When people set up a living trust, the car is the asset that gets the most hesitation. Does it have to go in the trust? Often it does not. California gives you three workable choices, and the right one depends mostly on what the vehicle is worth and what else you own.
Option 1: Leave a lower-value car in your name
If the vehicle is not worth much, you can usually leave the title exactly as it is. The DMV has a fairly simple procedure for moving a vehicle to a family member after the owner dies, and it does not require a court probate. The person entitled to the vehicle signs a short statement under penalty of perjury, DMV form REG 5, called the Affidavit for Transfer Without Probate, and the DMV issues the new title.
The conditions matter. At least 40 days must have passed since the death, and no probate can be needed for the rest of the estate. That is the usual situation when everything else you own is already in your living trust, which is why a single low-value car left outside the trust rarely causes a problem. If a large asset was left out of the trust and does need probate, the simple procedure may not be available.
Option 2: Retitle a higher-value car into your living trust
For a more valuable vehicle, consider changing the title into the name of your trust now, the same way you would with any other trust asset. The car is then already in the trust, and your successor trustee can deal with it under the trust terms without relying on the DMV affidavit procedure. If you retitle a vehicle, let your insurance company know about the change.
Option 3: Name a beneficiary on the title
California also lets you name a beneficiary directly on the vehicle’s Certificate of Title, the “pink slip.” This is called a transfer on death designation, or TOD. When you die, the vehicle goes to that person through the DMV without probate. The title is reissued showing your name followed by “TOD” and the beneficiary’s name.
A few rules are worth knowing before you use it:
- Only one owner and one beneficiary can be listed. There is no place for a backup beneficiary.
- While you are alive, the beneficiary has no rights in the vehicle and does not have to sign anything. You can sell the car, change the beneficiary or remove the beneficiary whenever you like.
- Your will or trust cannot change the designation. Only a new title issued by the DMV can.
- The beneficiary can be a person or a trust. Naming your trust as the beneficiary sends the vehicle to the trust at your death.
- If the beneficiary dies before you and you have not updated the title, the vehicle becomes part of your estate.
- Any loan or lien stays attached to the vehicle, and certain creditor claims can still reach a vehicle that passes this way.
After the owner dies, the beneficiary takes the title, signs the owner’s name and countersigns, and files a Statement of Facts (DMV form REG 256) giving the date and place of death. The DMV may also ask for a certified copy of the death certificate. There is no 40-day waiting period for this route.
Watch: how to name a beneficiary on a California vehicle title
Choosing among the three
A modest car with the rest of your estate in a living trust usually calls for nothing at all. A valuable vehicle is a candidate for the trust. If you would rather skip the trust for the car and want a specific person to receive it with minimal paperwork, a TOD designation does that. Whichever you choose, the change has to happen on the title itself, because the DMV follows the title, not your wishes.
This article is general information about California DMV procedure, not legal advice for your situation. DMV rules, forms and fees change, so confirm current requirements before you file.