As an Estate Planning Attorney, my main goal is to ensure for clients the transfer of their assets at the time of their death as easily and inexpensively as possible. Hopefully, this means avoiding probate if possible too.
One question that comes up repeatedly from my clients is whether or not to transfer the title of a vehicle into that client’s trust’s name. It is common practice in many states, including Arizona, to title motor vehicles (or other types of moving vehicles like RVs or ATVs, etc.) in the name of a trust to avoid probate and further simplify the asset transfer during a difficult time.
While I do think that transferring your vehicle to the trust is usually best, here are a couple of things to consider…
First, you can’t title a vehicle to a trust if you still owe money on it. Any lienholder of record would have to sign off on a title change – and I have yet seen a lienholder do so. However, as soon as loan is paid off, you should make sure that is reflected on the title. At that point, you can go to the Motor Vehicle Department (MVD) and complete the paperwork to re-title your vehicle to the trust. This brings up the next thing to consider…
Second, re-titling your vehicle means waiting in line at the MVD. This alone can dissuade clients from taking the extra step of including their vehicles in the name of the trust. While I still think this is the best course of action, if you are the sole owner of the vehicle, there is another way.
Introducing the Beneficiary Designation!
Here in Arizona, a new law has made it simple to inherit a motorized vehicle using the same car title transfer process that you use when buying a car. The Beneficiary Designation, when done properly, ensures that the vehicle passes upon the individual’s death automatically. You don’t have to wait until the car is paid off, and you don’t have to wait in line at the MVD. IMPORTANT NOTE: this option only works if the vehicle is owned by one person. Therefore, this is not the best option for married couples.
So what if I don’t transfer the car to my trust or use a beneficiary designation?
While I will still encourage you to transfer your paid-off cars to a trust, and use the beneficiary designation for any collateralized car, you still might avoid probate here in Arizona if the value of the personal assets in your “probate estate”, including the equity of your vehicles, does not exceed $75,000 in value. In such a case, the beneficiaries of your estate may be able to use a Small Estate Affidavit to transfer title outside of probate. In other words, make your beneficiaries wait in line at the MVD instead of you!
In short, vehicles are important considerations in your estate plan. I would love to be of service to you to make sure these affairs are properly handled, so please give me a call to make an appointment so we can discuss your specific situation.