Long time readers of this blog will be familiar with the notion that your estate is your money, your property, and even your online assets. We also talk at length about how to handle real property in your estate plan, but there’s one kind of property that’s often passed over when discussing your plan — your vehicle. Americans and Texans in particular, take a lot of pride in what they drive. And considering the drive times between cities and in downtown traffic, having a ride to depend on is paramount. Yet, when it comes to vehicles (such as cars, boats, and planes), they’re often downplayed in an estate plan. So how do you tackle this question in your estate plan.
Easy Street: Planning for Cars in Your Estate Plan
Determining how a vehicle like a car is handled by an estate plan will depend on whether the car is a value-building asset or not. Meaning, is the car a collector’s item or a daily use vehicle? Those people with the funds to purchase collector cars or cars with the potential to become collector items (we see you Jay Leno), will want to list their vehicles either in the will (as specific gifts) or transfer title of those cars to their trust.
For the rest of us, it doesn’t make sense to add our daily use cars to our estate plans. This is due largely to turn over. On average, Americans tend to purchase cars every eleven and a half years. That may sound like a long time, but this means the car you have now likely won’t be the same one you own when you pass away. If you want to leave your daily use car to a loved one in your will, naming your current vehicle can really frustrate your intended gift.
Example: You own a Lexus RX 350 that you use every day. It’s well maintained, and seems like a great gift to pass onto a loved one. So, you specifically gift the Lexus (identified by the VIN) in your will to your niece. Years later, you sell this Lexus and buy an Audi A3 for your daily use. This sale of the specifically identified car means the gift has been adeemed.
Ademption is a legal concept that states if the specifically identified property is not in the estate at the time of death, then the beneficiary cannot inherit the gift. So, if you have sold a car specifically earmarked for a loved one, they can’t just take another car of equal value that may be in your estate. A court may be able to reform your will to interpret your intention of leaving a car to your niece, but that process is expensive and probably not what you wanted.
Often, gifts of cars will either be mentioned broadly (i.e., “any vehicle I owned for daily use”) or not mentioned in the will at all. In Texas, it is fairly easy to transfer title to cars once you have passed away, through the tax office. The forms can be provided either by your attorney or can be found online.
Smooth Sailing: Including Boats in Your Estate Plan
But it’s not just cars which can be a part of your estate. Other vehicles, including boats and planes can be transferred at your death or can be transferred to your trust.
Much like cars, boats are often not placed into a trust. Again, this is due to the turn-over nature of these vehicles. Larger vessels are often transferred to an entity, like a trust or an LLC, but lighter craft are often turned over fairly frequently. Much like cars, title to boats and their outboard motors can be transferred at time of death. The forms needed to transfer title to a boat (either from an individual or from a trust) can be found on the Texas Parks and Wildlife website or can be provided by your attorney.
Flying the Friendly Skies: Transferring Title to Your Airplanes
Lastly, while most people won’t be able to buy private jets, owning a smaller aircraft is not unimaginable. For those plane owning individuals, it may be a good idea to transfer ownership of your plane to your trust.
Long time readers of this blog are aware that entities, like a revocable living trust, allow you to transfer title of property (like a plane) to your trust, all while still exercising control over that property while you are alive. Additionally, the trust allows your named successor trustee (maybe your surviving spouse, children, grandchildren, or even corporate trustee) to step in and seamlessly continue managing that property when you can no longer act.
Since planes are governed by the Federal Aviation Administration (FAA) transferring of title of your plane must be done through that office. There are a variety of documents proving both citizenship and ownership you will need to provide to the FAA. Your attorney can work with you to ensure these documents are properly prepared and submitted.
Whether it’s your car, boat, plan, or bike, having a plan for how to transfer ownership of your vehicle is an important part of your estate plan. Whether you have drafted a plan that may need to be updated, or if you have never drafted an estate plan before, we’re ready to help ensure your estate planning journey is smooth sailing. Nielsen Law PLLC provides family-focused estate planning to individuals and families in Austin, Round Rock, Cedar Park, and the Central Texas area. For more information and to learn about our firm, please contact us.