How Transfer-on-Death Beneficiaries Claim Vehicles

In some states, vehicle owners can register their cars and boats in transfer-on-death (TOD) form. It's a simple way of naming someone to inherit the vehicle when the owner dies. The big advantage to naming a TOD beneficiary is that after the owner's death, no probate court proceeding is necessary to transfer the vehicle.

States That Allow Transfer-on-Death Registration of Vehicles

*Wisconsin allows transfer-on-death registration only of "farm implements" such as tractors and other farm machinery.

When the owner (or the last surviving owner, if the vehicle was jointly owned) dies, the TOD beneficiary automatically owns the vehicle. The deceased person's will doesn't affect who inherits the vehicle, and the probate court isn't involved, either.

Identifying TOD Vehicle Designations

When you take inventory of the deceased person's assets, check the title and registration of any car registered in one of the states listed above. If there's a TOD beneficiary, it should be clearly stated in these documents.

The Executor's Role

Cars registered in TOD form don't pass under the terms of the deceased person's will. That means the vehicle is not part of the deceased person's probate estate, and it isn't under the control of the executor. So if you're the executor (or administrator appointed by the court), it's not really your job to help transfer the vehicle to the TOD beneficiary.

But if you think the TOD beneficiary might not know about how the vehicle was registered, promptly let him or her know. And if the beneficiary isn't sure how to proceed and asks you for help, you can point him or her in the right direction. The process should be simple.

How a TOD Beneficiary Can Claim a Vehicle

Every state has its own procedures and forms for TOD beneficiaries to follow. To find the rules in your state, start by checking the website of the motor vehicles department where the vehicle is registered. In some states, you'll find all the forms and instructions you'll need; in others, you'll need to follow up with a call to the DMV.

Generally, the TOD beneficiary will need to submit a few documents to the state DMV:

• Certificate of title to the vehicle, showing the TOD beneficiary designation
• Certified copy of the owner's death certificate, and
• Government-issued I.D.

If the title certificate can't be found, the beneficiary will probably have to submit a statement about the beneficiary designation. For example, in Nevada, a beneficiary who can't produce the car title must submit an affidavit (sworn statement) stating that he or she is the TOD beneficiary named on the missing title.

There is usually a small fee for issuance of a new title. The new owner will also need to re-register the car with the motor vehicles department.

Possible Complications

TOD designations are usually very efficient ways of transferring title to a vehicle. Sometimes, however, circumstances make things a little more complicated.

Divorce

If someone names his or her spouse as a TOD beneficiary, and then the couple divorces, the TOD designation may—or may not—be automatically canceled. It depends on state law, just like the effect of divorce on a will. Any former spouse who wants to claim a TOD vehicle should check the law to make sure the designation is still in effect.

Multiple Beneficiaries

If more than one person is named as a TOD beneficiary of a vehicle, the issues are the same ones that come up whenever two or more people inherit any tangible asset. The beneficiaries will have to decide how they want to share ownership of the vehicle: own it together, sell it and split the proceeds, or have one beneficiary buy out the other's share.

Liens on the Car

The new owner of a car takes ownership subject to any lien (legal claim) on it. For example, if the deceased owner still owed money on the car, the debt comes with the car.