Estate planning attorneys can never stress enough the importance of “funding” your trust – ensuring that assets that you intend to pass by the terms of your trust actually do so. Funding is accomplished by retitling assets or changing the beneficiary on the asset to the trust. You may be surprised to learn that your vehicle does not need to be retitled to your trust in order to avoid probate court. In fact, unless you have vehicles in excess of $60,000 in value, we generally advise against doing so for the following reasons.
It is estimated that over half of Americans have not executed a will, and even fewer – typically estimated at 20% or less – have a trust. This can create great misconceptions about what it means to have a trust. In reality, having a trust does not necessarily mean that the individual is wealthy, but rather that the individual is organized. Unfortunately, the assumption that equates “trust” with “deep pockets” could be problematic if your vehicle were ever involved in an auto accident. If the other drivers involved in the accident sees that the vehicle is titled in the name of a trust, they could feel encouraged to file a lawsuit that they might not otherwise pursue.
Transfers Can Often Take Place Outside of Probate
When a vehicle owner dies, the next of kin may transfer the vehicle into their name at the Secretary of State if (1) the aggregate value of all vehicles owned in the decedent’s name does not exceed $60,000, and (2) there is no probate estate opened for any other purpose or property. If a probate estate is opened, for example, because another asset was “missed” when funding the trust, the vehicle will need to pass through probate, except in the case of a jointly titled vehicle where “full rights to survivor” is specified on the title.
To transfer the vehicle to the next of kin, the next of kin needs to present the title, current registration or license plate number, and a copy of the decedent’s death certificate to the Secretary of State. The next of kin will then complete a TR-29, Certification from the Heir to a Vehicle form. If the vehicle is being transferred to an immediate family member, the vehicle may maintain its current license plate. Co-owners may also be added at that time, however, if a co-owner is not an immediate family member of the decedent or the spouse of the inheriting next of kin, use tax will likely be due.
Often, the next of kin is the surviving spouse. However, when there is no surviving spouse and the next of kin includes a group of people related by equal degree (e.g. children or siblings), all have an equal interest in the vehicle and any who are not interested may need to complete a certification statement so advising.
Your Insurance May Be Affected
Titling your vehicle in the name of your trust could increase your insurance premiums, as the vehicle would technically be owned by an entity. If you have determined, together with your estate planning attorney, to title your vehicle in the name of your trust, consult your casualty insurance agent to be sure that the transfer will not increase your premiums.
If you have questions about titling your vehicle in trust or how to accomplish your intentions for passing your vehicle to a beneficiary, contact Mammel Law at 248-644-6326.