One of the primary goals in establishing a Revocable Living Trust ("RLT") is to avoid probate and to minimize administrative burden after your death. As has been stated countless times over the years by the attorneys at JGB, the key to probate avoidance is to properly fund your trust. How and when to fund a trust with assets such as an IRA, Life Insurance, or real estate is often a straightforward evaluation. The analysis becomes less clear when determining the best way to title motor vehicles as part of a trust-based plan because several factors must be considered.
Common Practice
Typically, I advise my clients to keep their "daily driver" vehicles titled outside of their trust. Vehicles in Virginia may be titled solely in the owner's name or jointly with right of survivorship between two individuals by including "or" between the names on the title or including the words "or survivor" after the names. Virginia law also allows a vehicle owner to designate their vehicle title to transfer on death ("TOD") to someone of their choosing upon the owner's death. The TOD designation effectively avoids probate on the vehicle transfer, while still maintaining traditional individual ownership during the vehicle owner's lifetime. TOD designations are not available on vehicles with liens in place (typically when financing the purchase of a vehicle).
Deciding whether to title a vehicle in the name of a revocable living trust generally requires evaluating the vehicle's current value and its likelihood of appreciating or depreciating over time. A classic collector vehicle like a 1969 Shelby GT500 would probably be worth the process (and potential hassle) of retitling the vehicle in the name of a revocable living trust. Whereas a 1996 Ford Ranger with 250,000 miles (even though still considered a classic by some folks) probably falls short on value justifying titling it in the name of a trust.
DMV Steps After Death
If an executor or administrator has been appointed by the court (probate qualification), they have the responsibility and duty to handle the retitling of an individually titled vehicle. If no executor or administrator has been appointed, then an individually titled vehicle may be retitled by providing DMV with:
1. a certified death certificate;
2. the existing vehicle title;
3. paying the $15 substitute title fee; and
4. providing one of the following:
- a. a copy of the decedent's will and a Statement of Authority to Assign Title (VSA form 24)
- b. if there is no will, then a completed VSA form 24
- c. an affidavit that the deceased's estate qualifies under Virginia's Small Estate Act (indicating the value of the decedents total estate is less than $75,000).
Even if an executor or administrator has been appointed by the court, vehicles titled jointly with survivorship fall outside probate proceedings and the executor/administrator's control. Jointly owned vehicles with right of survivorship can have the deceased owner's name removed from the title by providing DMV with:
1. a certified death certificate;
2. the existing vehicle title;
3. paying the $15 substitute title fee.
4. If the existing title has been lost or stolen, then a VSA Form 67 will also be needed.
Recent Experience
A few weeks ago, I decided to conduct a practical experiment of my own. When purchasing a new vehicle, I chose to title it directly in the name of my Revocable Living Trust. I wanted to see firsthand how the process worked, what challenges might arise, and whether the benefits outweighed any inconvenience. The experience gave me valuable insight that I can now share with clients considering the same decision. It is worth noting that the vehicle's value was below Virginia's $75,000 small estate threshold, meaning trust ownership was not necessary to avoid probate-related complications.
After going through all of the normal negotiations with the purchase of a vehicle, I informed my sales representative that I intended to title the vehicle in the name of my Joint Revocable Living Trust where both my wife and I serve as co-trustees. The dealership indicated they had no concerns with this, but they did require a full copy of my trust document. With no desire to provide the full trust document, I politely declined and provided them with my abbreviated certification of trust. The certification of trust was accepted, validating the trust's existence, and normal paperwork proceeded. The process ultimately went smoothly and took no more or less time than my previous experiences at dealerships (with non-trust vehicle titling). In speaking with the sales manager at the dealership, the ability to title a vehicle in a trust does not change whether the vehicle is financed or purchased outright.
The only hiccup was the dealership needed to register my trust with the DMV as a separate ownership entity before the final title, registration and license plates could be issued. There was no delay or additional cost on my end, just some additional work they completed on my behalf.
I recommend confirming with your insurance carrier that coverage will extend to a vehicle titled in the name of your trust. In my case, I called my insurance provider prior to purchasing the vehicle. Since my trust was already listed as an additional insured party on my homeowner's policy (I use the same company for both homeowner and automobile insurance), my insurance provider had no concerns over the vehicle being titled in the name of the trust. Different companies may provide different answers, and it is always best to inquire prior to purchasing a vehicle. It is also a good idea to contact your local Commissioner of Revenue to confirm personal property exemptions will continue to apply on a vehicle titled in a revocable living trust.
I cannot say that all dealerships or insurance companies will be as accommodating as those used during my recent vehicle purchase, but it does show that titling a vehicle in the name of your trust is an available option. I probably saved myself quite a bit of hassle by purchasing the vehicle directly from the dealership (and letting them handle the paperwork) than if I went to the DMV and navigated the process on my own.
The Bottom Line
After completing my own vehicle purchase and trust-titling experiment, my opinion remains largely the same: there is no one-size-fits-all answer. Can you title a vehicle in your Revocable Living Trust? Absolutely. However, my experience also confirmed that trust ownership often involves additional paperwork and occasional administrative hurdles.
For many Virginia families, the simplified DMV procedures available for transferring vehicles after death may make trust ownership unnecessary. For others with high-value vehicles or collector cars; trust ownership may be a worthwhile step. As with most estate planning decisions, the best answer depends on your goals, your assets, and your family's circumstances.