How to Transfer the Title of an Automobile to a Trust

by Tom Streissguth
itstillruns article image
monkeybusinessimages/iStock/Getty Images

When you sell a vehicle, you must transfer the title to the new owner with the responsible state agency. This procedure is also necessary if you move a car into a trust. If the vehicle is placed in the name of a trust, the trust itself -- not any individual -- has the rights and obligations of legal ownership. Each state has specific requirements for a transfer of title.

Basics of Trusts

A trust is an entity that can hold assets for the benefit of an organization or individuals who are named as beneficiaries. The "grantor" of the trust appoints a trustee to manage the assets and make the distributions as instructed in the trust document. By placing a car in trust, a grantor can pass the vehicle to a designated beneficiary and avoid any problems over the transfer in probate court. If the trust is irrevocable, the grantor also keeps it outside of his personal estate for tax purposes.

Legalities of Trust Ownership

Transferring a vehicle to a trust makes the trust the legal owner. The trustee is responsible for paying registration and license fees, for maintaining the vehicle according to state requirements, and for insuring the vehicle. The trustee either handles these tasks personally or appoints an agent or representative to do so. As part of the trust assets, the vehicle may be subject to claims and seizure through lawsuits filed against the trust, or against the original owner, if a court finds that the vehicle is not exempt from such claims.

Transfer Form

State law controls the transfer of a vehicle from one owner to another. An official title document, which shows the name and address of the current owner, will usually have a short transfer form printed on the title itself, often on the reverse side. The transfer releases ownership and names the subsequent owner; for a trust this might be, for example, "John Doe Memorial Trust." California and other states also require the transfer to show the name of the trustee. The trustee must endorse the form with a signature.

Additional Documents

To complete the transfer, the new owner files the old title with the completed transfer document with the state agency handling vehicle registrations. Maryland and other states also require the filing of insurance information, including the insurance company, policy number and name of insured; a bill of sale documenting the transaction; an inspection certificate; and an odometer statement showing current mileage. In addition, when trusts register vehicles, the state may require a copy of the document establishing the trust and showing the name of the trustee.

More Articles

article divider