Posted On: April 15th 2018
If you’re like many people, you use a revocable trust — often referred to as a “living trust” — to manage your assets during life and avoid probate at death. And you may know that the trust isn’t effective unless you “fund” it — that is, transfer ownership of your assets to the trust and designate it as beneficiary of retirement accounts or insurance policies.
What about automobiles and other vehicles? Should you transfer them to your revocable trust? If you still owe money on an auto loan, the lender may not allow you to transfer the title to the trust. But even after your loan is paid off, there are risks to consider before you make such a transfer.
As owner of the vehicle, the trust will be responsible in the event the vehicle is involved in an accident, exposing other trust assets to liability claims that aren’t covered by insurance. Therefore, you need to name the trust as an insured party on your liability insurance policy.
On the other hand, because you’re personally liable either way, owning a vehicle through your revocable trust may not be a big concern during your life.
After your death, when the trust becomes irrevocable, an accident involving a trust-owned vehicle can place the other trust assets at risk. Keeping a vehicle out of the trust eliminates this risk. The downside, of course, is that the vehicle may be subject to probate, although some states offer streamlined procedures for transferring certain vehicles to heirs.
© 2018