Generally, we don’t recommend titling a car into the trust unless the vehicle is very special for one reason or another and is addressed specifically in the terms of the trust. The reason for this is not that it is legally correct or incorrect for a trust to own a car, but that having the trust own the vehicle has the potential to complicate matters. If the driver of a car that is owned by a trust causes an accident and needs to exchange information with another driver, the other driver will see that the vehicle is owned by a trust. This may cause the other driver to make assumptions that the driver of the vehicle has “deep pockets.” In some cases, this might encourage the other driver to pursue a lawsuit or other recovery methods more aggressively than he would have if he had not seen that the car is owned by a trust.
Having said that, much of funding is personal preference. If a client would like to retitle the car to the trust, the DMV website offers instructions for how to Title and Register a Vehicle.
If a client decides not to retitle the vehicle, then the DMV’s Guide for Family Members and Friends of the Recently Deceased, will apply after the client’s death.
A third option that doesn’t make sense for most of our clients is a Beneficiary Title. A beneficiary title can name only one individual beneficiary (not a trust, and not more than one person) and the beneficiary must go to the DMV within 120 days of the deceased owner’s death to have the vehicle retitled to the beneficiary’s name. If the beneficiary predeceases the vehicle owner, then the beneficiary’s estate will have proceed.
