Clients frequently ask whether one should transfer the title to their automobile into their revocable living trust. This is a loaded question, as it depends.

If the client is a Florida resident and doesn’t own more than two automobiles, then Florida law exempts those two automobiles from probate. For Florida law to apply, however, the automobiles must be registered in Florida. Whomever you named in your will to receive the automobiles specifically, or the tangible personal property more generally, will be entitled to the cars.

To transfer the automobiles, the beneficiary needs to take a copy of the will with a certified copy of the death certificate to the Tax Collector’s office, along with the title. If the title is electronic, there are additional forms to complete.

Automobiles registered in other states, however, would be subject to the law of registration in the state of registration. In those states a probate court order may be necessary to transfer title. Coincidentally, the proper forum for the probate would be Florida if the owner was a Florida resident at the time of his death.

Presume, for example, that Andy owned two automobiles, a Volvo sedan and a Buick. The Volvo he kept at his residence on Captiva, with Florida tags and title. The Buick he kept in Ohio with tags and registration there. Both cars were held in Andy’s name individually. Upon Andy’s death the Florida automobile is exempt, but if Ohio requires a probate to transfer title then a Florida probate would have to be opened before title to the Buick could be transferred to its rightful beneficiary.

This begs the question – if Andy created a revocable living trust, should he then transfer the Buick’s title to his trust? I would suggest that the answer is no.

Assume that Andy was in a terrible accident that was his fault. His automobile coverage is limited to $300,000 under the terms of his policy. If a plaintiff’s attorney sees Andy’s name on the title he may not jump to certain assumptions about Andy’s wealth than if the automobile is owned in trust.

This, of course, begs another question as to whether a revocable trust protects Andy’s assets from his creditors. It does not. A revocable trust is simply another form of ownership. Andy has complete control over the trust. He is the grantor, trustee and beneficiary. He can freely contribute assets to the trust and remove them from the trust. The trust can use his social security number as the taxpayer identification number. Consequently, a judgment creditor can attack the trust assets.

One solution that I recommend to nearly all my clients with any degree of net worth is to carry an umbrella liability policy. An umbrella policy is not terribly expensive and can serve to protect you beyond the scope of what your homeowner’s, automobile and boat policies might cover. Be sure to discuss what your other policy limits must be with your carrier when you do purchase an umbrella policy.

For liability purposes I also rarely suggest that married clients own automobile titles jointly. If Andy is married to Denise, and they own automobiles jointly, then any accident could jeopardize their jointly held assets. While a jointly owned automobile would avoid probate, remember that if you have Florida title, probate won’t usually be necessary.

I normally recommend to my married clients that each spouse own the automobile that he or she drives most often.

So, there’s a lot more to owning automobiles that meets the eye.  Be sure to always consult with your legal counsel as well as with your liability carrier before deciding what’s right for you and your family.

© 2018 Craig R. Hersch. Originally published in the Sanibel Island Sun.