Classic Cars and Estate Planning Tips

Classic Cars and Estate Planning Tips

Posted by Anderson Restoration Parts on 13th Oct 2023

Many owners of classic cars view these vehicles as investments just as much as they consider them entertainment or transportation methods, and one area where this concept often comes into play is estate planning. Because classic cars are often quite valuable, and may even increase in value with time due to rarity, it's common for their owners to consider them closely during estate planning processes.

At Andersen Restoration Parts, while we certainly can't claim to be estate planning professionals, we're your one-stop shop for all classic car restoration and improvement parts - with parts ranging from suspension rebuild kits and front-end rebuild kits to idler arms, bushing kits and more. We've helped numerous clients upgrade and restore their classic cars, including those who may consider these vehicles during their estate planning. Here's everything you need to know if you're considering this area

Why Classic Cars Are Often Part of Estate Planning

Before we get into some of the specifics on how classic cars are commonly included in estate planning, let's look at why this is often the case. As noted above, classic cars are often valuable assets that can appreciate in value over time. In addition to their potential for financial gain, many owners have sentimental attachments to their vehicles and want to ensure they remain in good hands after they pass away.

For these reasons, plus for common desires to keep classic cars "in the family" so to speak, many owners include their vehicles in estate planning processes. This may involve designating a specific person or group of people to inherit the car, setting aside enough funds for its maintenance and upkeep, or even transferring ownership during the owner's lifetime.

Pros and Cons of LLCs

One option for including classic cars in estate planning is to create a Limited Liability Company (LLC) specifically for the vehicle. This can have several benefits, such as providing liability protection and allowing multiple people to share ownership of the vehicle.

However, there are also some potential downsides to this approach. Creating an LLC involves legal and financial considerations that may not be necessary or desired for all classic cars, such as annual fees and tax implications. Furthermore, the primary protections LLCs offer are against lawsuits - which are not especially common in the realm of classic cars. If your car is part of an LLC, it's still vulnerable to creditor judgements or bankruptcy proceedings.

Why Trusts Are Often Ideal

One of the most popular and effective methods for including classic cars in estate planning is through a trust. Trusts offer many benefits over LLCs, such as greater flexibility in decision-making and potential tax advantages. They also provide more protection against legal challenges or financial issues.

Additionally, trusts can be structured to include specific instructions for how the vehicle should be maintained and used after the owner's passing. This can ensure that the car remains in good condition and stays within the family as desired.

Living Trust Vs Irrevocable Trust

If you do decide that a trust is the best option for including your classic car in estate planning, you'll have to choose between a living trust and an irrevocable trust. Both types offer the benefits listed above, but there are some key differences.

A living trust allows you to maintain control over the vehicle while you're alive, but also provides instructions for its use after your passing. Additionally, this trust can be amended, altered or revoked by you at any point during your life - you retain complete control over how your classic car is handled.

On the other hand, an irrevocable trust involves giving up control over the vehicle and its use. You can't make changes to this type of trust once it's established, so it's important to carefully consider your wishes and desires before setting it up.

Both these options have their own pros and cons, so it's best to consult an estate planning professional before making a decision. They can help you understand the implications of each type of trust and choose the one that best fits your needs and goals.

As you can see, classic cars are often included in estate planning processes due to their financial value, sentimental attachments, and desire for continued ownership within the family. While LLCs and trusts are popular methods for including these vehicles, it's important to carefully consider your options and consult a professional before making any decisions.

At Andersen Restoration Parts, we're here to help keep your classic car running in top condition for generations to come - whether that's through estate planning or simply regular maintenance and repairs. Contact us today to learn more about our wide range of parts and services for all your classic car needs.