Many people create an estate plan intending to bequeath their assets to family and friends, helping to ensure they protect the ones they love. These assets can include money, valuables, items of sentimental value, and even a car. But even if you leave your vehicle to a family member, your executor will still have to go through what can be a complex process of transferring vehicle ownership after you die.
At Landskind & Ricaforte Law Group, P.C., our experienced New York estate planning attorneys help grieving families navigate that process and help them transfer ownership of the deceased person’s vehicle. Here, we discuss the legal steps involved to help ensure a smooth transition and avoid unnecessary delays or expenses.
Transferring Vehicle Ownership: the Size of the Estate Matters
In New York, what happens to a car when the owner dies depends on the size of the estate and whether the deceased person engaged in any estate planning before their death. Here are two common scenarios:
- You transfer the vehicle through probate. If the deceased person owned a vehicle in their name alone and the estate's value exceeds $50,000, the car generally must go through probate. The court-appointed executor will manage the process of transferring ownership to the designated beneficiary.
- You transfer the vehicle through a small estate proceeding. If the estate is valued at $50,000 or less, a small estate proceeding can be used to collect and distribute the deceased person's assets, including vehicles. This process is typically faster and less expensive than formal probate.
If the car was owned jointly with a surviving co-owner or placed in a living trust, it can usually be transferred without court involvement. The surviving owner or successor trustee simply follows the necessary DMV procedures.
Your First Step Is to Collect the Proper Documentation
Regardless of the transfer method, the first step an executor must take in dealing with a vehicle after the owner’s death is to locate important documents, including the following:
- The car's title or registration
- The deceased person's death certificate
- The will or trust documents, if any
- Proof of insurance
The executor of the estate also needs to obtain copies of your court appointment papers before attempting to transfer vehicle ownership.
Transferring a Vehicle Through Probate
If the vehicle must go through probate, the executor is responsible for managing the process. Key steps in this process include the following:
- Appraising the value of the car. The executor must determine the car's value, either through a professional appraisal or by referencing Kelley Blue Book or a similar valuation guide.
- Notifying the proper people of your death. The executor must notify the estate's beneficiaries and the DMV of the car owner's death.
- Distributing the vehicle. If the will specifies who should inherit the vehicle, the executor transfers ownership to that beneficiary. If the car is not specifically mentioned, it becomes part of the estate's residuary and is distributed with other remaining assets. If there is no will, state intestacy law determines who inherits the vehicle.
- Paying the taxes. The executor must ensure any estate taxes are paid before transferring the vehicle. In New York, estate tax is due on estates exceeding $6.11 million in 2022.
- Re-titling. Once the probate court has approved the distribution, the executor can work with the DMV to re-title the vehicle in the beneficiary's name.
Transferring Vehicle Ownership Using a Small Estate Proceeding
If the deceased person's estate qualifies for a small estate proceeding, the named executor or a close family member can use this simplified process to transfer vehicle ownership. This process includes the following steps:
- Filing a small estate affidavit. This sworn statement lists the deceased person's assets (including vehicles), their value, and who inherits them under the will or state law.
- Collecting the vehicle. With the affidavit and death certificate, the executor or family member can claim the vehicle from whoever has it.
- Transferring the title. The new owner presents the affidavit, death certificate, and title to the DMV to re-title and register the vehicle in their name.
How to Plan Ahead
Even though you can transfer a vehicle’s ownership through the courts, advance planning can make the process much simpler. For example, you might consider the following:
- Create a joint ownership. Adding a co-owner to your vehicle title creates a right of survivorship. When you die, the surviving owner can assume full ownership without court involvement.
- Create a living trust. Placing your vehicles in a revocable living trust allows you to continue using them during your life while avoiding probate at death. Your successor trustee can efficiently transfer the vehicles to the beneficiaries you've chosen.
Problems You Can Face When Transferring a Vehicle
When transferring vehicle ownership after the owner's death, the estate may encounter several potential problems that can complicate the process, create delays, or result in unintended expenses. Some common issues include the following:
You Don’t Have the Proper Documentation
A common problem executors face is incomplete or missing paperwork. If the deceased person's important documents—such as the vehicle title, registration, or insurance policy—can't be located, the transfer process can come to a halt. The executor may need to spend significant time tracking down records or obtaining duplicates from the DMV or other agencies.
Family Members Are Contesting Ownership
Disputes can arise among family members or other potential beneficiaries about who should rightfully inherit the vehicle. For example, if the deceased person's will is unclear or outdated, there may be disagreement about their intended wishes. If the car is particularly valuable, sentimental, or difficult to divide, conflicts can escalate and lead to costly litigation that depletes the estate's assets.
There Are Outstanding Debts
If the deceased person had outstanding auto loans, parking tickets, or other vehicle-related debts, these financial obligations don't disappear at death. The estate is responsible for satisfying these debts before the car can be legally transferred. If the estate lacks sufficient assets to pay these bills, the executor may need to sell the vehicle to cover the amounts owed.
There Are Unexpected Taxes
In some cases, inherited vehicles may come with unanticipated tax burdens. While most cars are not valuable enough to trigger federal estate taxes, if the deceased person's estate exceeds the exemption amount ($12.92 million in 2023), the vehicles may be subject to this tax. Additionally, if the beneficiary later sells the inherited vehicle, they may owe capital gains tax on any appreciation in value since the owner's death.
Contact Us for Help With Transferring a Vehicle
At Landskind & Ricaforte Law Group, P.C., we guide executors and administrators through the process of transferring vehicle ownership, offering knowledgeable advice and hands-on support to minimize delays, avoid costly missteps, and ensure the smooth distribution of assets to beneficiaries. If you're dealing with cars or other vehicles in an estate, please reach out to schedule a consultation with our compassionate legal team.