LRaven

Does anyone have any advice with co-ownership regarding car title and insurance policy? My brother and I recently purchased a 2007 Carrera S from my brother’s brother in-law and we store the car in my brother’s garage. We’ve already had the car in our possession for a year and co-ownership has worked out well and we’ve never had issues with both wanting the car at the same time. My question is with regard to putting the car in both of our names or put the car only in one name. I’m 51 and he is 46. I’m single and he is married with three kids. He recently purchased an auto insurance policy that is twice as much as a quote that I received from my auto insurer. We live in Michigan and if a car is purchased from a family member, you are not required to pay the 6% Michigan sales tax. If the car is titled in both of our names I would be required to pay half the sales tax and he would not be required to pay any. Thank you for any helpful suggestions.

champignon

Just an off the wall idea; you might be able to title the car in the name of an LLC that you could form quickly. Initially, the LLC could have only one member, your brother. Most states would accept this as being equivalent to your brother owning it outright, if he can show them that he is the sole owner of the LLC. It will depend on whether your state has significant fees for starting up and maintaining an LLC. In my state, the formation of the LLC costs $100, and there are no additional or annual fees, you just have to go online once a year and confirm that the contact information hasn't changed, in order for the registration of the LLC to remain valid and current. You need to check with your DMV/Dept. of Transportation on whether there are any rules against an LLC owning a vehicle and registering the vehicle to the LLC, but I can't see why there would be an issue since lots of businesses owning vehicles are LLCs.

Once you have the car registered to the LLC, with your brother as sole owner, he could sell you half of the LLC (not the car, but the LLC owning the car), and I don't think you would need to do anything with the DMV. You would want to write up a simple document governing the running of the LLC and showing the ultimate ownership percentages ("Articles of Organization").

When it comes to car insurance, you will need the policy to name you and your brother individually, plus have a rider for the LLC, which might add $10 or $15 to the annual insurance premium. Check with your agent to be sure they can do this but I don't see any reason why they could not, although a not-too-swift agent might need to educate themselves on this before they would do it. I ended up pitching a stupid insurance agent who was too lazy to look this up, and went with a new one who is smart and has been very useful in many ways for many insurance policies I have.

My business partner and I own a house together that we share for business purposes. Although the order of what I am suggesting you might do is not the same as what we did, the final result was the same, with the house being owned by an LLC that we jointly own, and with the LLC being named as "secondarily" insured.

Steve Jensen

As champignon said, a LLC or similar. I'll also mention the possibility of a Living Trust - works well for NFA tax-stamped firearms and such, so a vehicle may be appropriate too. Worth a quick consult with a lawyer...

LRaven

Thank you for your suggestions.