If you have a child or relative with disabilities, you can set up a special needs trust that will provide for her financial well-being. Placing a vehicle in the trust allows the trust beneficiary access to the vehicle, without being directly responsible for license and registration fees, taxes, upkeep and other costs.
Special Needs Trust
A special needs trust is designed for the health and welfare of a disabled individual. The creator of the trust, known as the grantor, sets up the trust and places assets into it for the benefit of the beneficiary. The grantor names a trustee, who manages the trust's assets -- which might include cash, investments, real estate, or specially equipped vehicles -- and makes disbursements for specific purposes such as medical treatment and equipment, educational expenses and transportation. Assets in the trust are not counted against the limits for individual beneficiaries set by programs such as Medicaid or Supplemental Security Income.
Retitling a Vehicle
As the grantor, you can place a vehicle into a special needs trust, but must retitle the vehicle in the name of the trust. This typically means filing a title application with the state's department of motor vehicles, which handles registration and licensing. The procedure varies from one state to the next, but most states have several requirements, which include presenting a proof of purchase form if the vehicle is new, as well as the original title, an inspection certificate and/or odometer statement, a copy of the trust agreement, and then paying of a fee.
As the applicant, you may also need to supply lien information if there is an outstanding loan on the vehicle. The lien holder, or lender, must either release the lien or allow its transference to the trust along with the title. Transferring the lien means making the trust the new party responsible for the car payments.
Inspections, Taxes and Registration
The state may require a safety inspection before a vehicle can be retitled, and proof that the vehicle passed the inspection. Excise taxes may be due on the sales price of a new vehicle. The agency that accepts the title application may collect a fee and issue a new title. If the vehicle came from out of state, you will also need to register it in the new state -- which means an additional application and fee.