One of the most common questions I get is “What happens to my cars when I die?” I’ve heard some lawyers tell people, “Oh, don’t worry – no probate will be needed.” Others say “They’ll have to go through probate.” Well, neither answer is 100% accurate because the real answer is “It depends.”
It depends on whether the car is leased or purchased. It depends on how the car (or motorcycle, mobile home, RV, or boat) is titled. It depends on whether there was a Will or a Trust or nothing. It depends on who is inheriting the vehicle. It depends on the value of the vehicle. It depends on what state the vehicle is registered in. It depends whether there will be a probate due to other assets. It depends, it depends, it depends.
There’s no way I can go over every possible situation. So, I’m going to point you to your most valuable resource with all things pertaining to motor vehicles – the DMV’s Procedure Handbook https://www.flhsmv.gov/motor-vehicles-tags-titles/motor-vehicle-procedure-manual/. Okay, I know the Florida DMV calls itself something else longer and fancier, but to 90% of us, the DMV is the DMV.
Click on Section I (Title and Lien), then scroll down to Procedure Number TL-18. Every answer you’re seeking is in that section. Look carefully and slowly.
But I will address a couple of the most common scenarios:
- The car is leased. The car can be turned into the leasing dealership. If they make money on the car, the estate of the deceased person could get a check (that means a probate may be needed if anyone wants the money). If the dealership loses money, the estate will owe them the difference. If there’s no probate, they’ll have no recourse to collect the deficit. If there is a probate opened, they may or may not file a claim in the probate to collect the deficit. Remember: in a probate, creditors get paid before beneficiaries.
- The title has two names on it. Save yourself lots of aggravation – make sure the title says “or”, not “and”. With “or” between the names, the survivor wins. He or she should immediately transfer the title to his or her name and perhaps add another owner with “or”, or sell the car. “And” is trickier – see the Handbook.
- You have a revocable living trust. You may want to consider putting a valuable car, boat, or RV into the name of your trust. You can actually do that when you buy the vehicle, but no one tells you that. Car insurance agents frown on it because there’s a fear that if there’s an accident and the person you hit (or his lawyer) sees the word “Trust” on your insurance policy, they’ll think you have deep pockets. Well, in Florida, even people with very modest assets have revocable living trusts, so hopefully eventually this fallacy will go away. Everything comes with pros and cons – you’ll need to decide what’s right for you.
- The car is paid for and titled solely in your name. If there’s going to be a probate anyway because you died with other assets in your sole name, and the heir isn’t your spouse or child, sometimes it’s easiest to just throw the car into the probate, too. Then the new owner will have a lovely court order she can bring to the DMV and avoid a lot of other hassle. If there is no probate, but you did execute a Will and left the car to someone, he can bring the Will, a death certificate and a bunch of other stuff to the DMV and get a title in his name (see the Handbook for details). If there’s no probate and no Will, but you have a surviving spouse, (or, surviving children if no surviving spouse) the DMV has a procedure for that (see Handbook). I have heard of people who sign the paper title as Seller (leaving the rest of the title blank), and put that negotiable title in a very safe place so someone they trust can transfer the title later on, if needed. Of course, that option can be very dangerous since the person with the blank title you signed essentially owns your car. I’m not recommending this last option – I’m merely acknowledging that some people have used it as an option since titles were created.
- If you die with debt – whether car loans or any other unpaid debts in your sole name – many of the DMV procedure won’t work. If you didn’t leave the car to your surviving spouse or surviving child (if there is no surviving spouse), a probate of some sort may be required.
So, you can see why I say “It depends.” As an estate planning and probate attorney, I generally only deal with motor vehicles that land in a probate. So if you die with a car in your sole name, and there won’t be a probate, please be aware that I’ll be referring your heirs to the DMV Procedure Handbook (link above)!
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Ready to make sure everything’s in order for your loved ones in the event you become incapacitated or die? Give Manasota Elder Law a call at 941-444-5958. We’ll help you determine whether you’re all set, or whether there are still some things that need to be done to protect what’s most important to you … your family.