Considering putting the E type into the family Trust

[Tony]

Considering putting the E type into the family Trust.
What would be the insurance implication . Am I still classed as the owner or part owner do I say the Trust is the owner.

Will this complicate the insurance issues or cost.

Asking for a friend

[Philk]

Hi.... what I know about Trusts would not quite fill the back of a postage stamp. However, I can't believe it would not make the insurance more awkward and would possibly require a different type of "corporate" insurance. At the end of the day, you are no longer the owner of the car but would be a named driver.

[abowie]

Considering putting the E type into the family Trust.
Asking for a friend

I think the best person to ask would be either your accountant or a solicitor (lawyer from our American friends). Having said that I'd be interested in the answer.

If an item is in a family trust are there implications in the UK for death duties or capital gains tax? Does the trust have to pay VAT or stamp duty on the transfer? Does this protect the asset from litigation against you, or bankruptcy?

We currently don't have death duties here in Australia, but with out Covid deficit now around a trillion dollars murmuring is starting. Privately owned vehicles don't attract capital gains tax here, but if a trust owns a painting for argument's sake I think it does apply there.

[gtjoey]

If its not E1A or a D TYPE or Sir Williams personal car?
I think its overkill.
Drive it, enjoy it....
Most older owners will be in shock the next 6 to 24 months.
Why?
The push to alienate ANYTHING associated with fossil fuels, will LOWER the prices which has already drastically started over the last 6 months.
IMHO, these cars will OVERALL die with us with very little exceptions for museums or posterity.
Anyone want my father in laws DUMONT television?
Horse Carriage from 1920?
Drive them now boys, hard reality is setting in.
Save the lawyers fees, your GRANDKIDS will not care whatsoever.
THEY WONT BE ALLOWED TOO......
GTJOEY1314

[chrisfell]

English trust law is ancient, and always under political review, mainly as it’s original function was almost immediately applied to avoiding tax. This forum may include expert tax lawyers, and they may give good (free) advice, but nothing can match the face to face one to one advice from a currently practicing trust expert. Bite the bullet, pick up the phone and call a firm of solicitors, asking to speak to the trust law experts.

I’m sure there is someone somewhere who specialises in the tax planning of classic car collections, for those with several cars they might want to protect from a 40% IHT hit..

[mgcjag]

Hi Tony.....Re insurance......you dont need to be the owner or registered keeper to insure a vehicle......the V5 shows the keeper but this is no indication if the owner......If your planning on living for more than 7 years you can gift your E type to a family member....after 7 years (if your still with us) there will be no inheritancs duties to pay on the E type(gift)...but its now considered as part of the "estate" of the person you gifted it to......you can still be the "keeper" and use it with their permission.....Steve

[malcolm]

Hi Tony.....Re insurance......you dont need to be the owner or registered keeper to insure a vehicle......the V5 shows the keeper but this is no indication if the owner......If your planning on living for more than 7 years you can gift your E type to a family member....after 7 years (if your still with us) there will be no inheritancs duties to pay on the E type(gift)...but its now considered as part of the "estate" of the person you gifted it to......you can still be the "keeper" and use it with their permission.....Steve

You need to be careful here. If a gift is judged as a "Gift with Reservation" then it doesn't count as a gift at all. Retaining use could be considered a "reservation", particularly if you remain as keeper. If it is a straight gift with no rights of use, and preferably with the new owner also as the keeper, then taper relief starts immediately culminating as you say in no tax after 7 years.

[mgcjag]

Malcolm...yes...but the basic question of insurance is correct.....you can insure a vehicle that you dont own.....Steve.....

[JerryL770]

You also need to be careful considering who the trustees are. If they are not family members but some "Trust" firm, then your heirs can have trouble getting hold of the asset, as has been reported on TV recently for some "home owners". Recalcitrant firms are a problem . . . . .

[Tony]

The members of the Trust is myself , wife and the children . Now I trust the children with my life so the fact they have an interest in the car doses not bother me at all.
The Trust has been set up via solicitor’s , financial advisor etc and includes my estate ( sounds quite grand) but basically the house) so I presume I am getting the correct advice.

It was just a point of interest from the car insurance point of view. I tend to think that one can get insurance on any car that is not yours but I suppose in my case I will be a shared owner as a member of the Trust. Both my boys are insured on the car so not real difference from that point of view.

I will let you know how it turns out when I am either dead or incapable of making any decisions.

[TGN]

Not all insurance companies will accept the policy holder not being on the log book.
Some of them require the insured to have a vested interest in the vehicle and demonstrate this by being registered in their name, regardless that the v5 only demonstrates whose liable to tax it and answer questions about its usage with regard to offences.
My brother in law is custodian of my Caterham so I don’t have to tax insure or store it. A few years ago all the insurance companies became pedantic over the v5 not being in his name.

You may have to shop around different insurance companies more in the future and your premium may increase but possibly negligible in consideration of the tax avoidance your children will benefit.

[Tony]

Being one of the Trustees would I not have a vested interest in the vehicle.

Tony

[christopher storey]

You need to be very careful about the question of insurance . It is a basic tenet of law that you must have what is called " an insurable interest" in a chattel before you can insure it . I am not at all sure that as a possible beneficiary of a family trust ( and we do not know whether this is a discretionary or other form of trust ) that you have an insurable interest . Definitely you need to spell out for the insurers exactly what the terms of the trust are and obtain their confirmation that you and anyone else who drives it are covered against all risks i.e. not just Road Traffic Act risks - which is not Third Party cover, but covers personal injury and death of Third parties but not any property damage

[malcolm]

Christopher is quite right but I would repeat what I said about "Gifts with reservation" if the point of the trust is to avoid IHT. You say that you presume you would be a "shared owner" of the car for insurance: if that is so, your gift is not absolute for IHT. If it is not so, it comes back to insurable interest again.

[Tony]

I have checked with advisors and apparently the E Type does not go into the Trust until I either die or are incapable of making any decisions. So I am still the owner and insurance should not be a complication.

[malcolm]

Ok, so insurance not an issue, but it doesn't help with IHT

[gtjoey]

Now drive the car and worry about dying later.........
ENJOY THE RIDE!
GTJOEY1314

[PeterCrespin]

I will let you know how it turns out when I am either dead or incapable of making any decisions.

See if you can get Christopher to draft a clause in the trust deed granting forum members from Heswall and Burton unfettered access to your garage lift in perpetuity (AKA Brimstage)? We could install a well-stocked minibar in your honour.

[Tony]

Peter, I have feeling the garage will be converted to a granny flat well before that. The good thing is it will already have a lift to get us upstairs.

[Philk]

There is then the question of what value the car will have at the time it goes into trust. With the cutover from ICE to EV in the UK, you need a pretty large crystal ball to try and work through what will happen to classic car values by 2030-2035. All will depend upon the widespread availability of fuel. It's a bit like cash.... it's still legal tender but, in certain locations, it's becoming increasingly difficult to find an ATM and, equally pertinently, finding places to spend it. Forecourt retailers will have increasingly difficult business cases to maintain x pumps serving y variety of fuels.