Co-Owned Automobiles and Estate Planning

What happens to cars in Estate Planning? Most of the time, people don’t spend time thinking about what happens to their vehicles when they are planning their estates, especially if it is co-owned with a partner. Unless the car is an “heirloom” item it is unlikely that it will be kept for a long time, and those that do last tend to lose their value. However, a co-owned automobile can cause problems with your estate if it has not been properly titled.

What can go wrong? Consider the situation of a one of my clients, whose spouse died suddenly, leaving two relatively new vehicles.

As is common, the automobiles were titled in the names of both spouses. However, even though both names were on the title, that doesn’t mean that the cars automatically transfer to the surviving partner. Per the title, my client only owned 50% of each vehicle. Therefore, the car had to go through the probate process, the executor had to take formal possession, a court fee had to be paid, and transfer forms submitted to the DMV. These frustrating tasks created a significant inconvenience for a person who was already dealing with the death of a loved one.

What can be done to prevent this? Luckily, there is a simple, straightforward preventative solution to this potential problem. In North Carolina the Division of Motor Vehicles allows you to include the initials JTWROS (Joint Tenants with Right of Survivorship) on your title following the names of both owners. This clarifies that ownership transfers 100% to the surviving partner on a joint title, avoiding a long process with probate.

If you are purchasing a vehicle, you can state this preference to the dealer and then check the document when you pick up your title from the DMV. However, if you already have your joint car title and it does not include these instructions, you can work with the DMV to have your title changed. It is worth the minimal time and effort now to avoid a potential problem later.

What happens with a JTWROS title after a partner passes? If a co-owner passes away and the vehicle is titled with JTWROS, the surviving partner will need to visit the DMV with the title and the death certificate. With these items, the DMV will be able to quickly issue you a new sole title without the time and hassle of going through probate.

You can find information about your local DMV here and read more about titling law in North Carolina here.