Pass My Car to My Heirs?
“Steps to take so there is no delay in passing a car to your heirs.”
A recent nj.com article asks, “What is the best way to pass a car to your heirs when you die?” The article explains that, as far as estate planning is concerned, a car is considered personal property. A car can be transferred by a specific mention of it in a will or just by the general reference to “personal property.” The only exception is if it is a collectable, in which case the auto will need a specific reference.
Typically, the executor of the estate (if there’s a will) or the administrator (if there’s no will) would either:
- Execute the bill of sale and the old title to sell the car to a third party; or
- Execute the old title to transfer the car to the person who inherits it in the will.
The executor should have an original document provided by the probate court that shows the executor's authority to act on behalf of the estate. This is called Letters Testamentary. If there is an administrator, Letters of Administration will also be required and should be given to the new owner.
However, if the car is owned by both a husband and wife or by civil partners, the transfer can be made in New Jersey, for example, by sending a copy of the death certificate, the old title, and an affidavit supplied by the Motor Vehicle Commission confirming the status of ownership and the co-owner's death, without the need for Letters Testamentary or Letters of Administration.
If the estate is small, under $50,000 in the case of the car passing to a spouse/civil partner or under $20,000 where the car passes to another heir, the documents required by the New Jersey Motor Vehicle Commission will include an Affidavit of the Spouse or Next of Kin, as filed with the probate court rather than Letters Testamentary or Letters of Administration, in addition to the old title.
To complete the transfer, the transferee will also need the odometer reading on the vehicle, the transferee's driver's license, her insurance information and payment of the fee charged by the Motor Vehicle Commission.
Because it’s so easy to transfer a motor vehicle, there’s no reason to put a vehicle in a trust prior to death. That’s only going to possibly increase insurance rates. Likewise, transferring the vehicle to a different owner prior to death, again could increase insurance rates.
However, there are several things that could cause a delay in the transfer of the vehicle's ownership. For instance, there could be a lien on the vehicle for an auto loan that would have to be paid before the car could be transferred. There also could be inheritance or estate taxes or other creditor claims that would need to be addressed, before a distribution can be made.
Delays could also occur, if there is a disagreement among the beneficiaries as to whom should receive the vehicle in distribution. There could be delays, if there's difficulty obtaining a duplicate title, because the old title can't be found. Finally, a family member may not be able to address the administration of the estate or not dispose of an asset, because of grief caused by the death of their loved one.
Reference: nj.com (November 13, 2018) “What is the best way to pass a car to your heirs when you die?”