You have a car in your garage. Have you ever thought about what is going to happen with your car after your death? The answer is the typical legal answer, depends.
If your car is in your sole name, the total value of all vehicles you own is less than $60,000 and you have no other property that needs to be probated through the probate court process, your heirs can just transfer your car into their name(s). All they would need to do is go to the Secretary of State with your death certificate, identification and proof of heirship and fill out the form, Certification from the Heir to a Vehicle. The form is at the Secretary of State office or it can be found online at http://www.michigan.gov/documents/tr-29_16195_7.pdf.
If you left a surviving spouse, he or she would be your sole heir and the only one that needs to sign off to transfer the vehicle into his or her sole name. If you have no surviving spouse and just children, then typically all of the children must go to the Secretary of State office to sign off to transfer the car out of your name.
If the vehicle is only going into the name of one of the kids, the other kids would each sign a Certification that they have no interest in the vehicle. The form is at the Secretary of State office or it can be found online at http://www.michigan.gov/documents/tr-34_16194_7.pdf. The child getting the vehicle would take the certifications from the other kids and the Certification from the Heir to a Vehicle signed by them to the Secretary of State’s office and transfer the vehicle into their own name.
This not only works for automobiles, but it will also work for any titled vehicle, other than a mobile home, including travel trailers, motorcycles, four-wheelers and other recreational vehicles. There are different rules for mobile homes and watercraft.
When your car is in joint names with rights of survivorship, there would also be no probate. Your surviving joint owner(s) would need to go to the Secretary of State office with your death certificate and their identification to transfer the car out of your name and into their name(s).
If your assets are being probated or need to be probated through the probate court process, then your car would also be probated with the rest of your property. If the total value of all vehicles you owned at the time of your death was in excess of $60,000, the vehicles would need to be probated. Your probate court appointed personal representative would take the letters of authority issued by the court to the Secretary of State office and then transfer the vehicle in accordance with your will.
When you left no will, your personal representative would transfer the car to your survivors in accordance to the rules of intestate succession. The rules of intestate succession are just fancy words for who will get your stuff if you died without a will. These persons would be your next of kin, spouse, kids, grandkids, etc.
If there is a loan on your car, the loan may have to be paid off upon your death. In many of the car financing agreements I have reviewed, death is considered a default of the loan triggering acceleration of the entire balance of the loan to be due in full immediately. In that instance, before the car can be transferred out of your name, a release or discharge of that loan would need to be issued by the lender after the auto loan is paid off. If your auto loan’s terms are such that it does not need to be paid off upon death, then the automobile could be transferred out of your name with the lien holder’s name remaining on the new title.
But what if you were leasing your automobile? You may think that your family could just turn in the car to the leasing company and walk away. They could, but leasing contracts are usually for a certain minimum period of time and are binding upon your heirs, successors and assigns. So if they turn the car back in to the leasing company, your estate could still be liable for the rest of the payments on the lease.
Only if there is a specific provision in the lease that says it expires upon your death without liability, would your heirs be able to just return the car to the leasing company without any repercussions. The car leases prepared by the leasing companies that I have reviewed over the years have all stated that death is a default of the lease. And upon default, the leasing company could repossess the car and assess an early termination fee. This early termination fee could be as high as all of the remaining payments on the lease. In such cases, your estate would not only have to pay off the entire lease, your heirs would not even get to keep the car for the remainder of your lease.
What if there are not any assets in your estate to pay off the lease? In that instance, if no one else signed on the lease, there may be no one liable for the payments due on the lease and the leasing company should be happy to just take the car back now. That way, they can get the most money out of selling it immediately, rather than getting it back later down the road through the repossession process with additional fees and costs and then selling the car when it is older and maybe with more mileage.
The best thing your heirs can do is to consult with a knowledgeable estate settlement attorney after your death. The attorney should be able to review the title, lease and/or loan agreement and make a determination of what needs to be done with your car.
By: Matthew M. Wallace, CPA, JD
Published edited May 3, 2015 in The Times Herald newspaper, Port Huron, Michigan as: What do we do with the car?