Pinnacle Estate Planning

By Jason Gray

PINNACLE LAW PLLC

    When setting up a trust, one of the most common questions people ask is whether they should put their vehicles into the trust. The answer is not always straightforward and depends on various factors, including the type of trust you have, your overall estate planning goals, and the value of the vehicles themselves.

What is a Trust?

    A trust is a legal entity that holds assets on behalf of beneficiaries. One of the main reasons people establish trusts is to avoid probate, the court-supervised process of distributing a deceased person’s assets. By placing assets into a trust, they can pass directly to beneficiaries without the delays and costs associated with probate.

Why Consider Putting Your Vehicles in a Trust?

    Placing vehicles in a trust can be part of a comprehensive estate plan, particularly for high-value or sentimental vehicles. For example, if you have a classic car collection or a luxury vehicle, it might make sense to include these assets in the trust to ensure they are transferred smoothly to your heirs. In states where probate is a lengthy or costly process, putting vehicles in the trust could prevent potential delays.

Does the Type of Trust Matter?

    Yes, the type of trust can affect whether you should transfer your vehicles into it. In a revocable living trust, you, as the grantor, have control over the assets during your lifetime. In this case, it may make sense to include your vehicles in the trust to simplify the distribution of all your assets after you pass away.   However, in an irrevocable trust, once the assets are placed in the trust, you lose control of them. Given that vehicles tend to depreciate quickly and may need regular upkeep or replacement, they might not be the best candidates for an irrevocable trust.

Potential Downsides of Putting Vehicles in a Trust

    One concern about putting vehicles in a trust is the issue of liability. If you place a vehicle in a revocable trust and someone driving the vehicle causes an accident, the trust could potentially be named in a lawsuit, depending on state laws.

    Additionally, vehicles are depreciating assets. Unless the vehicle holds significant value, it may not be worth the hassle of transferring ownership to the trust, especially considering that many states have simpler procedures for transferring vehicle titles upon death.

Alternative to Putting Vehicles in a Trust

    An alternative to placing a vehicle in a trust is to use a Transfer on Death (TOD) designation. Many states allow vehicle owners to file a TOD form with the Department of Motor Vehicles (DMV), allowing the vehicle to pass to a named beneficiary outside of probate without needing to involve a trust.

Conclusion

    Whether or not you should put your vehicles in a trust depends on the value of the vehicles, your overall estate planning strategy, and liability concerns. Consult with an estate planning attorney to determine the best approach for your specific situation.

Jason Gray is the owner of Pinnacle Estate Planning. To schedule a free consultation in Spokane, Coeur d’Alene, or Sandpoint, please call (509) 505-0665 or (208) 449-1213. You can also get more information at www.LawPinnacle.com

*This article is for informational purposes only and should not be construed as legal or financial advice.