What to Do if You Inherit a Car
Inheriting a car can be a blessing or a curse. Here's how to navigate the process.
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QuickTakes:
So, you just inherited a car. Now what?
Before you can fully call it your own, you'll need to get your inherited vehicle registered. Doing that typically requires filling out more paperwork than registering a car you bought.
How to Transfer Car Ownership
The first thing you should do after inheriting or being gifted a car is to verify the paperwork. Even if you inherited it from a close family member, check that the year, make, model, and vehicle identification number listed on the title and on registration documents correctly correspond to the car.
Next, you'll want to write a bill of sale. An inheritance isn't a conventional sale, but having a written record of when and where the car changed hands can prevent issues down the road.
The process of registering an inherited car and the costs associated with it vary from state to state, so you'll need to consult your state's department of motor vehicles.
One of the most important things you'll need to know is whether the car is paid for or financed. If there's an outstanding loan, you'll need to take over the payments or pay it off. Check with the lender for more details about the loan-assumption process.
Many states require additional documents, such as an affidavit of inheritance and a copy of the owner's death certificate. Some states charge a fee to transfer ownership. Nevada, for example, collects a $20 title fee.
Finally, you need to contact your insurance company to add the car to your auto policy.
There may be other steps to consider, depending on your state and local laws. Please be sure to do your own due diligence and consult with a professional if need be.
You Likely Need a Vehicle Inspection
It's a good idea to inspect your inherited vehicle carefully to get a clear idea of its condition. If possible, find out if the previous owner kept service records that can help you trace the car's maintenance and repair history.
If the car is fairly new, odds are it won't need significant repairs, though it's wise to perform routine maintenance if you don't know when it was last done. If the car is older, and especially if it's been sitting unused for a long time, making it roadworthy could require mechanical and cosmetic repairs.
What You Should Do With the Car
If you like it and it suits your needs, you can keep it. If you don't need or want it, you can sell it or donate it to a charity. Usually you'll be able to claim the donation as a tax deduction.
Once the car is in your name, donating or selling it is the same as if you bought the car, though you might need to pay capital gains tax if its value increases during your ownership. While new and late-model cars normally depreciate over time, some classic cars can gain considerable value in even a short period. If you've inherited a high-value vehicle, it's a good idea to consult a tax professional before you sell it.
