Estate planning is about more than just your house, savings, and retirement accounts. Your car or truck is also a valuable asset that needs to be handled the right way. In North Carolina, the way you title your vehicle can make a big difference for your family. It affects probate, taxes, insurance, and even liability if an accident happens.
Below, we’ll go through what it means to put a vehicle in a revocable trust, the risks and benefits, and how North Carolina rules come into play.
The Main Concerns When Titling a Vehicle
When planning how to title your car, there are three big things to think about:
- Reducing probate exposure
- Avoiding unnecessary fees and taxes
- Protecting your assets if an accident happens
A car is more than transportation. It can also bring legal and financial challenges if it is not titled correctly.
Putting a Car in a Revocable Trust
Yes, you can put the title of a car in a revocable living trust. A trust can hold almost any asset that a person can own. The benefit is that a vehicle inside a trust avoids probate and transfers directly according to the trust instructions.
But this choice is not always simple. When a car is owned by a trust, there can be insurance issues, extra steps for the trustee, and possible tax mistakes at the DMV. Some agencies do not always know how to handle trust-owned vehicles, which can create delays.
Car Insurance Issues With Trust Ownership
Insurance is often the hardest part of putting a car into a trust. Some insurance companies will not insure a trust-owned vehicle at all. Others may increase your premiums because they view it more like a business policy.
If the car is in your individual name, you usually benefit from your personal credit history and safe driving record. When the car is owned by a trust, those factors may no longer apply, which could raise costs. Before you retitle your car, it is smart to check with your insurance company about how they handle trust ownership.
Liability Risks With Trust-Owned Vehicles
Another concern is liability. If you are in an accident and your car is titled in the trust’s name, the trust itself could become exposed to claims. That means other assets inside the trust, like your savings or property, may be at risk. This is something to weigh carefully when deciding if a trust is the right place for your car.
Using Joint Tenants With Rights of Survivorship
Many couples in North Carolina choose to title their vehicles as Joint Tenants with Rights of Survivorship, or JTWROS. This means that when one spouse passes away, the other automatically becomes the owner.
This avoids probate, but it comes with risks. If the car is titled jointly and one spouse is involved in an accident, both names could be tied to a lawsuit. In another scenario, if a spouse is injured as a passenger in the jointly owned car, they may have limits on filing an insurance claim.
What To Do If a Spouse Passes Away
If your spouse dies and the car is in both names, the next step depends on how the title is written.
- If the title says “Trustee,” the vehicle belongs to the trust.
- If the title says “JTWROS,” you can usually transfer ownership by bringing the title, your ID, proof of insurance, and the death certificate to the DMV.
- If there is no designation, your spouse’s share of the vehicle goes into their probate estate.
North Carolina law allows a surviving spouse to claim up to $60,000 in personal property from the probate estate. This is called the spousal allowance and may keep the car out of probate court.
Costs and Fees to Expect
When you retitle a vehicle in North Carolina, you usually pay a processing fee of about $52 or less. The DMV may also try to charge a Highway Use Tax, which can be a few hundred dollars. If you are moving the car into a properly set up automobile trust, this tax should not apply. If it is charged in error, you should not pay it unless you want to go through the process of requesting a refund.
Options for Unmarried Individuals
North Carolina does not allow transfer-on-death designations for cars, so unmarried individuals need other tools. If your estate is worth less than $20,000, you may qualify for a simplified probate process. For larger estates, putting your vehicle into a revocable trust may make sense. This keeps the car out of probate and ensures it goes directly to your chosen beneficiary.
If you decide to retitle your car into a trust, it helps to use an automobile trust design. This allows the DMV to recognize the transfer, keeps you in line with state tax exemptions, and connects the vehicle back into your living trust at death.
Balancing the Pros and Cons
Choosing how to title your vehicle is about finding balance. A revocable trust can provide smoother transfers and keep property out of probate, but it may create insurance and liability challenges. A JTWROS title works well for many married couples, but it has its own risks.
The right choice depends on your personal situation, your estate size, and how you want your property handled in the future.
Get Estate Planning Help Today
Estate planning is about preparing today so your family does not face problems tomorrow. If you own a vehicle in North Carolina, how it is titled matters for your estate plan, your taxes, and your protection in case of an accident. If you have questions about whether to use a revocable trust, joint ownership, or another option, speak with our Wilmington estate planning attorney. Call (910) 777-5734 today to discuss your estate plan and make sure your vehicle and other assets are protected the right way.