13 Oct Should Your Vehicle Be in Your Living Trust?
We all want our Living Trust to work properly when the time comes, but sometimes knowing which assets to include in your Living Trust can be confusing. Phelps Law, located in Gilbert Arizona is here to help with your estate planning needs and to ensure your Living Trust includes all that is necessary.
Almost daily, we are asked by clients: “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 on your heirs (company vehicles are typically titled in the name of the company).
Let’s look deeper into why this is so.
Keeping your vehicles titled 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. 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.
- 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 allows your Successor Trustee to easily sell your vehicle (or transfer it to the person you direct) after you die or become disabled.
So what’s the easiest way to title your vehicle into your Living Trust?
- It’s easiest to do this at the time you purchase the vehicle. 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.
- But what if you already purchased your car and forgot? Are you now relegated to spending the better part of your day waiting in line at MVD with a sack lunch? No. A second option that we’re encouraging clients to do nowadays, is to keep the vehicle titled in your individual name, but name your Living Trust as “beneficiary” of your vehicle. MVD has recently made this possible by filling out a beneficiary form for your vehicle (form is available online here). Then you simply attach the notarized form to your original title. If you sell your vehicle later, just throw the form away and do 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 MVD or to a dealership.
But what 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 (see last month’s newsletter on protecting yourself with limited liability companies).
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.
Click here to contact us and schedule your free trust review!
Images used under creative commons license – commercial use (7/19/2017) William Murphy (Flickr)