Although motor vehicles are often depreciating assets, and the value of the owner’s probate estate may be less than the jurisdictional limit at the time of their death. Two (2) recently enacted Maryland laws provide methods on how to transfer one’s vehicle upon death without having to endure the probate process. Let’s explore.
Methods of Avoiding Probate
Chapter 684 of the 2017 Laws of Maryland now provides that a vehicle owner may avoid probate for the vehicle after his death by registering the vehicle with a designated transfer-on-death beneficiary. See http://www.mva.maryland.gov/about-mva/info/27300/27300-78t.htm for registering a beneficiary on your title. If one has no specific beneficiary in mind for a vehicle, then the vehicle should be transferred to a revocable living trust. Chapter 663 of the 2017 Laws of Maryland provides that a trustmaker may retitle his or her motor vehicle to a living trust without having to worry that a Maryland 6% excise tax or certificate of title fee will be due when the trustmaker transfers the vehicle to the Trustee or when the Trustee subsequently transfers the vehicle to certain family members of the trustmaker (e.g., upon the death or disability of the trustmaker). See http://www.mva.maryland.gov/about-mva/info/27300/27300-44T.htm for more information.
Reasons to Avoid Transferring a Vehicle to a Living Trust
In some cases, transferring a vehicle to a trust increases the difficulty of obtaining insurance for the vehicle in the event of a casualty or liability. However, moving a vehicle to a trust does not directly affect its insurance, and insurers will more than often add a trust to the trustmaker’s policy for no additional charges. It’s important to add the trust as an additional insured, because the insurable interest will be held by the trust, in the event of casualty and negligent entrustment.
There are a few instances in which transferring a vehicle to a living trust will be made difficult and even impossible for the trustmaker. For example, if the existing vehicle title reflects that a lien holder is still owed money for the vehicle, the MVA will require the trustmaker to supply a statement from the lien holder authorizing the transfer to the trustee title. If the lien holder does not cooperate, the transfer cannot be approved.
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