How to Transfer a Car Title When the Owner Is Deceased
Car inheritance can be complex: Knowing how to navigate this process can help reduce stress during a difficult time.
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Following the loss of a loved one, transferring car ownership may be one necessary consideration. It can be relatively straightforward, depending on where the individual resided and how they prepared to distribute their assets.
Understanding the rules and regulations of this process can help simplify the transition and reduce the stress on beneficiaries during a difficult time.
How to Transfer Ownership of a Car After Death
How complex it is to transfer a title after a car owner's death will depend on whether or not that person left a last will and testament. The specific rules and regulations that apply to their car title will also depend on the transfer policies of the state where the vehicle owner resided.
If there's a will in place, the deceased's assets will, generally speaking, be transferred according to their wishes. In some cases, wills may even include a transfer-on-death addendum, which simplifies the transfer process. For beneficiaries who receive a vehicle designated transfer-on-death, the process can be as easy as bringing a valid form of identification, the title, transfer-on-death form, and original owner's death certificate to the state's motor vehicle authority. These rules will vary by state, since not every state allows the use of transfer-on-death forms.
Without a will in place, the state probate court — which oversees asset distribution for a deceased person's estate — becomes responsible for deciding who owns the vehicle. This process could take months to complete, which means the beneficiary will have to wait to find out if they can transfer the title.
Once the probate court determines ownership of the vehicle, the beneficiary will then go through the title transfer process laid out by their state's motor vehicle authority. This may include bringing a letter from the probate court, a valid form ID, and the original owner's death certificate to their state's motor vehicle department along with the title that needs to be transferred.
A handful of states also require an inheritance tax on newly acquired property. These inheritance tax rates and policies will also vary by state.
Who Is Responsible for a Car Loan After Death?
Unfortunately for beneficiaries, car loans will still require payment after the original owner has passed away. Many car loans have a death clause included in their contract that outlines the process for repaying the loan. This process will vary depending on state laws and the loan itself, but there are a few ways for beneficiaries to handle these loans.
Beneficiaries may be able to sell part of the original owner’s estate to pay off the remaining loan balance on the inherited vehicle. However, if they aren't able to pay the loan in full, the beneficiary will not only inherit the title, but also become responsible for the debt. If there are no beneficiaries available to pay the loan and the estate cannot cover the remaining balance, the lender may repossess the vehicle.
How to Sell a Car of a Deceased Person
Depending on the vehicle and situation, a beneficiary could decide to sell the deceased's car rather than keep it. For example, inheriting a classic car could be an opportunity to take advantage of a high resale value.
Vehicles that transfer to only one beneficiary are easier to sell than those that are jointly distributed. If only one beneficiary owns a vehicle, they simply need to transfer the title, pay off any existing loans, and cancel the insurance on the vehicle to sell it. Even if the vehicle goes to probate, if a beneficiary can get sole ownership, selling the vehicle is their right.
If there are multiple beneficiaries listed for the same vehicle, it will be up to those individuals to agree on how to move forward. One beneficiary may buy the others out of their shares, or they may all decide to sell it together and split the proceeds.
