Clients often ask if they should put their vehicle into the name of their trust. The answer, as you may have come to expect from me, is “it depends.” Academically, all currently income taxable assets should be held in your trust in order to avoid guardianship and probate exposure upon a disability or death. However, there are also some practical concerns that should be considered when deciding whether or not to transfer your car to your trust.
Department of Motor Vehicles
The first issue to consider is the Virginia Department of Motor Vehicles, itself. The DMV has some wonderfully dedicated and truly helpful professional working the front line. However, when your number is called after waiting for an hour, you may to be assigned to a clerk that has experience or knowledge in transferring a vehicle to your trust. In fact, they may not even know what a trust is. This may cause you to be sent back into the queue or worse; cause you to complete incorrect DMV forms that you will have to rectify later. As such, one specific factor you need to consider is the time and hassle that may be experienced in the process of working with the DMV to place your vehicle in your trust. At the very least, you should adjust your mindset and achieve some Zen-like patience prior to crossing the DMV threshold.
Value of the Car
There is a valid argument for leaving vehicles of lesser value outside of your trust. This is because there are two alternative options for transferring a vehicle after death without a full probate. They are, 1) a Virginia Small Estate Act Affidavit if the total probate assets value is less than $50,000; or, 2) A DMV Form VSA 24. There are administrative requirements for both options; however, they are much less onerous than a probate transfer.
Unfortunately, I have received a number of calls from angry clients that have reported that after transferring their car to the trust, they were informed by the local Commissioner of Revenue office that they no longer qualified for property tax relief. This is categorically incorrect. Va. Code Section 58.1-3523 specifically provides that in order to qualify for tax relief, the motor vehicle must be owned or leased by a natural person or held in a private trust and be used for nonbusiness purposes. A Revocable Living Trust (RLT) is by its very definition a private trust. So, as with anything, don’t automatically assume that the statement or conclusion of a government official is necessarily correct. We have experienced a myriad of instances where we have had to correct a state or local clerk on the application and content of the law.
My general recommendation to my clients is that they keep their current daily drivers in their own name (or in joint ownership with right of survivorship if it is a couple). I do advise that if you purchase a brand new, luxury vehicle from a dealer, you direct the dealer to place that car into your trust upon purchase. They may hem and haw at this at first; however, you can remind them that you are paying their tags and title fee (typically $400) in the purchase of the car and for that, they can do a little extra paperwork (or you can go to a competing dealer and buy your car from them).
If you have specific concerns about how your vehicles should be addressed in your estate plan then do not hesitate to contact your JGB attorney to schedule a document review.
IN OTHER NEWS
Many of you have come to know my paralegal of almost four years, Sarah Kuehl. While Sarah has been working hard for JGB, she has also been working to become a Realtor®. Please join me in congratulating Sarah as she transitions to her new profession with the Williamsburg Office of Howard Hanna in New Town. Below is Sarah’s new contact information. If you need assistance buying or selling a property, Sarah will provide you the same attention, skill and professionalism she did as a JGB employee as your Realtor®!