Can you register a car to a trust?

This is possible, and is usually done using a family trust, which is a type of inter vivos (living) trust. Living trusts are created by agreement between living people. They are very useful for keeping assets for generations on end. The Founder establishes the trust during his/her lifetime; this constitutes an agreement between him/herself and the trustees.

The purpose of a family trust is to own all paid-up, risk-free assets. These include furniture, certain investments (non-property), and motor vehicles. Unlike furniture which is quick and easy to transfer to a family trust, vehicles unfortunately require a few more steps. The registration department in South Africa has also recently altered some of its processes. Below is a summarised list of the steps.

Procedure

1) You will need a Road Worthy Certificate before re-registering the vehicle at your local Vehicle Registration Authority.

2) You will also need to take along the Letter of Authority, Trust Deed and typical FICA (Financial Intelligence Centre Act) documents to your local Vehicle Registration Authority. A list of these offices can be found at: https://www.westerncape.gov.za/your_gov/33/facilities/719

3) The trust is not a ‘person’, so you will first require a Traffic Register Number before completing the necessary forms for re-registration. Ask for assistance in terms of which forms are to be completed.

4) Once the Trust has been issued with the Traffic Register Number, the respective Re-Registration forms must be completed – these are different colour-coded forms and it is advised that you ask for assistance about which are to be completed.

It is vital that you put the effort into maintaining your trust, ensuring that it is used as intended, and generally properly maintained. Thus, ensure that you move your furniture and vehicles if it suits your financial situation, and make sure that your full financial structure is up to date.

Potential setbacks

If you want to register your car but still owe money on a vehicle loan, the lender may not allow you to transfer the title to the trust.

Even if you own the vehicle outright (whether you paid cash for it or paid off your loan), there are other risks to consider before moving it to a trust.

As owner of the vehicle, the trust will be responsible if the vehicle is involved in an accident, exposing other trust assets to liability claims that aren’t covered by insurance, and possibly negatively impacting other beneficiaries of the trust. You must therefore name the trust as an insured party on your liability insurance policy.

Of course, because you’re personally liable either way, owning a vehicle through your trust may not be of major concern in your life. But it may affect the trust once you pass away and keeping a vehicle out of the trust removes this risk.

Ensure that you weigh up your options before deciding whether or not to register a car to a trust.