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Automobile ownership in a trust?

Posted: Mon Jan 16, 2017 10:51 pm
by cobra2411
One of the major hesitations with rejecting licensing and registration is a lack of a license plate is a glaring invitation to the thugs to come mess with you.

What are the thoughts on moving the vehicles to a trust, then the trust registers, licenses and insures them? You don't own them, you just have permission from the trust to use them.

The charge of allowing an "unlicensed driver" to use the vehicle would likely be levied against the trustee - not sure how that would be handled in this case as you're accepting their contracts. Well the trustee is...

Most discussions revolve around the traveler, but his property is sort of forgotten...


Re: Automobile ownership in a trust?

Posted: Tue Jan 17, 2017 7:17 am
by editor
I've known a lot of people who have used trusts for cars, and I've used them myself.

Such a trust is easy to construct, usually no more than a single page. You need the following parties:
  • Grantor
  • Trustee
  • Beneficiary
  • Successor Trustee
Be sure the trust will dissolve within fewer years than the maximum law of perpetuities in your State.

I also recommend if you have several cars put each one in a separate trust. If you were ever in an accident and were assessed liability over and above what the insurance will pay, the plaintiff's lawyer will go after the owner of the car. In this case the owner of the car owns only one thing in the whole world: a wrecked car.

I'm not suggesting you avoid genuine liability, but pre-arranging this circumstance will make you a less inviting target for unscrupulous attornies.

As for insurance, you may find it difficult to get in the name of a trust. They are still going to want all the potential drivers named, along with their driver license numbers.

If you have a driver license anyway, then having insurance is not, in my opinion, that much of an additional prejudice on your character. Others might disagree. We have some purists on this site and, while I completely agree with their viewpoint, I know that even they will agree as to how difficult it is to completely remove yourself from the Beast.

A few years ago I discovered a secret phrase in the auto insurance industry: Non-owner policy

A non-owner policy insures the driver. This is liability and medical only, not for full coverage of the car, so you can't owe any money on the car. You can get regular PL/PD, or you can even get enhanced coverage, and it's relatively cheap. The agent may ask if you own a car which, if a trust owns your car the answer is "No."

Not all underwriters will write these policies, but with a little calling around you can find one that will. If you describe what the policy does, and what you're trying to accomplish, every single one of them will deny that such a policy exists, even the companies that would otherwise write one of these policies, so it's important to ask for the policy by name.

This is great for people who have several cars, or an old farm truck they just can't justify insurance on. You pay one small premium, and then you're covered no matter what car you're in.

Re: Automobile ownership in a trust?

Posted: Tue Jan 17, 2017 2:41 pm
by cobra2411
So are you saying the trust can own the vehicles with no insurance and I could get a non-owner policy that would cover me for liability when I use the vehicle?

Re: Automobile ownership in a trust?

Posted: Tue Jan 17, 2017 11:57 pm
by editor
Yes, that's exactly what I'm saying.

Your mileage may vary, as I know that some States require proof of insurance to get plates and registration. I don't know how it would play out in that case-- I suppose you might find a way to force the issue, or get insurance for a day and cancel it. As long as you have a surety policy of some kind I think you'd have reasonable grounds of defense if some cop ever tried to make an issue of it.

Other States don't require proof of insurance to get plates, and in those jurisdictions I think you should have no trouble at all.

It's not the car that needs to be insured anyway, even by government's twisted logic; it's what might be done with the car. And the car isn't going anywhere without someone behind the wheel.

You might be interested in the Car Insurance thread on this forum. In particular, read this post, and this one.