Post-Death Car Complications and Legal Solutions in Maryland

For many of our probate clients administering the post-death affairs of a loved one, the most vexing issue can be retitling or the disposition of a car.

What complicates the post-death disposition of a vehicle?

Ownership of your car passes by title. Many couples only hold title to a vehicle in the name of the spouse who will be the primary driver of the car.

When a car is titled in the sole name of the Decedent (the person who passed away), ordinarily the car must be included in the Decedent’s probate estate. Why? Two reasons. First, there is no co-owner or designated beneficiary of the vehicle. Second, the “Personal Representative” of the Decedent’s Estate (the Executor) is the person who has the legal authority to sign away the title.

This is particularly vexing in two common scenarios:

SCENARIO A: Spouse 1 dies, survived by Spouse 2. All of Spouse 1’s assets are either jointly titled with Spouse 2 (meaning that the joint asset passes by survivorship to Spouse 2) OR pass by beneficiary designation to Spouse 2. None of these assets would be required to go through probate. However, Spouse 1’s vehicle is titled in their sole name.

SCENARIO B: Spouse 1 dies and Spouse 2 has already passed away. Spouse 1 and 2 had created a trust during their lifetimes. They had diligently funded the trust. They opted for a trust expressly to avoid probate. They had gone so far as to sign an “assignment of tangible personal property” assigning ownership of all their tangible personal property (their “things”) to their trust. However, because ownership of the car passes by title, the car is not included amongst that tangible personal property. The car remained owned by Spouse 1.

In either scenario, there are ways to avoid opening a probate estate before the Register of Wills solely to deal with the car.

What are the simple solutions in Maryland to address this?

SOLUTION 1: Under Maryland law, the legislature has excused spouses from opening probate if the sole probate asset is a car (up to 2 cars, actually), the car is fully paid off, and the surviving spouse is the only beneficiary under a will. In other words, let’s assume Spouse 1’s Will contains language along the lines of, “Upon my death, the rest and residue of my Estate passes to Spouse 2, if they survive me”. Assuming Scenario A above, where Spouse 2 survives and all other assets have passed by joint ownership or beneficiary designation, by law, a probate estate need NOT be opened just to deal with the car.

But what about if we assume Scenario B above. Spouse 1 is still the owner of the vehicle but this time, Spouse 2 has already died. Under this scenario, there is no surviving spouse who is the sole beneficiary under a will.

Does this mean that probate will be required?

Not necessarily! The second solution is a beneficiary designation for the vehicle.

SOLUTION 2: Maryland permits the owner of a vehicle to designate a transfer-on-death beneficiary of their vehicle. The same way that you may have a pay-on-death owner of your bank account, Maryland permits you to have a transfer-on-death beneficiary of your vehicle.

The owner of the vehicle may complete an MVA Form VR-471, available here. This form can only be completed when the car is paid off. The owner can only designate one beneficiary (meaning an owner can’t designate their two children as co-beneficiaries).

Upon completion of Form VR-471, the form is not filed with the MVA. It is held by the vehicle owner. After the owner’s death, it would be presented to the MVA and the title will convey to the designated beneficiary. We recommend keeping this form along with your original estate planning documents.

Does the District of Columbia offer anything similar?

No. Unfortunately, the District of Columbia does not offer similar statutory probate exclusions or transfer-on-death beneficiary designations. Talk to your City Council member! Or, consider titling vehicles jointly with a spouse, if appropriate.

For more information about winding up the affairs of your loved ones, including probate and trust administration, contact Jeremy Rachlin at (301) 656-1177 or jrachlin@bulmandunie.com.