Many people establish trusts to avoid probate proceedings for their heirs. Revocable trusts are the most popular choice for estate planning. This is because the trust maker retains full rights to change asset distributions, beneficiaries and trustees. A trustee manages and controls trust assets for the benefit of the trust's named beneficiaries and may transfer title to real and personal trust property according to the trust's terms.
Before a trustee can transfer title of a decedent's car, she must be certain the trust is the vehicle's lawful owner. That means the trust maker must have transferred the car's title into the name of the trust prior to death. In that case, the trustee bears control over the legal title and may legally convey the car to a third person.
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The trustee must transfer a car owned by the trust pursuant to the terms of the trust. For example, if the car was left to a named beneficiary, the trustee may not title it to a different beneficiary. If the trust states the car is to be liquidated, the trustee may sell the car at fair market value to a third person. Ultimately, the trustee is limited by the trust's terms when transferring the car title.
Signing the Title
To transfer a car title, the trustee must sign in his capacity as trustee of the trust. For example, if a car is owned by ABC Trust, the trustee can't simply sign his own name but rather sign as "John Doe, trustee of ABC Trust." The conveyed title should then be recorded at the proper state agency to complete the transfer.
Handling the Payment
Any money paid for the car should be deposited into a trust account by the trustee. The proceeds should be distributed or held according to the trust's terms. At the time of transfer, the trustee should also ensure the vehicle's insurance has been transferred to the new owner or the new owner has purchased a new policy. A trustee should not allow the car to leave her possession until the title is fully transferred and recorded with the appropriate state agency and insurance is in place. This protects the trust against liability for future accidents or injuries involving the car.
Maggie Lourdes is a full-time attorney in southeast Michigan. She teaches law at Cleary University in Ann Arbor and online for National University in San Diego. Her writing has been featured in "Realtor Magazine," the N.Y. State Bar's "Health Law Journal," "Oakland County Legal News," "Michigan Probate & Estate Planning Journal," "Eye Spy Magazine" and "Surplus Today" magazine.