Putting a car in a revocable trust is generally a good idea to avoid probate, simplify asset transfer to heirs, and handle incapacity, particularly for high-value or collector vehicles. While it simplifies post-death transfers, it may create minor administrative hurdles at the DMV and requires updating insurance, notes this article.
Dave Ramsey's core car rules emphasize paying cash, avoiding new cars (unless you're a millionaire), keeping your total vehicle value under half your annual income, and using a strict budget, often suggesting the 20/4/10 rule (20% down, 4-year loan, 10% total car expenses) as a guideline if financing, but preferring no debt at all to avoid depreciating assets trapping you. He stresses buying reliable, used vehicles to prevent debt and build wealth.
By putting assets in a trust, the property owner can maintain control over it, plan their estate for the future, and ensure the property is transferred to family or others according to their wishes. Just about any property can be placed in a trust, including your cars and other vehicles.
Liability Exposure
Some lawyers argue that if you put a car in your trust and someone gets into an accident while driving it, the trust (and all your other trust assets) could be liable in a lawsuit.
Depreciation. Cars reportedly lose 20% of their value in the first year of ownership and retain just 40% of their original value after five years. Clearly, that is not a good investment. “Your goal should be to buy the least expensive car. Period,” said Orman. “That should steer you to a used car rather than a new car. ...
For tax year 2025, gift tax rules apply if the vehicle's fair market value is over $19,000. In most cases, you must file IRS Form 709 if you give gifts to someone in 2025 totaling more than $19,000. Gifts exceeding the $19,000 annual exclusion count against your lifetime exclusion, which currently is $13.99 million.
Less money: Selling your car usually nets you more money than donating it, whether you sell privately or trade it in. No tax deduction: Not all vehicle donations may qualify as tax deductible; consult a tax professional for advice.
Pay Insurance for the Gift Recipient
If you're paying for the loved one's insurance, you will also no longer need to do a title transfer or you could have both of your names listed on the title. However, make sure the giftee is listed as a driver on your insurance policy.
One of the most common mistakes people make when creating a trust is forgetting to transfer their assets into the trust. A trust is only effective if it is funded properly, meaning that you must title your assets in the name of the trust.
Suze Orman, the popular financial guru, goes so far as to say that “everyone” needs a revocable living trust. But what everyone really needs is some good advice. Living trusts can be useful in limited circumstances, but most of us should sit down with an independent planner to decide whether a living trust is suitable.
Dave Ramsey's core car rules emphasize paying cash, avoiding new cars (unless you're a millionaire), keeping your total vehicle value under half your annual income, and using a strict budget, often suggesting the 20/4/10 rule (20% down, 4-year loan, 10% total car expenses) as a guideline if financing, but preferring no debt at all to avoid depreciating assets trapping you. He stresses buying reliable, used vehicles to prevent debt and build wealth.
He has blamed politics for what he considers Americans' economic dependence, and has said presidents should do "as little as possible" about the economy. Ramsey supported Donald Trump in the 2024 United States presidential election.
The Ramsey 25% rule is a personal finance guideline from Dave Ramsey, stating that your total monthly housing costs (mortgage principal, interest, taxes, insurance, HOA, PMI) should not exceed 25% of your monthly take-home pay, preventing you from becoming "house poor" and allowing for savings, investing, and financial freedom. It's a guideline for building a strong financial foundation, not a strict rule, though some find it difficult in high-cost areas.
The "5 by 5 rule" (or "5 and 5 power") in trusts allows a beneficiary to withdraw the greater of $5,000 or 5% of the trust's annual fair market value, whichever is higher, without triggering significant tax consequences, offering flexibility while preserving the trust's long-term integrity for the grantor's original purpose. If unused, the right lapses, but repeated lapses can have tax implications, so it's a strategic clause for asset management and tax planning.
10 Assets You Should Leave Out of Your Living Trust
Want to make your assets virtually untouchable by creditors and lawsuits? Equity stripping may be the answer. This advanced technique involves encumbering your assets with liens or mortgages held by friendly creditors, such as an LLC or trust you control.