/or spouse.
• The named insured(s) must be the registered owner(s) of all vehicles to be insured on the policy.”
So I am assuming this would be okay, since a living trust is a grantor trust, and my wife and I are the grantors of our revocable trust, correct? Then as long as the policy is written in the name of the trust’s grantors – us – we and our property should be covered?
Yes. Our cars are in the name of our trust, but the policies are in our names. They insure me no matter what car I am driving.
Lee, I’ve gone thru 3 auto lenders, all of whom “forced” me to take personal name title or they would refuse the loan. I had one lender who used to make an “exception” but now even they declined the request, saying the borrower must be on title and they don’t lend to trusts. In one case I’ve signed the Note personally, and put bank on as lienholder on title (as per the loan requirement), yet when they got the title and saw it in a trust, they invoked some provision in the loan that jacked my interest rate sky high! I’m trying to see it from the bank’s point of view, but with my name (personally) as guarantor on the Promissory Note, and a lien in favor of them on the vehicle title, how are they “at risk”? They claim the loan is not valid with such structure, but (of course) I’m not talking to attorneys, only “supervisors” at the bank. What do I do or tell them?
You are getting a loan. That is a simple contract between two parties. He who has the gold makes the rules. If it is a real property you have to get the loan, take title in your name, and they quit claim the property into the trust’s ownership. That should be done. The loan company can’t say a thing about it if it is done that way. You could do the same thing with the car. Take title in your name and then change the title to the trust. Federal law says the loan company can’t stop you, but likely the state will want another sales tax of transfer tax on the car’s value. Technically, they can’t do that, but they are the state, and they make the rules too. The good news is, just forget about putting the car in the trust. It is best if you can get the car in the name of the trust, but not necessary, because all states have a workaround for the title to a vehicle when the owner dies. You probably won’t have a probate on the car. (Actually, you don’t care, you are dead, but your family probably will want to avoid probate.) The trust is only a probate avoidance tool, and with a car likelihood is the family can use a workaround and probably avoid the probate. Don’t sweat it in the case of a car. If you pay cash for the car, then make sure you put the car title in the trust’s name.
Thanks, Lee. You say the loan company can’t do anything if I move my car title to a trust, but they did! They jacked my rate to the maximum interest level. What federal law prohibits them from doing this? I know about the Garn-St. Germaine law for real estate, but what if personal property? If I can cite this law maybe I can fix this, thanks.
The Garn St. Germaine is 12 U.S.C. §1701j-3(d)(8)
The IRS can’t tax you differently under it’s grantor trust rules, but the loan on your car isn’t a mortgage. Take the car out of the trust. I have never run onto that. Get a different loan company. Which loan company is it? I will stay away from that one.
(from Lee): If it is a real property you have to get the loan, take title in your name, and they quit claim the property into the trust’s ownership. That should be done. The loan company can’t say a thing about it if it is done that way. You could do the same thing with the car. Take title in your name and then change the title to the trust. Federal law says the loan company can’t stop you, but likely the state will want another sales tax of transfer tax on the car’s value. Technically, they can’t do that, but they are the state, and they make the rules too.
Follow up question: What Federal law prohibits the loan company from ‘stopping me’ from transfering car title to a trust. I know for real property it’s the Garn-St. Germain Act. Maybe citing Federal code will get lender off their high horse…?
Lee, taking this topic one step further: Per the policeman (wannabe lawyer) that pulled me over this week, the name on proof of insurance must match the name on vehicle title. Huh??? If the car is titled in the Trust, and insurance card is in my name, isn’t that OK? The insurance card already specifies the vehicle (includes VIN). Got me thinking, though, it may be a privacy advantage to ‘comply’ with this officer’s request in the event someone other than me is driving. In that case the officer would be looking at car registration in Trust name, insurance in Trust name, yet the Driver name not on either. If that (other) driver got say, a speeding ticket, it would not come back on me as my name is “not involved” (nowhere on license or registration produced by driver). Furthermore, if an accident occurred, it would keep my name personally out of lawsuit, as damaged party would sue the “owner” (Trust), with no other assets than a (highly leveraged, and likely now damaged) vehicle. Of course insurance coverage would exist, but this arrangement would serve to isolate that lawsuit from other assets owned personally. Is this logic correct?
I think your logic is pretty sound. Usually the insurance will name the trust and you as insureds. You can put both names on the policy if you want. It is called and additional insured in some cases.
Because of limited space for the title of my car I was only able to get the name of the trust and date but not the trustee name. I am the trustee and the successor trustee is a bank. Is that enough information or will that create some kind of problem?
I understand there isn’t much space on a car title. You will probably be fine. Cars are not nearly as critical as other assets, because the DMV usually has workarounds to fix titles or transfer titles at a death. The trust should have all three parts on any title: name of trust, date of trust, and trustee’s name. As in: “Lee Phillips Living Revocable Trust dated the tenth day of July 1999, Lee Phillips Trustee” abbreviates to: “Lee Phillips Tr, U/A7/10/99 Lee Phillips TTEE”.
I just purchased a vehicle that is in a trusts name. The trustee signed off on the title. I now am having trouble tagging it because they want copies of the trust? What do I do now. I can’t get that paperwork and can’t reach the people.
That is a problem. Not sure what to do. Try another DMV agent on a different day.
My wife and I are purchasing a boat in Florida, where we reside. We want to own it within our revocable trust. The seller is insisting that we buy it as Trustees of the Trust and not as the trust. As long as he gets his check I’m not sure why it would concern him. The broker handling the purchase is in another state, isn’t familiar with this situation and is providing no guidance. I told the broker to just put the name of our trust as the new owner. How do you think these documents should be filled out? I know the State will register it in the name of the Trust, as we have several vehicles and a boat already in the name of our trust. I guess the confusion on the part of the seller is that he doesn’t think “the trust” can buy anything, only the Trustees.
You are providing a tremendous service with this Web site, Lee. Thanks!
When you take title in the name of the trust you are technically taking title in the name of the trustee on behalf of the trust. Title requires the name of the trust, the date of the trust, and the name of the trustee.
Help!! We bought a camper in Missouri from a man who had a revocable living trust on the title. He signed it and we went to our DMV in Illinois to register it in our name and they told us they couldn’t without his revocable trust paperwork. We got the paperwork and took it in and they said the name on the trust did not exactly meet the name on the title and thus they will not register it in our name. How do we get the revocable trust off the title?
If they want the trustee’s signature to match on the title and the living revocable trust, maybe the guy will resign the title using the exact version of his name he used on the trust signature.
Thanks for your help!
Problem is he signed the title over to us using the name on the title with his revocable trust after his name.
That’s why we had to bring the trust paperwork to the DMV to prove he had the right to sign the title.
The names don’t match.
He lives in Missouri and we are in Illinois.
Hopefully he will be able to change the title to match his revocable trust, or change the revocable trust to match the title.
What a hassle!!
We didn’t know anything about revocable trusts until now.
We purchased an EV in the name of a revocable trust with two trustees – Not related. Each trustee has all rights. Here’s how the vehicle Certificate of Ownership is titled: ABC SEPARATE P/T DOE, JOHN TRUSTEE, DOE, JANE TRUSTEE. Who can claim the tax credit. Only one person claimed the credit. The IRS is giving a hard time claiming the don’t know who the owner is.
There is not enough info to really understand this. The grantor of a living revocable trust who’s social security number is attached to the vehicle is the one who will deduct it. A living revocable trust shouldn’t have a tax id number.
My sister in law is the Trustee of the revocable trust of my wife’s Father. He has a vehicle that is now only his since my Mother in law’s recent passing. He no longer drives. Rather than now putting his vehicle into the trust, my sister in law has offered to sell it to us. She indicates that the attorney who drew up the trust recommends that the sale price be the KBB private party sale value. We have offered to buy it for approximately 87% of that value. Is it required that it be sold for the full private party sale valuation or can it be sold for less? Thanks!
It can be sold for less, as long as the parties agree.
Thank you for patiently addressing such a confusing issue as autos that are included in trusts. I am the trustee of my parents’ trust. The trust “owns” a handicap van which is necessary for transporting both parents. Neither parent Is able to drive at this point, but the van is driven by my two siblings and me when, and only when, transporting our parents to medical appts or other short errands around town. It is parked at my parents’ residence and has always been insured in my Dad’s name. After a recent insurance cost increase, I phoned another company for a comparison and learned that the van would need to be insured as a business vehicle at a greater expense.
I have read all of the posted questions and your replies, so I think I understand the value of keeping the van in the trust which seems to work best in our situation.
I am asking if I also correctly understand the point you made in your posted reply to Rod on Oct. 11, 2018. It sounds like even though the van is registered under the trust, I can, in fact, leave the van insured in my Dad’s name since my siblings and I have our own auto insurance and that should cover us when driving our parents in the van. Is this correct?
The new company that is quoting you, doesn’t know what they are talking about. Don’t insure with them. Most all companies recognize that an auto held in a living revocable trust is still a private vehicle. I am sure that if you got to the right person in the company that you got the quote from, they would also agree. You just got someone that didn’t know that they were doing when they gave you the quote.
Date means date trust was formed??
Yes, it means the date the trust was formed. When taking ownership in the name of the trust there are three elements you have to have: 1. Name of trust 2. Date of trust (date the trust was formed) 3. Name of trustee(s).
Thank you Mr. Phillips!!!
If a car in New Hampshire is omitted from the owner’s living trust, can this have any effect on the need to probate assets that are properly included in the trust when the owner dies?
No. Assets owned by the trust would not be subject to probate, independent of whatever assets are outside of the trust. Your DMV will probably have a “workaround” that will allow you to transfer title to a car without a probate proceeding.
Assets that require a signature to transfer should be held in a living revocable trust. Those assets will avoid probate upon the death of the grantor (you). If a car isn’t titled in the name of the trust, that asset will need to be probated, but will not in any way affect the assets held in the trust. Actually, pretty much all states have a probate work around for motor vehicles. Try that first.
We just bought a car and had it titled in our revocable living trust (we live in Texas). Our trust name includes the full name of both myself and my wife, and I am a Jr (for example, the trust is called “Jane Louise Doe and Jack Henry Doe Jr. Revocable Living Trust”). When I got the title paperwork back from the state, I noticed that they missed my “Jr.” in the title. I never thought about this before, so I went and checked the titles for our other two cars. One has it perfect, but the other has used initials instead of the full middle names (e.g. Jane L Doe).
Is it necessary for the car titles to exactly match the trust name? Is it worth the effort to have the titles fixed? Should I go back to the dealer where we bought the car and make them fix the paperwork (we told them to use the entire trust name). I’d like to avoid any problems if we were to pass away suddenly, and I definitely want to keep the vehicles out of probate.
I was also wondering if it might be easier to just amend our trust to identify all the equivalent names of our trust to make it completely legal if middle names are abbreviated or if the Jr is left off, or in some other cases (like on a bank account) where it is just called “Doe Revocable Trust”. For us, we wrote our own trust so I can easily add this explanation.
What do you recommend?
Is it necessary for the car titles to exactly match the trust name? No, it probably isn’t worth fixing it. you will just have to sign the way it is on the title. Cars are a lot more forgiving than real property. Is it worth the effort to have the titles fixed? Should I go back to the dealer where we bought the car and make them fix the paperwork (we told them to use the entire trust name). Are you getting the date and the name of the trustee(s) on the title too? The name of the trust always includes 1. Name of trust, 2. Date of trust 3. Trustees name. I’d like to avoid any problems if we were to pass away suddenly, and I definitely want to keep the vehicles out of probate. You would probably be ok. I recently sold a car in my trust, and after three weeks, they came to me and said they needed a copy of the trust to verify things. That I was the trustee, etc. it probably isn’t a good title without the three parts to the name. abreviations, etc are ok. Jane Louise & Jack Henry Doe TR U/A 10/22/18 J.L. Doe and J. H. Doe TTEEs would probably work.
I was also wondering if it might be easier to just amend our trust to identify all the equivalent names of our trust to make it completely legal if middle names are abbreviated or if the Jr is left off, or in some other cases (like on a bank account) where it is just called “Doe Revocable Trust”. For us, we wrote our own trust so I can easily add this explanation. You could do that. It is better to have a short name. JanJak Tr, U/A 10/22/18 J.L. Doe and J. H. Doe TTEEs
What do you recommend? Just keep going with your trust and try to keep it on titles and stuff. Cars are much less of a deal than real estate or banking stuff.
My can is now in a revocable Trust. If it must be sold before I die — e.g. — I may be incompetent — how can my son, who is listed as agent on the General Durable Power of Attorney,sell the car if it is owned by the Trust?
The trustee would sell the car, not your agent. Your son may be both agent and trustee for your affairs, or there may be two different people.
My mom recently died with a living trust. Her car was not retitled to the trust, and as trustee I now want to give it sell it to one of the beneficiaries as she wanted. We live in Missouri, and the dmv talks about transfer upon death or willed cars, but we have neither. What should I do?
Explain to the dmv exactly what is going on and ask if they have a workaround for probate of a car.
Good Morning , I am purchasing a car in Florida in which the title says John Doe Irrevocable Trust.
He just signed John Doe under seller. Is this Ok? or does he need to sign John Doe Irrevocable Trust?
or do I need a copy of his Trust? or all of the above?
It should say John Doe Trust, Dated or U/A 07/09/XXXX, John Doe Trustee or TTEE. It would have been good to have him sign John Doe Trustee, but it all depends upon what the florida department of motor vehicles will accept.
If there are personal credit card related judgements against someone and they take title to a used car (worth around $7500) in a revocable living trust naming themselves as Trustee, will it prevent any potential credit card judgements against them attaching to the car? Is it even worth it to try to put a $7500 car with over 100k miles on it in a trust to preven judgements from attaching to it?
Helping a friend – this just happened: (in NY) Purchased a new car in name of Living Trust. All going swimmingly. Then contacted Allstate to get insurance card to complete the sale. Allstate refused – stated bluntly “we won’t insure a trust”. So my friend switched it to a personal purchase, got an insurance card for the “replacement vehicle” under his current policy, and everybody is now happy. But he really wants the car in his Living Trust.
If he later simply goes to DMV and transfers the title into his Living Trust (NY DMV apparently does this as co-ownership by the Living Trust and the Individual), he’s afraid Allstate will learn of it and void his coverage, so – to be safe – he’s inclined to keep it in his name and let the car fall into his estate and get probated. It will be his only probate asset. The principle of “invisible to the insurance” is clear, but if Allstate’s view is different it looks like he’s stuck. Your thoughts would be appreciated.
I am a co trustee of my mother’s living trust, along with my two brothers.
There are two older model cars with low mileage (less than 100,000 miles after 15-16 years of use) and that are comparable to those advertised on car sales websites at $8,000-$10,000.
The primary beneficiaries of the trust are my two brothers and me, with smaller token sums to be paid to the five grandchildren.
One of my brothers began using one of the cars full time for his personal use before our mother died, it now stinks of cigar smoke, and he has assumed it is “his.” When confronted that he needs to pay fair market value or these will be sold, he became very defensive. When told that we also need to avoid insurance problems, he offered to retitle the car in his name for $1. I told him the fair market values advertised and he scoffed. The same thing with the other car, which he wants to “give” to his adult daughter. Again, he argued that he does not want to pay the fair market value ($15,000-$20,000 for both cars) but he continues to drive one car and gives his “permission” as a trustee to his adult daughter to drive the other car full time. They both own their own cars and do not “need” these cars. I suspect they are keeping them in the hope of later claiming they were worthless and reselling them and pocketing the proceeds. The estate is substantial and they do not need to behave like this. This is about greed, control and self reward. He treats my reminders of fiduciary duty as something to be ignored. He has sought to shuffle this issue aside and does not raise it in the context of discussions of estate assets such as the house and investments.
My other brother is indifferent and has always refused to challenge him. I feel the brother keeping the cars is self
dealing, breaching his fiduciary duty by seeking to enrich himself and giving preferential treatment to his daughter as all the grandchildren are in every way to be treated equally by the trust and there was no stipulation by my mother that these two beneficiaries receive the cars. My brother’s adult daughter actually took the car and failed to return it, leaving her own car in my mother’s driveway long term while using my mother’s car.
What do I do to avoid my brother changing the titles to himself and his daughter, and possibly taking the cars in breach of his fiduciary duty? Do I need to read him the riot act and threaten to hire my own attorney? What part of NY state trust law can I quote to him to force him to pay fair market value for these trust assets or stop using them and surrender them? I do not want to try to unwind a retitling of the car ownership or report a theft if he goes too far to protect what he wrongly assumes is his financial interest in these cars. He only owns one third of each car but is treating both cars as if they are his own and shows no sign of backing down. These are registered in the name of the
trust but he is taking advantage of the other beneficiaries. He does not like the low fuel mileage of his own car so uses the very fuel efficient car of my late mother for his own, and refuses to rein in his adult daughter. Any advice?