Legal Question in Wills and Trusts in Texas
Does a beneficiary of a trust in Texas have to pay county taxes on value of the inherited vehicle when transferring the title?
The car is covered under the trust as a pour over. My personal believe, and I think this is what the county office was getting at, this is not considered a gift nor a sale, simply a distribution of what is covered under the trust and a no cost transfer of title except the new registration fee.
The car has X amount of value that goes to the beneficiaries. None of that value is taxable federally or county wise as it meets the exemption requirements, except what has earned interest. If the car or the value of the car is bequest to one person or all beneficiaries that value is still inherited by the beneficiaries at no tax liability.
It should not matter how the value of the trust is reallocated. If one beneficiary is allowed to take their value as a car and the other take their value as cash it is still the same value of the vehicle inherited by the beneficiaries just redistributed differently. Yes one beneficiary gets less cash distribution while the other gets the value of the car. The cash distribution is not a county taxable consideration, it's still tax exempt is my take.
1 Answer from Attorneys
Your take doesn't count as far as the DMV is concerned. If they are charging tax at the time of title transfer, then you have no alternative than to pay.
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