Should You Put Cars and Vehicles in a Trust?

When planning an estate for the future and after your passing, it is common to put property like cars and vehicles in a trust to ensure it passes to the people the owner wants without exposing it to certain legal processes and fees. Our team can help by establishing your trust and registering your vehicle with the Department of Transportation under it.

Many people use trusts to protect property from going through the probate process, which is when the court distributes property to legal heirs based on intestacy laws because there is no will. Placing your vehicles and other property in a trust will avoid this and the legal fees it often incurs. Doing so will also allow you or another named beneficiary to potentially avoid taxes, like Marland’s 6% excise tax on transferring vehicle titles.

Contact our trusts attorneys in Maryland today for your free case analysis by calling Rice, Murtha & Psoras at (410) 694-7291.

Can and Should I Place Cars and Other Vehicles I Own in a Trust?

When someone wants to have control over a piece of property during their lifetimes, they might consider placing their assets in a trust. By putting assets in a trust, the property owner can maintain control over it, plan their estate for the future, and ensure the property is transferred to family or others according to their wishes. Just about any property can be placed in a trust, including your cars and other vehicles. Our trusts attorneys in Maryland can help you establish the right instrument to protect your property and explain how it can help. There are many good reasons to place your vehicles in a trust, including avoiding probate and potential taxes. We can also determine if there are any drawbacks to putting vehicles in a trust.

Reasons to Place Your Vehicle in a Trust

One of the primary benefits of a trust is the ability to bypass the often lengthy and costly probate process. When a beneficiary is designated, the car can be directly transferred to them upon your passing, which not only expedites the transfer but also eliminates the need for court involvement, thereby saving both time and legal fees that can easily accumulate during probate. This gives you some privacy in your affairs by not exposing your vehicle and other assets to the probate process, which is a matter of public record. If a person dies without a will or trust, any vehicles they own will pass based on intestacy laws to the next of kin rather than how they might have wanted it transferred.

Avoiding probate and putting vehicles in a trust can also help avoid taxes. In most cases, people use intervivous trusts, also known as revocable trusts, to place vehicles and other property in them and control them during their lifetime. The current owner of the vehicle can name themselves as beneficiary and have it take effect during their lifetime, or they can name a family member or any other person. Suppose the vehicle is transferred to an immediate family member through a trust or named as beneficiary. In that case, they can avoid excise taxes to Maryland, as well as title fees, according to Md. Code, Transp. Art., § 13-810(c)(1). Taxes can also be avoided if the vehicles are transferred to a legal heir not related to the trust owner.

The procedure for adding a beneficiary to your car title is not complicated and can often be completed quickly online. Maryland provides a straightforward and affordable process that can be completed in just a matter of minutes, making it an easy option for most vehicle owners. When compared to the potential expenses associated with probate, which can include attorney fees, court fees, and other administrative costs, this minimal investment can provide substantial savings in the long run.

Reasons Against Placing Your Vehicle in a Trust

Like other estate planning tools, there are advantages and drawbacks to placing your vehicle in a trust. One reason you might not put your cars and vehicles in a trust is that the vehicle could be involved in an accident. If an accident occurs involving a vehicle in a trust, it could expose the trust to a lawsuit, putting your estate plans at risk.

In some cases, insurance companies make it difficult for people who place vehicles in a trust. They might not know how to insure the car properly, charge a higher premium, or deny coverage altogether. However, putting a car in a trust should not prevent you from getting insurance, which our team can help you set up while arranging your estate planning.

What Are the Steps to Placing My Vehicle in a Trust?

Placing your cars and other vehicles in a trust in Maryland is a relatively simple process that can be completed through the Maryland Department of Transportation (MDOT). However, you will need to provide some documentation to ensure the property is transferred.

To start the process, you must submit an “Application for Certificate of Title” form to the MDOT. You will also need to fill out and file a “Request for Exemption of Excise Tax and Title Fee for Qualifying Vehicle Transfers to or from a Trust” form to name your beneficiary and avoid the excise tax upon transferring the property.

You will also need to submit a copy of your bills of sale for any vehicles being placed in the trust. If you do not have an original bill of sale, you must fill out this form and have it notarized if the vehicle is less than seven years old, the price of the vehicle is at least $500 below market value, and the new owner named in the trust wants the excise tax calculated based on the sale price rather than the market value.

Your vehicle must also be up to date with inspections, including having certificates, at the time it is transferred to a trust.

Call Our Trusts Attorneys in Maryland for Help Protecting Your Vehicles and Other Property

Call our Marland trusts attorneys today to get your free case review by contacting Rice, Murtha & Psoras at (410) 694-7291.