Estate Planning for Automobiles
“Should I title my car(s) in the name of my Trust?” This is one of the most common questions we receive here at Preston Estate Planning, and the answer is both simple and complicated. Generally speaking, any asset with a registration that requests your signature to transfer it should be titled in the name of your Trust. These assets typically include property, checking accounts, savings accounts, and more. However, this rule has very limited exceptions — and for most people, their automobile is one of them. The Smart Way to Handle Your Car(s)
However, most people do not have individual cars or car collections worth more than $184,500. So even though vehicles do have formal registration and need a signature, they typically are not worth enough to trigger probate. If you fall into the category of “most people” here, then you do not need to title your car(s) in the name of your Trust. When you pass away, your trustee will be able to transfer those vehicles to your beneficiaries without having to go through the probate process.
A Note for Car Aficionados and Collectors
Automobiles: An Exception to the Rule
If you happen to have purchased a 1955 Mercedes-Benz 300 SLR Uhlenhaut Coupe (worth $142 million) or a 1959 Ferrari 250 GT LWB California Spyder Competizione (worth $18.15 million) at auction, you will need to go through the hassle of titling your vehicle(s) in the name of your Trust in order to avoid probate. While these may be extreme examples, the key to remember is that if the value of your vehicle collection is near $184,500, you’ll definitely want to retitle those vehicles in the name of your Trust. This transfer may be a pain, but it’s the kind of pain that’s worth going through for the result. (See the cover of this newsletter for our thoughts on taking shortcuts!) To make the transfer correctly, we recommend working with your local Department of Motor Vehicles (DMV) branch or a DMV partner that provides registration services, like the American
The most common exceptions to the titling rule are retirement accounts like 401(k)s and IRAs. You do not need to title those assets in the name of your Trust. Automobiles are another common exception. You usually do not need to title your car(s) in the name of your Trust unless an individual car or your car collection is worth more than $184,500.
The Story Behind the $184,500 Limit
Certain assets require your signature to transfer those assets to another owner (e.g. bank accounts, vehicles, real property). Most
of those assets should be owned by your Trust. However, if the total value of those “signature required” assets that you leave out of your Trust is $184,500 or more,
they will trigger the expensive, time-consuming probate process
that your Trust is designed to avoid. Many real estate
Automobile Association (AAA). They will ensure you’ve dotted all of your Is and crossed all of your Ts.
investments and bank accounts break that $184,500 threshold, which is one of the reasons we recommend titling those assets in the name of your Trust.
2 PrestonEstatePlanning.com
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