DUDE, WHERE’S MY CAR? IT’S NOT IN PROBATE!
If you have ever been nominated as an executor of an estate, you know how physically and emotionally draining the process is. Retrieving the death certificate, making funeral arrangements, paying someone else’s bills, locating financial statements, selling real estate that is not your own, dealing with beneficiaries who want their inheritances – at the precise time you are mourning a loved one you must also manage his or her affairs. There is much to be done when someone passes away.
One piece of the estate administration puzzle that has always been frustrating is transferring ownership of a decedent’s motor vehicle to beneficiaries. Anyone who has wasted an entire day at the Department of Motor Vehicles to transfer title to another person knows the pain involved. And oftentimes the car is the only probate asset (especially when it is a spouse that has passed away), necessitating the probate of a Will or administration of an estate solely to deal with that one asset.
Thankfully, New Jersey recently enacted a law to help make transferring title of a motor vehicle upon death much easier. Under N.J.S.A. 39:3-30.1b: “A motor vehicle may be titled in transfer on death (“TOD”) form by including in the certificate of ownership a designation of a beneficiary or beneficiaries to whom the motor vehicle shall be transferred on death of the owner, or the last to die of two or more owners with right of survivorship…A trust may be the beneficiary of a TOD certificate of ownership.”
This means that you can fill out a form, sign, notarize it, and designate someone to inherit your car after you pass away without having to go through the probate process to transfer the motor vehicle. The form can be found HERE.
The distribution of probate assets (assets solely owned by a person without a beneficiary designation) are dictated by the contents of a decedent’s Last Will and Testament (or intestacy law if there is no Will) and requires going through the court process to transfer assets from decedent to beneficiary. Non-probate assets (e.g., life insurance policies and retirement assets with named beneficiaries, jointly owned assets with rights of survivorship, and trusts) bypass the court system completely and pass by operation of law. Non-probate beneficiaries generally receive their inheritances immediately, without the need for court intervention.
This new law transforms a motor vehicle, which has typically been a probate asset, into a non-probate asset, which is much easier to administer. If a decedent’s car is passing through an estate (as opposed to a named beneficiary), that car could only be driven for a period not to exceed thirty (30) days without the necessity to transfer title. Moreover, to actually transfer title the executor has to be properly assigned with a surrogate’s short form certificate. Oftentimes, no one has been appointed and has the requisite authority to transfer a vehicle within that time frame, which is problematic. The entire process would often take much more time than necessary and could cause infighting between beneficiaries if the asset was not specifically bequeathed. For instance, if Dad’s Will did not specify who would get the car, then it was often a source of contention between children.
N.J.S.A. 39:3-30.1b creates a path around the entire court system by creating a direct path for owners to dictate who they want to inherit their motor vehicles. Transferring ownership is now just as easy as collecting life insurance or handling a decedent’s 401K. The transfer takes place once a death certificate and the requisite paperwork can be provided to the Motor Vehicle Commission with much less hassle.
Note that the transfer is subject to any liens there might be on the vehicle. If there is a loan, the new owner will have to pay it. However, the ownership transfer happens without the need to probate the Will. Also, if the TOD beneficiary passes away before the motor vehicle owner, the car would revert to the estate in the same way a life insurance policy does when the beneficiaries predecease the life insurance policy owner.
Most of the time our state (and federal) governments create processes and procedures that make our lives more complicated. However, there are times when our legislators prove they understand the complexity of our court system, and they actually enact legislation to make the process less confusing. With N.J.S.A. 39:3-30.1b, we can now bypass the court system for motor vehicles and give an already busy executor one less thing to worry about.
If you or someone you know needs help navigating the probate or administration process in New Jersey or New York, please call one of the Trusts & Estates attorneys at Pashman Stein Walder Hayden and we can assist you.