It is not unusual for family members to look for easy ways to transfer property to relatives and loved ones when they die. Some have been through the probate process with another loved one and want to avoid the delays and red tape that are often a part of it. But whether an estate is probated or not, some legal process must be used for almost anything that is transferred from one person to another.
One item that must be transferred by a change of title is a car or other motor vehicle. Many people assume that they can just start driving a car that the deceased person owned without any further legal action. But what happens when you later want to sell the car and the title isn’t in your name? Or if you are stopped by the police and the registration isn’t in your name? Just like driving a car off of a dealer’s lot without registering it in your name, you don’t legally own the car.
One method of passing title without probate in Arkansas is called “transfer on death” or TOD. When the owner registers the vehicle, it will say something like “John Smith, TOD Jack Smith.” As long as John is alive, he is the legal owner of the vehicle. When John dies, the title automatically transfers to Jack, although Jack will have to go to the Department of Motor Vehicles with John’s death certificate to “legally” complete the transfer.
While this seems relatively easy compared to probate, just like many other estate planning strategies, a transfer on death may be subject to pitfalls that require the advice of an estate planning attorney. First of all, the new owner may have to pay taxes on the value of the car. Second, a TOD takes precedence over a will. If you forgot that you did a TOD to your ex-wife, then leave the car to your current wife in your will, your ex-wife still gets the car. And, if the car is very valuable or an antique, putting it in a trust may be a better way. But whatever the value, sentimental or financial, make sure to consult an estate planning attorney to make sure that a transfer on death is the best option for your circumstances.
- Low-Interest Loans: An Estate Planning Technique - June 23, 2020
- Irrevocable Medicaid Trusts - June 16, 2020
- Uncompensated Transfers - June 9, 2020
Leave a Reply