13 Oct Should Your Vehicle Be in Your Living Trust?
A living trust gives you more control over the distribution of your assets when you’re gone. But sometimes, determining which assets to include in your living trust can be confusing. Fortunately, the Phelps LaClair team can help you ensure the right assets are funding your trust.
Our clients often ask us, “Should I title my vehicle into my Living Trust?” The short answer is yes. For personal vehicles, it’s usually best to include them in your living trust to make life easier for your heirs (company vehicles are typically titled in the name of the company).
Let’s look deeper into why vehicles should be in a trust.
Why Should I Put My Car in My Living Trust?
Titling your car in your living trust minimizes headaches for your successor trustee. Remember that in Arizona, probate is required if you pass away with assets worth more than $75,000 titled under your individual name (i.e. assets that are not titled in your living trust).
- For example, let’s say you pass away and you had 3 assets that you had forgotten to title in your living trust: a $45,000 RV, a $25,000 truck, and a checking account with $5,001 in it. Since these 3 assets combined total $75,001.00, all 3 assets must pass through probate. This will significantly increase the time, expense, and headaches involved in settling your estate for your loved ones.
- We advise clients to stay far away from this $75,000 limit, so it is best to title vehicles in your Living Trust.
But even if your car is valued well under $75,000, keeping it titled in your living trust is still beneficial. It allows your successor trustee to easily sell your vehicle (or promptly transfer it to the intended beneficiary) after you die or become disabled.
What Is the Process?
So what’s the easiest way to title your vehicle into your living trust?
When You Purchase the Vehicle
It’s easiest to do put your vehicle in a trust at the time you purchase it. When you purchase your vehicle, remember to show the dealership your trust ID card so they know to issue the title in the name of your living trust. Done! Simple and easy.
After the Vehicle Has Already Been Purchased
But what if you already purchased your car and want to title it to your trust years later? Are you now relegated to spending the better part of your day waiting in line at the MVD with a sack lunch? No. A second option that we’re encouraging clients to look into is to keep the vehicle titled in your individual name, but to name your living trust as the “beneficiary” of your vehicle.
The MVD has made this possible by filling out a beneficiary form for your vehicle. Then, you simply attach the notarized form to your original title. If you sell your vehicle later, just throw the form away and fill out a new one for your new vehicle. This is a very simple option, and a lot of people prefer this to the hassle of presenting your trust paperwork to the MVD or to a dealership.
Does Including My Car in My Trust Open Me to Exposure?
But what happens if you get in a car accident and get sued? Will all of your trust assets be exposed to this lawsuit if the Trust owns your vehicle?
The truth is, if you get sued for a car accident and your insurance limits are insufficient to cover the claim, the assets in your living trust could be exposed regardless. Whether the vehicle was titled in your personal name or in the name of your living trust at the time of the accident has no effect. Remember, your living trust is an estate planning tool, not an entity to protect you from lawsuits.
Estate Planning Attorney Serving the Phoenix Valley
Are you due for your free 3-year trust review? Summer is a good time to get organized before the business of the fall season sneaks up on you. This free review meeting is a good chance to sit down with us to make sure your vehicles and all your other assets are properly titled in your living trust to avoid probate. It will be well worth your time.
Contact us today to schedule your free trust review!
Need advice on what assets should be in your living trust?
Give us a call today at (480) 892-2488 or email us at admin@PLEstatePlanning.com