Don’t Wreck Your Loved One’s Estate – Decedent Vehicle Titling and Insurance
When a loved one passes away, many family members do not think twice about driving the decedent’s vehicle. With relatives and friends coming in from out of town, the vehicle is convenient to use and cheaper than a rental car. However, if an accident occurs, the entire estate of the decedent could be exposed to creditors. Both the titling of the vehicle and the car insurance policy need to be reviewed before any person drives the car anywhere.
Change the Title to the Vehicle
First, the title of the car should be located to determine the ownership of the car. If the decedent owned the car jointly with another person, the car ownership automatically passes to the joint owner on the title at the time of death. The joint owner will still need to notify the Department of Motor Vehicles of the death, but the joint owner can treat the car as his or her own.
Review the Vehicle’s Insurance Policy
When the car was jointly owned by spouses, many insurance companies extend the existing insurance coverage to the surviving spouse. It is still a good idea to check with your insurance agent prior to driving to make sure you are covered. If the joint owner was a non-spouse, it is imperative to update your insurance agent prior to driving, as a new policy may need to be issued in the surviving owner’s name.
Why It’s Risky to Use the Vehicle Until These Issues are Resolved
If the decedent owned the car individually, no other individuals should drive the vehicle until the title is transferred out of the decedent’s name to the new owner. Why? Because the insurance company will most likely deny all claims in the event of an accident, especially if they were not notified of the death of the policyholder.
In most situations, even the named executor is only able to drive the car to obtain maintenance such as inspections or oil changes. The executor should not drive the car for personal use. Even if an accident does not occur, if another individual drives the car for an extended period of time, they may be liable to future owner for diminishing the value of the property.
Depending on the estate planning the decedent completed, it could take several months before title is transferred to the new owner. Once the vehicle has been transferred to the new owner, the new owner can either add the vehicle to their existing insurance policy or obtain a new insurance policy.
The convenience of driving the car is seldom worth the trade-off of exposing the entire estate to creditors. Make sure you contact the decedent’s insurance agent and estate planning attorney for assistance in reviewing the title and insurance policy before anyone drives the vehicle.