Vehicles and Revocable Trusts

In order to avoid probate upon death, it is necessary to transfer certain assets from your personal name into a revocable trust. I discussed non-probate assets in an earlier post; most other assets, particularly real estate, should be transferred into a revocable trust.

Whether personal vehicles should be transferred into a revocable trust is sometimes debated, but generally is not worth the expense and hassle. First, vehicles are purchased and sold on a relatively frequent basis, making the transfer of a vehicle that is later sold by the transferor unnecessary. Second, in the event of an accident, a vehicle title that lists a trust as an owner instead of an individual can give a potential litigant the impression that the owner of the vehicle is wealthy and may in fact encourage a lawsuit.

Third, even if a person passes away without having transferred a vehicle into a trust, the vehicle can still likely be transferred outside of the probate process. This is because most states, particularly those that have adopted the Uniform Probate Code, have a statutory provision for a "small estate affidavit." This enables some assets such as vehicles to be transferred from the estate of the decedent outside of probate. The applicable provision states:

"Thirty days after the death of a decedent, any person... having possession of tangible personal property... belonging to the decedent shall... deliver the tangible personal property... to a person claiming to be the successor of the decedent upon being presented an affidavit...."

The contents of the affidavit vary slightly among states but generally require that the value of the estate (excluding assets in a trust or that pass by operation of law) be below a certain threshold and that no probate has been opened. Some state agencies, such as the Utah Department of Motor Vehicles, even have a form that complies with the statutory requirements and can be completed without much more difficulty than signing over a car title. Before transferring a vehicle into a revocable trust, check your state's statutes and see if your vehicles can be transferred in this manner.

Posted in: Living Trust,Probate