How to Handle Cars in Probate
By Patricia Louise Nelson of Bend, OR
Many probates include cars. A car is to be included in the probate process if the person who died owned an interest in the car without right of survivorship to a co-owner or owned it alone. Including a car in the probate process means listing it on the inventory at fair market value. You can document fair market value by researching it online. Save the results of your research to document the value of the vehicle as close to the date of death as possible. Generally speaking, the value of vehicles decreases over time, so it is important to preserve the proof of value that you find.
Do not return vehicles to the lienholder unless you have written documentation that the lienholder will not seek a deficiency. Having a vehicle on which the decedent owed more money than the vehicle is worth is a problem. But returning that vehicle to the lienholder so the lienholder can sell it and seek a deficiency against the decedent’s estate is a bigger problem. Try to sell the vehicle, even if you have to accept less than the amount owed on it. That is the least expensive approach – unless the lienholder is willing to accept the vehicle back and assure you in writing that it will not seek a deficiency.
Ideally, you will sell the vehicle to an independent third party during the probate. Hopefully the amount you receive for the vehicle will be close to the fair market value you documented. Another option is to hold the vehicle for the probate period; perhaps disabling the vehicle so no one can drive it.
Of course, there are circumstances where a beneficiary of the estate needs to drive the vehicle. If you know that person is not a safe driver, do not let them drive the estate’s vehicle. If you decide to allow a beneficiary to drive the estate’s vehicle, sign the title over to that person reserving a lienholder interest for the estate. Have the person sign a custodial receipt for the vehicle. Ensure that the person insures the vehicle, naming the estate has an additional insured. Once the probate is complete, you can sign off as the lienholder and turn the vehicle over to the person who has been driving it.
In any of these options, be sure the vehicle is insured and disclose to the insurance company that the owner has died.
Find out more at: https://www.twosprucelaw.com/videos/cars-in-probate
