How to Remove a Vehicle From a Family Trust

By John Cromwell

A family trust is a popular device used to ensure that a family’s assets are protected from creditors and property kept out of probate. The trust assets are maintained by a selected supervisor, or trustee, and used for the benefit of chosen beneficiaries. The trustees are generally the parents, with the entire family acting as beneficiaries. Given this purpose, most trusts contain the more valuable family assets, such as the home and cars. Since cars wear out over time, it is important to give someone in the family the ability to remove a car from the trust.

Step 1

Check to see if the trust is revocable. A revocable trust allows its creator to change its terms, including the ability to take property out of the trust. Generally, the creator would need to draft a written declaration removing the vehicle from a revocable trust and deliver that document to the trustee. The trustee would then transfer the property as directed.

Step 2

If the trust is irrevocable, determine if the trust agreement grants the trustee discretion to transfer property out of the irrevocable family trust. If so, that power is limited by the trustee's fiduciary duty to the beneficiaries, meaning he can only dispose of the car if it's in the beneficiaries' best interests.

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Step 3

Amend the trust so that the car is no longer included. The process for amending the trust may be defined by the law of the state where the trust is located or the trust agreement. This process will generally require that all of the trustees and beneficiaries agree to any change in the trust.

Step 4

Transfer the car’s title from the trust to the person who is getting the car. Trust property, such as cars, is formally held in the name of the trustee on the trust’s behalf. The process for transferring title varies by state. Generally, at the bottom of the car’s title is a transfer section. Complete that section, including the new owner’s information, sale price and odometer miles at the time of transfer. You would then sign and date the title.

Step 5

Check to make sure the new owner of the car registered title as the new owner. A car is generally registered in the state where it is located. The purchaser generally must submit the signed title to the appropriate state office and pay a fee to transfer title.

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References

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