By: John Dawson
One of the questions I am often asked by clients is, “Should I transfer my automobiles to my revocable living trust?” I generally advise clients not to transfer their automobiles to their revocable living trust. The primary reason for this advice is because if the automobile is ever involved in an accident, the Trust could be at risk for the liabilities created by the accident, if the Trust is the owner of the vehicle. So, the benefit of not transferring vehicles into the name of the Trust is that the assets of the Trust are not exposed to a liability, if the automobile is ever involved in an accident.
What is the downside of not transferring automobiles to a Trust? Depending upon the value and state law, the transfer of title to the vehicle could be subject to probate, or some legal process to transfer title. For example, in Nevada, if the vehicle has a value in excess of Twenty-Five Thousand Dollars ($25,000.00) then a court proceeding must take place to transfer the title. However, if the beneficiary is the surviving spouse, then estate value of One Hundred Thousand Dollars ($100,000.00) or less can be transferred by way of a small estate affidavit. In Nevada, if the value of the automobile is Twenty-Five Thousand Dollars ($25,000.00) or less, it can be transferred with a small estate affidavit to a non-spouse.
In Nevada if the vehicle has a value of more than Twenty-Five Thousand Dollars ($25,000.00), but One Hundred Thousand Dollars ($100,000.00) or less, it can be transferred with a court proceeding called “Set Aside Without Probate.” If the vehicle has a value of more than One Hundred Thousand Dollars ($100,000.00), the transfer of title is subject to probate in Nevada.
In Nevada if you want to avoid probate, preparation of a small estate affidavit (if applicable), or liabilities associated with the Trust owning the vehicle, you could use the “Transfer on Death” form (click here to view the form). Another option to avoid probate and liability problems would be to create a Limited Liability Company (LLC) to own your automobiles with the Trust being named as the member of the LLC. Of course, if you are not concerned about exposing your Trust to liabilities from an automobile accident, go ahead and transfer your automobiles to the Trust, and you will avoid probate of your automobile.
Feel free to contact John Dawson in the Las Vegas, Nevada office with any questions or concerns at 702-550-4463.